Salient features of the compliance requirements
The Circular defines “electronic mode” to mean video conferencing facility i.e. audio-visual electronic communication facility (VCF) employed which enables all persons participating in that meeting to communicate concurrently with each other without intermediary and to participate effectively in the meeting.
The Circular clarifies that directors of a company may participate in a Board Meeting under the provisions of the Act through electronic mode and such participation will be counted towards quorum requirements.
For holding Board Meeting through electronic mode, a company shall comply with the following in addition to compliance required under the Act:
e. If a statement of a participant in the meeting via VCF is interrupted or garbled, the Chairman or Secretary shall request for a repeat or reiteration, and if need be, the Chairman or Secretary shall repeat what he heard the participant was saying for confirmation or correction.
b. After the roll call, the Chairman / Secretary may certify the presence of quorum.
c. Roll call should also be made at the conclusion of the meeting or at re-commencement of the meeting after every break to ensure presence of quorum throughout the meeting.
5. Subject to Articles of Association of the company, a Board Meeting which cannot be held for lack of quorum automatically stands adjourned to the next week on the same day, time and place. The Circular provides that in case of such automatic adjournment of a Board Meeting through VCF for the purpose determining place of meeting, place where the Chairman or Secretary is sitting during the Board Meeting shall be taken as the place of the meeting.
6. The statutory registers which are required to be placed before the Board in the Board Meeting as per the provisions of the Act shall be placed before the Chairman for compliance of the Act. The statutory register required to be signed by the other directors shall be deemed to have been signed by the directors participating through VCF, if they have given their consent to this effect in that meeting.
7. If a motion is objected to and there is a need to vote, the Chairman/ Secretary should call the roll and note the vote of each director who should identify himself.
8. At the end of the Board Meeting, the Chairman of the meeting shall announce the summary of the decisions taken at the meeting in respect of each agenda item and names of the directors who have consented to or dissented to those decisions. Video recording of that part of the meeting shall be preserved for 1 year from the conclusion of that meeting.
9. The draft minutes of the Board Meeting shall be circulated in soft copy within 7 days of the meeting for comments / confirmation to directors who attended the meeting. Thereafter, the minutes shall be entered into the minute books as prescribed under section 193 of the Act. The minutes shall also contain details relating to:
a. Mode of attendance of each director during the last 3 Board Meetings, whether personally or through VCF;
b. Particulars of directors who attended the Board meeting through VCF.
Conclusion – Legal recognition to participation at the Board Meeting through VCF will allow directors of multinational companies, Joint venture companies and other companies who may be at different locations to participate in Board Meetings. The Circular provides safeguards to be taken and procedures to be followed by the company for conducting Board Meeting through VCF. This is a change that will increase transparency and orderly compliance.
To take benefit of this Circular a company may require to review their Articles of Association which may contain specific procedure with regard to holding of Board Meetings.
