Board Meeting Rules amid Covid-19

To deal with the precarious situation due to outbreak of Covid-19 and the Ministry of Corporate Affairs have given major relaxations with respect to holding of Board meeting through physical presence of Directors by amending Rule 4 of Companies (Meeting of Board and its Powers) Rule, 2014.

The Ministry of Corporate Affairs (MCA) vide its notification dated 19th March, 2020 has come up with  Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and the said rules will be effective on the date of its publication in the Official Gazette i.e. 19^th March, 2020.

Rule 4 of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 insert a new sub rule which states that “For the period beginning from the commencement of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and ending on the 30^th June, 2020, the meeting on matters referred to in sub-rule(1) may be held through video conferencing or other audio visual means in accordance with Rule 3”.

Sub rule(1) states that the  following matters which shall not be dealt with in any meeting held through video conferencing or other audio visual means:

• The approval of the annual financial statements
• The approval of the Board’s report
• The approval of the prospectus
• The Audit Committee Meeting for consideration of financial statement
• The approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

With the amendment, the Companies may now take the above matters on a Board Meeting conducted through video conferencing or other audio-visual means. The amendment has come up with major relaxation of Companies, which hold their Board Meeting for approval of accounts within 30^th June, 2020.

The Institute of Company Secretary of India(ICSI) has also issued guidelines on 3^rd April, 2020 on applicability of Secretarial Standards on Meeting of the Board of Directors (SS-1) to keep the conformity of the Standard with the provision of the Companies Act. The institute has also clarified that the above guidelines is voluntary in nature and will be applicable only for the period of relaxation given by the MCA i.e. 30^th June, 2020.

Major takeaways of the ICSI guidelines on SS-1

1. The Relaxation with respect to matters mentioned in Sub-rule(1) also applied to Para 1.2.3 of SS1

2. Notice to a Director can be sent through e-mail, if physical delivery of documents is not possible due to COVID-19 lockdown. Wherever there is requirement of sending notices, agenda, minutes for meeting of the board of directors or committee or for resolution which are proposed to be passed by circulation, the same can be sent thorough email.

3. The gap between two meetings of board of directors has been increased to 180 days.

4. Relaxation has been given the requirement of holding of meeting of independent director as per Para 2.3 of SS-1

5. Physical documents which were referred in the meeting should be identified by the company secretary can be signed after the normalcy is restored.

6. Minutes of the meeting of the Board of Directors can be digitally signed by Chairman and can be circulated among the members. The directors may waive their rights of receipt of such minutes keeping the mind the prevailing condition. If the minutes could not be signed digitally, the same can be signed and circulated among the members once the normalcy is restored.