MCA allows 180 days Gap between two consecutive Board Meetings

Gap between two consecutive Board Meetings may extend to 180 days for Quarter – April to June 2021 and Quarter – July to September 2021, instead of 120 days

In view of the difficulties arising due to resurgence of COVID-19 pandemic and request received from stakeholders, the Ministry of Corporate Affairs (“MCA”) vide its General Circular No. 08/2021 dated 03^rd May, 2021 has decided that the requirement of holding meting of Board of the Companies within intervals provided in Section 173 of the Companies Act, 2013 (120 days) stands extended by period of Sixty (60) days for first two quarters of financial year 2021-2022. Accordingly, gap between two consecutive meetings of the Board may extend to 180 days during the Quarter – April to June 2021 and Quarter – July to September, 2021, instead of 120 days as required in the Companies Act 2013.

Section 173 of the Companies Act, 2013 (“the Act”) mandates that a minimum of Four (4) board meetings have to be held in a year with a gap of not more than 120 days between any consecutive two meetings. Please read the provision of Section 173 of the Act as under:-

173(1): every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board.

Now after MCA General Circular No. 08/2021 dated 03^rd May, 2021 it is stated that the period of 120 days shall be counted as 180 days till the next two quarters i.e. Quarter – April to June 2021 and Quarter – July to September, 2021. More clarity, if any Board Meeting is going to be held in between 1^st April 2021 to 30^th September 2021, the period of 120 days mentioned in Section 173 of the Act shall be read as 180 days.

Relaxation by MCA in Financial Year 2020.

It is submitted that MCA had taken special measures under Companies Act, 2013 and Limited Liability Partnership Act, 2008 in view of the COVID -19 outbreak vide General Circular No. 11/ 2020 dated 24^th March, 2020.

In order to support and enable Companies and Limited Liability Partnerships (LLPs) in India to focus on taking necessary measures to address the COVID-19 threat, including the economic disruptions caused by it, some measures have been implemented by the MCA to reduce their compliance burden and other risks. In Para II of the said Circular-

“The mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (CA13) (120 days) stands extended by a period of 60 days till next two quarters i.e., till 30th September. Accordingly, as a one-time relaxation the gap between two consecutive meetings of the Board may extend to 180 days till the next two quarters, instead of 120 days as required in the CA-13.”

Accordingly, if any Board Meeting was held in between 1^st April 2020 to 30^th September 2020, the period of 120 days mentioned in Section 173 of the Act was read as 180 days.

*****

Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.