As we all are aware that in view of the COVID-19 outbreak in the different countries and as a safety measure India has moved to a mandatory lockdown in most states, the Ministry of Corporate Affairs (MCA) has taken certain steps to liberalize compliance requirements for companies. Additionally, in a media briefing held on March 24, 2020, the Finance Minister has announced certain exemptions for Indian companies (which will be notified by the MCA shortly).

We are here to discuss on the conducting the board meeting through video conferencing and following steps to be follow by each and every director of the company while conducting the Board Meeting through video conferencing.

What is the update from the MCA on board meeting through video conferencing?

In view of the travel restrictions imposed due to COVID-19, the MCA has relaxed the foregoing restriction until June 30, 2020. Therefore, directors present by video conference for a board meeting at which any of the followings matters are as follows discussed will form part of the quorum. It must be noted that all other requirements for board meetings to be held by video conference, including recording of the proceedings, have to be complied with by the company.

  • the annual financial statements or the board’s report;
  • a prospectus for offer of securities; or
  • an amalgamation, merger, demerger, acquisition or takeover,

These compliance requirements little challenging given that most companies CEOs, directors, executives and other team members are working from home for the past week or so.

Question and answer for conducting of board meeting through video conferencing

Sr. No. Question Answer
1 What is Video Conferencing? As per explanation under rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014,

“video conferencing or other audio-visual means” means audio-visual electronic communication facility employed which enables all the persons participating in a meeting to communicate concurrently with each other without an intermediary and to participate effectively in the meeting.

2. Whether any director present via video-conferencing will suffice the quorum requirement?[1] Yes, Directors present through video conferencing or other audio visual means would suffice for the quorum requirement as their presence shall be counted for the purposes of quorum.
3. Whether any director present via telephone or tele-conferencing or any other Mode will suffice the quorum requirement? No, Directors present through telephone or tele-conferencing or any other Mode which does not conform to the requirements of the relevant provisions of the Act cannot be considered as participation of a Director through video-conferencing.

If due to any technical issue emerged during the meeting held through video-conferencing, a director chooses to participate through telephone or tele-conferencing for remaining Meeting, then such participation cannot be considered as participation of a Director through video-conferencing.[2]

4. What should be the place of the Meeting in Video –conferencing? Section 173 of the Companies Act, 2013 (“the Act”) does not restrict a company from holding any meeting of its Board of Directors at some other place within or outside India.

Further, as per Rule 3(6) of the Companies (Meetings of Board and it’s powers) Rules, 2014, with respect to meetings conducted through video conferencing or other audio visual means, provides;

(i)  that the scheduled venue of the meeting as set forth in the notice convening the meeting, shall be deemed to be the place of the said meeting and

(ii) all recordings of the proceedings at the meeting shall be deemed to be made at such place.

In the current scenario we can show the any one of director’s residence as a meeting place and other directors are participating through video conferencing.

5. Can Chairman of the meeting participate the meeting through video conferencing? In case the Chairman of the Meeting is participating through video conferencing, he/she should, while transacting any restricted items* of business, vacate the Chair and entrust the conduct of the proceedings in respect of such items to any other Non-interested Director attending the Meeting physically and should not participate in the meeting in respect of such items.

* In the current scenario chairman can participate in the restricted items till June 30, 2020

6. Whether it is mandatory for the director to communicate the company about the participation of the meeting through video conferencing? (i) A director intending to participate through video-conferencing should communicate his intention to the Chairman or the Company Secretary of the company.

(ii) He/She should give prior intimation to that effect sufficiently in advance so that the company is able to make suitable arrangements in this behalf

(iii) Any director who intends to participate in the meeting through video-conferencing may intimate about such participation at the beginning of the calendar year and such declaration shall be valid for one year.

[Rule 3(3)(d) and (e) of the Companies (Meetings of Board and its Powers) Rules, 2014].

7. What process to be follow when directors participating through video conferencing? The requirement for roll call is in line with the requirement under Rule 3(4) and Rule 3(5) of the Companies (Meetings of Board and its Powers) Rules, 2014.

