Board Meeting through Video Conference.

Board Meeting through Video Conferencin

Board Meeting through Video Conference

Major provisions relating to Video Conferencing and provisions a Company need to comply to hold a Board Meeting via Video Conferencing is explained in this article. The specific provision in Companies Act, 2013 was inserted via Section 173, Section 174 and the Rules brought clarity to the Video Conferencing provisions. However, it is not as simple as calling a Board Member using Facetime or WhatsApp Call will be counted as a Video Conferencing under the Act.

Section 173(2) of Companies Act, 2013 (The Act) read with Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014 (The Rules), 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 recognizing the participation of the directors and of recording and storing the proceedings of such meetings along with date and time.

What is Video-conferencing?

As per definition “Video conferencing or other audio-visual 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.”

Who can hold meeting through Video Conferencing (VC) under the Act?

As per Section 173(2) of Companies Act, 2013, Every Company can hold a Board Meeting through video conferencing or other audio-visual means, which are capable of recording and recognizing the participation of the directors and of recording and storing the proceedings of such meetings along with date and time. The complete process for conducting of Board Meeting through video conferencing is prescribed under Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014 read with Secretarial Standard – 1 (SS-1).

MATTERS NOT TO BE DEALT WITH IN A MEETING THROUGH VC –

a) the approval of the annual financial statements;

b) the approval of the Board’s report;

c) the approval of the prospectus;

d) the Audit Committee Meetings for consideration of financial statement including consolidated financial statement if any, to be approved by the board under sub-section (1) of section 134 of the Act; and

e) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

IMPORTANT UPDATE:

While earlier certain agenda were not allowed to be transacted in the Board Meeting via VC. Companies Amendment Act, 2017 (effective from May 07, 2018) has added an important clarification. As per the recent amendment where there is a quorum in a meeting through the 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 provision.

Notice for Board Meeting

As per Companies Act Section 173(4) “A meeting of the Board shall be called by giving not less than 7 days’ notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means

Provided that a meeting of the Board may be called at shorter notice to transact urgent business subject to the condition that at least one independent director, if any, shall be present at the meeting.

Provided further that in case of absence of independent directors from such a meeting of the Board, decisions taken at such a meeting shall be circulated to all the directors and shall be final only on ratification thereof by at least one independent director, if any.”

  • A meeting of the Board shall be called by giving not less than 7 days notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means.
  • A meeting of the Board may be called at shorter notice to transact urgent business subject to the condition that at least 1 independent director if any shall be present at the meeting.
  • In case the independent directors are absent from such a meeting of the Board, decisions taken at such meeting shall be circulated to all the directors.

Guidelines for Notices of Meeting

  • It should be delivered to the right participants. Only individuals whose presence is required should be informed of the meeting.
  • State important details. The date, time, and venue of the meeting should be clearly stated.
  • Include items of business. …
  • Give an advance notice to participants.

The manner of Participation by Directors

As per Companies Act Section 173(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 meetings 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.”

  • The participation of Directors in a meeting of the Board may be either in person or through video conferencing or other audio-visual means.
  • It is provided that 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.

Key points for an effective board meeting:

a) Prepare a clear and specific agenda.

b) Prepare meeting documents, board packs, and other references.

c) Stick to the agenda.

d) Ensure that facilities and tools are in order.

e) Record important points and action items and have a secure filing / archiving scheme

What do you mean by Quorum?

Definition: The minimum number of voting members that must be in attendance at a meeting of an organization for that meeting to be regularly constituted. A quorum is the number or proportion of the members of an organization that must be present in order to transact any business.

Who can sign the minutes of board meeting?

Minutes of the Meeting of the Board should be signed and dated by the Chairperson of the Meeting or the Chairperson of next Meeting.

Such Minutes may be signed by the Chairperson of the Meeting at any time before the next Meeting is held.

WHAT ARE THE ESSENTIALS OF A VALID BOARD MEETINGS?

If the business transacted at a meeting is to be valid and legally binding, the meeting itself must be validly held. A meeting will be considered to be validly held, if:

a) It is properly convened by proper authority.


b) Proper notice must be served. (Sec. 101 and Sec. 102 of the Companies Act, 2013)

c) Proper quorum must be present in the meeting. (Sec. 103 of the Companies Act, 2013)


d) Proper chairman must preside the meeting. (Sec. 104 of the Companies Act, 2013)


e) Business must be validly transacted at the meeting.

f) Proper minutes of the meeting must be prepared. (Sec. 118 and 119 of the Companies Act, 2013)

Chairman of a Meeting: ‘Chairman’ is the person who has been designated or elected to preside over and conduct the proceedings of a meeting. He is the chief authority in the conduct and control of the meeting.

Agenda of Meetings: The word ‘agenda’ literally means ‘things to be done’. It refers to the programme of business to be transacted at a meeting. Agenda is essential for the systematic transaction of the business of a meeting in the proper order of importance. It is customary for all organisations to send an agenda along with the notice of a meeting to all members. The business of the meeting must be conducted in the same order in which the items are placed in the agenda and the order can be varied only with the consent of the meeting.

Minute: Minute of a meeting contains a fair and correct summary of the proceedings of a meeting. Minutes must be prepared and signed within 30 days of the conclusion of the meeting. The minute books of meetings must be kept at the registered office of the company or at such other place as may be approved by the board.

Proxy: The term ‘proxy’ is used to refer to the person who is nominated by a shareholder to represent him at a general meeting of the company. It also refers to the instrument through which such a nominee is named and authorised to attend the meeting.

Matters to be included in Board reports for OPC and Small Company

Once you have registered an OPC, there are a lot of compliances such as board reports and their particulars that need to be maintained to ensure smooth functioning of the company.

Matters OPC and small companies should include in board reports:

  • The web address, if any, where Annual Return referred to in sub-section (3) of section 92 has been placed.
  • The number of Board meetings during the year.
  • Directors’ Responsibility Statement.
  • Details in respect of frauds reported by auditors under section 143(12) other than those which are reportable to the Central Government.
  • Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.
  • The state of the company’s affairs.
  • The financial summary or highlights.
  • Material changes from the date of closure of the financial year in the nature of a business and their effect on the financial position of the company.
  • The details of directors appointed or have resigned during the year.
  • The details or significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.
  • The Board’s report shall also contain the particulars of contracts or arrangements with related parties referred to in Section 188(1) in Form AOC-2.

Disclaimer:

The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. Company suggestion shall not be responsible for any loss whatsoever sustained by any person who relies on this material.”

With the COVID-19 pandemic, Board Meetings though Video Conferencing has become quite the norm.

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CS Deepa Sharma

Author is a associate member of the Institute of Company Secretaries of India (ICSI) and apart from that she holds LLB degree and Master in Commerce degree from Rajasthan University. She is having over 5 years of experience as a Practicing Company Secretary. She is well versed with all the matters related to Company Law and ROC matters, RERA , statutory reporting, Compliance Report and Corporate Governance. She is having good exposure in maintaining secretarial records as prescribed under Companies Act, 2013.


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