MCA allows Companies to transact all items through Video Conferencing or Audio-Visual means
The Ministry of Corporate Affairs (Ministry) vide its notification dated 15th June, 2021 has allowed Companies to conduct Board Meeting on all matters without restriction through Video Conferencing or other Audio-Visual Means by making amendment in Companies (Meetings of Board and its Powers) Rules.
The Rule 4 of the above said which is reproduced below for ready reference stands omitted.
Rule 4- Matters not to be dealt with in a meeting through video conferencing or other Audio-Visual means-
(1) Above rule prescribes some matters which are restricted to be dealt with through video conferencing or other Audio-Visual means-
(i) the approval of the annual financial statements;
(ii) the approval of the Board’s report;
(iii) the approval of the prospectus;
(iv) the Audit Committee Meetings for consideration of financial statement including consolidated financial statement if any, to be approved by the board under 134(1) of the act; and
(v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover
Provided that where there is quorum presence in a meeting through physical presence of directors, any other director may participate through video conferencing or other audio visual means.
For the period beginning from the commencement of the Companies (Meeting of board and its powers) Amendment Rules, 2020 and ending on 30th June, 2021, the meetings on matters referred above may be held through video conferencing or other audio visual means in accordance with Rule 3.
Now after the amendment the abovesaid Rule 4 has been omitted completely.
Rationale of the above amendment
The rationale on such restriction was due to the fact that the above mentioned items i.e. approval of the annual financial statements, board report, prospectus approval and matters of approval relating to amalgamation, merger, demerger, acquisition and takeover were of sensitive nature and required to be dealt in physical manner.
Due to the spread of COVID-19 and subsequent lockdown to tackle the virus, the Ministry of Corporate Affairs has given relaxation with regard to Rule 4 of the above said rules.
Now after the second wave, the Ministry has thought to move into complete digital mode of carrying out Meetings of the Board of Directors, thereby Rule 4 is omitted from the Companies Act, 2013.
It can also be considered as one further step towards ease of doing business by the government.
Effect of above amendment
Accordingly, this can be concluded that with this amendment, there is no restriction with regard to any matter to be dealt by the Board of Directors through Video Conferencing or other Audio-Visual Means.