During the roll call, every Director participating through Electronic Mode should state, for the record, the following namely;

(a) name;

(b) the location from where he is participating;

(c) that he has received the Agenda and all the relevant material for the Meeting; and

(d) that no one other than the concerned Director is attending or having access to the proceedings of the Meeting at the location mentioned in (b) above.

[Rule 3(4) of the Companies (Meetings of Board and its Powers) Rules, 2014] The proceedings of such Meetings shall be recorded through any electronic recording mechanism and the details of the venue, date and time shall be mentioned.

8. How do directors participating in a meeting by video conferencing sign the attendance register?[3] The following provisions in the rules ensure the correct recording of the names of directors who are present through video conferencing:

(i) Rule 3(4) of the Companies (Meetings of Board and its Powers) Rules, 2014 provides that at commencement of the meeting, a roll call shall be taken by the chairperson when every director participating through video conferencing or other audio visual means shall state, for the record, inter-alia, name and location from where the director is participating.

(ii) Rule 3(11)(b) of the Companies (Meetings of Board and its Powers) Rules, 2014 provides that the minutes shall disclose the particulars of the directors who attended the meeting through video conferencing or other audio visual means.

(iii)The draft Secretarial Standard-1 provides that the attendance register shall be deemed to have been signed by the directors participating through video conferencing, if their attendance is recorded by the chairman or the company secretary in the attendance register and the minutes of the meeting.

9. When a director joins the meeting by audio/video conference, (where he is counted for the purpose of quorum u/s 174), is it sufficient to say that director was not absent u/s 167(1)(b) even if he does not physically attend even a single Board meeting in a period of 12 months?[4] The requirement of section 167(1)(b) of the Act is only for attendance of a Director in the Board Meeting. It does not deal or regulate the manner of attending the Board Meeting.

A Board Meeting attended by any Director, whether in person or through video conferencing or other audio visual means, shall be sufficient attendance for the purpose of section 167(1)(b) of the Act.

10. Is sitting fees payable to a director who participates in a meeting through video conferencing ?[5] (i) Yes, sitting fee is payable to a director who participates in a meeting through any of two modes viz. in person or through video conferencing or any other audio visual means.

(ii) Rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 provides that such sum would be as may be decided by the Board of directors which shall not exceed one lakh rupees per meeting of the Board or the committee.

11. In respect of a meeting by Video Conferencing, due to some technical problem, the Video Recording which was done could not be retrieved. Is the meeting valid? What is the remedy?[6] (i) Rule 3(2) of the Companies (Meetings of Board and its Powers) Rules, 2014 casts duty on chairperson of the meeting and company secretary to take due and reasonable care to record proceedings and prepare the minutes of the meeting.

(ii) In case the video recording cannot be retrieved, the chairperson and company secretary should prepare the minutes on the basis of their noting and thereafter, seek confirmation of all the directors present personally or through video conferencing.

(iii) As per rule 12(b) of the Companies (Meetings of Board and its Powers) Rules, 2014, every director who attended the meeting, whether personally or through video conferencing or other audio visual means, shall confirm or give his comments in writing, about the accuracy of recording of the proceedings of that particular meeting in the draft minutes, within seven days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed.

[1]https://www.icsi.edu/media/webmodules/companiesact2013/FAQS%20ON%20THE%20COMPANIES%20ACT%202013.pdf – Question no. 99(c)

[2] https://www.icsi.edu/media/webmodules/Final_GuidancenoteonBoardofMeetingpmd.pdf – Page no. 16 and 17

[3]https://www.icsi.edu/media/webmodules/companiesact2013/FAQS%20ON%20THE%20COMPANIES%20ACT%202013.pdf – Question no. 89

[4]https://www.icsi.edu/media/webmodules/companiesact2013/FAQS%20ON%20THE%20COMPANIES%20ACT%202013.pdf – Question no. 89

[5]https://www.icsi.edu/media/webmodules/companiesact2013/FAQS%20ON%20THE%20COMPANIES%20ACT%202013.pdf – Question no. 81

[6]https://www.icsi.edu/media/webmodules/companiesact2013/FAQS%20ON%20THE%20COMPANIES%20ACT%202013.pdf – Question no. 97

Author Bio

More Under Company Law

Leave a Comment

Your email address will not be published. Required fields are marked *