MCA removes restrictions on conducting board meetings via video conferencing

Table of Contents

1. Introduction
2. Timeline of amendments w.r.t. meetings via video conferencing
3. Provision regarding Board Meetings through Audio-Visual means
4. Procedures for Convening and Conducting Board’s Meetings
5. Conclusion

1. Introduction 

The MCA vide. Notification No. G.S.R. 409(E). Dated 15.06.2021, has notified the Companies (Meetings of Board and its Powers) Amendment Rules, 2021, which seeks to amend the Companies (Meetings of Board and its Powers) Rules, 2014 wherein Rule 4 providing for restriction on matters not to be dealt with in a meeting through video conferencing as specified in Rule 4 of the Act has been omitted. This means that now all the matters can be transacted in a board meeting conducted through video conferencing. Earlier, certain matters were not permitted to be transacted through video conferencing, such as approval of the annual financial statements, the Board’s report, approval of the prospectus, etc.  These actions are earlier restricted for the digital medium.

2. Timeline of amendments w.r.t. meetings via video conferencing

Last year, due to the Covid-19 pandemic, relief was provided to all companies to transact the aforesaid businesses by way of e-meetings for the period starting from 19.03.2021 to 30.06.2020 initially through the insertion of Rule 4(2) vide. Notification No. G.S.R. 186 [F. No. 1/32/2013-CL-V-Part], Dated 19-3-2020, later on, the date was further extended to 30.09.2020 vide. Notification No. G.S.R. 395(E) [F. No. 1/32/2013-CL-V-Part], Dated 23-6-2020, and the further date was extended to 31.12.2020 vide. Notification No. G.S.R. 590(E) [F. No. 1/32/2013-CL-V-Part- I], Dated 28-9-2020, and finally, the date was extended to 30.06.2021 vide. Notification No. G.S.R. 806 (E) [F. No. 1/32/2013-CL-V-Part], Dated 30-12-2020 respectively. Now the Companies (Meetings of Board and its Powers) Amendment Rules, 2021 has permanently omitted rule 4, which means Companies can freely transact all business in their board meetings conducted through video conferencing or other audiovisual means 

3. Provision regarding Board Meetings through Audio-Visual means

Section 173(2) of the Companies Act, 2013 allows directors to participate through video conferencing or other audiovisual means in the meetings of the board, which are capable of recording and recognizing the participation of directors and recording and storing the proceeding at such meeting along with date and time.

Rule 4 of the said Rules states that the following matters cannot be dealt with or approved through video conferencing or other audiovisual means:

(a) Approval of annual financial statements;

(b) Approval of board’s report;

(c) Approval of prospectus;

(d) Audit committee meeting for approval of financial statements; and

(e) Amalgamation, merger, demerger, acquisition, and takeover.

Note:- the director’s participation by video conferencing or by other audiovisual means shall also be counted for quorum.

Earlier the above matters were restricted to be transacted through the digital medium. This move by MCA  will ease the burden on companies to hold physical meetings even beyond the pandemic.

After the  Notification, companies are allowed By MCA to hold meetings of their Board for the matters restricted under Rule 4 through video conferencing or other audiovisual means. All Board meetings conducted through video conferencing or other audiovisual means have to be conducted under the procedure prescribed under Rule 3 of the said Rules.

4. Procedures for Convening and Conducting Board’s Meetings

Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014 provides for the requirements and procedures, in addition to the procedures required for Board meetings in person, for convening and conducting Board meetings through video conferencing or other audiovisual means:

(1) Every Company shall make necessary arrangements to avoid failure of video or audiovisual connection.

(2) The Chairperson of the meeting and the company secretary, if any, shall take due and reasonable care:

(a) to safeguard the integrity of the meeting by ensuring sufficient security and identification procedures;

(b) to ensure the availability of proper video conferencing or other audiovisual equipment or facilities for providing transmission of the communications for effective participation of the directors and other authorized participants at the Board meeting;

(c) to record the proceedings and prepare the minutes of the meeting;

(d) to store for safekeeping and marking the tape recording(s) or another electronic recording mechanism as part of the records of the company at least before the time of completion of an audit of that particular year;

(e) to ensure that no person other than the concerned director is attending or have access to the proceedings of the meeting through video conferencing mode or other audiovisual means; and

(f) to ensure that participants attending the meeting through audiovisual means can hear and see the other participants clearly during the meeting, but the differently-abled persons may request the Board to allow a person to accompany him

5. Conclusion

It is a welcome step taken by the MCA as it was the need of the hour. The relaxation provided by the MCA to the companies in the conduct of Board meetings will surely help Companies and their Board of directors to undertake actions at the Board level without being affected by the Covid-19 restrictions imposed by the Governments.