Ministry of Corporate Affairs (‘MCA’) has, vide its recent Notification No. GSR 409(E) dated June 15, 2021, notified the amendment in Companies (Meetings of Board and its Powers) Rules, 2014. By the said amendment,Rule 4 has been permanently deleted. Please note that Section 173 of Companies Act, 2013 (‘CA, 2013’) allows to hold Board Meeting through physical as well as video conferencing mode. But, Rule 4 restrict some matters which cannot be discussed in Board Meeting through video conferencing.As per above amendment,w.e.f. 15th June, 2021 a company can hold Board Meeting through video conferencing and discuss any agenda in such meeting. There is no restriction onany agenda for Board Meeting through video conferencing.

It is pertinent to mention herein that to curb the difficulties for corporates to conduct their Board Meetings during an outbreak of the Covid Pandemic, MCA had granted relaxation from the above restriction in a phased manner from March, 2020 to June 30, 2021 by issuing following Notifications.

1. G.S.R. 186 (E), dated the 19th March, 2020;

2. G.S.R. 395 (E), dated the 23rd June, 2020;

3. G.S.R. 590 (E), dated the 28th September, 2020; and

4. G.S.R. 806 (E), dated the 30th December, 2020.

Now, the said restriction under Rule 4 is permanently deleted.

Provision of Section 173 of the Companies Act, 2013 and Rules thereto

Section 173 of the CA, 2013 mandates that a minimum of 4 board meetings have to be held in a year with a gap of not more than 120 days between any two meetings. Such meetings may be attended by the directors either in person or through video conferencing or other audio-visual means which are capable of recording and recognising the participation of the directors and recording and storing the proceedings of such meetings along with date and time.

Please read the provision of Section 173 of the CA, 2013 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.

Provided that the Central Government may, by way of notification, direct that the provisions of this sub-section shall not apply in relation to any class or description of companies or shall apply subject to such exceptions, modifications or conditions as may be prescribed in the notification.

(2) the participation of directors in a meeting of the Board may be either in person or through video conferencing or other audio visual means, as may be prescribed, which are capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meeting along with date and time.

Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio-visual means.

Provided further that where there is quorum in a meeting through physical presence of directors, any other director may participate through video conferencing or other audio-visual means in such meeting on any matter specified under the first proviso.

(3) XXXXX

(4) XXXXX

(5) XXXXX…..”

With the above, it is clear by first proviso to sub-section (2) of Section 173 of the CA, 2013 that Central Government may notify the matters which shall not be dealt with a meeting through video conferencing or other audio-visual means. So, there are certain matters which cannot be dealt with in any meeting held through video conferencing. Rule 4 of the Companies (Meeting of Board and its Powers) Rules, 2014 provides that

“The following matters cannot be dealt with in any meeting held 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 Meeting for consideration of financial statement

v. The approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

Provided that where there is quorum in a meeting through physical presence of directors, any other director may participate through video conferencing or other audio-visual means.

Relaxation provided by MCA through Notifications: –

1. G.S.R. 186 (E), dated the 19th March, 2020.

To deal with the precarious situation due to outbreak of Covid-19, MCA had 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.

MCA vide its Notification No. G.S.R. 186 (E), dated the 19th March, 2020 had 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.19th March, 2020.

Rule 4 of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020hadbeen renumbered existing Rule 4 with Sub-rule (1) thereof and after sub-rule (1) as so renumbered, the following sub-rule (2) had been inserted, namely: –

“For the period beginning from the commencement of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and ending on the 30 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”.

With the amendment,the then existing Rule 4 as Rule 4(1) states that

“The following matters which shall not be dealt with in any meeting held 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 Meeting for consideration of financial statement

v. The approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

Provided that where there is quorum in a meeting through physical presence of directors, any other director may participate through video conferencing or other audio-visual means.

With the above amendment, the Companies, till 30th June, 2020,could take the above matters (as mentioned in Rule 4(1) now) on a Board Meeting conducted through video conferencing or other audio-visual means in accordance with Rule 3 of the Companies (Meeting of Board and its Powers) Rules, 2014.

2. G.S.R. 395 (E), dated the 23rd June, 2020.

MCA vide Notification No. G.S.R. 395(E) dated 23rd, June, 2020had further relaxed the requirement of holding Board meetings with physical presence of directors under Section 173(2) read with Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 for approval of the annual financial statements, Board’s report, etc. Such meetings could be held till 30th September, 2020, through video conferencing or other audio-visual means by duly ensuring compliance of Rule 3 of the said rules.

In exercise of the powers conferred by sections 173, 177, 178 and section 186 read with section 469 of the Act, the Central Government had further amended the Companies (Meetings of Board and its Powers) Rules, 2014, namely:

“In the Companies (Meetings of Board and its Powers) Rules, 2014, in rule 4 in sub-rule (2), for the figures, letters and word “30th June, 2020”, the figures, letters and word “30th September, 2020”shall be substituted.”

3. G.S.R. 590 (E), dated the 28th September, 2020.

MCA vide Notification No. G.S.R. 590(E) dated 28th September, 2020 had again relaxed the requirement of holding Board meetings with physical presence of directors under Section 173 (2) read with Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 for approval of the annual financial statements, Board’s report, etc.for the period from 19th March 2020 and ending on 31st December, 2020.

In exercise of the powers conferred by sections 173, 177, 178 and section 186 read with section 469 of the Act, the Central Government had further amended the Companies (Meetings of Board and its Powers) Rules, 2014 as Companies (Meetings of Board and its Powers) Third Amendment Rules, 2020 as under-

“In the Companies (Meetings of Board and its Powers) Rules, 2014, in rule 4, in sub-rule (2), for the figures, letters and word “30th September, 2020”, the figures, letters and word “31st December, 2020” shall be substituted.”

4. G.S.R. 806 (E), dated the 30th December, 2020.

Subsequently, MCA vide Notification No. G.S.R. 806(E) dated 30th December, 2020 had relaxed the requirement of holding Board meetings with physical presence of directors under Section 173 (2) read with Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 for approval of the annual financial statements, Board’s report, etc.for the period from 19th March 2020 and ending on 30th June, 2021.

In exercise of the powers conferred by sections 173, 177, 178 and section 186 read with section 469 of the Act, the Central Government had further amended the Companies (Meetings of Board and its Powers) Rules, 2014 as Companies (Meetings of Board and its Powers) Third Amendment Rules, 2020 as under-

“In the Companies (Meetings of Board and its Powers) Rules, 2014, in rule 4, in sub-rule (2), for the figures, letters and word “31st December, 2020”, the figures, letters and word “30th June, 2021” shall be substituted.”

Note: Please also read my Article dated 6th May, 2021 title as MCA allows 180 days gap between two consecutive Board Meeting at.taxguru.in.

*****

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.

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