The Ministry of Corporate Affairs has vide its notification dated 19th March 2020 ameliorated the Companies (Meetings of Board and its Powers) Rules, 2014. The Rules are hereby called as Companies (Meetings of Board and its Powers) Amendment Rules, 2020.In addition to the existing amendment the Ministry of corporate affairs has again amended the Rule 4(2) of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 dated 23rd June 2020 and 31st December 2020
The MCA has amended the said rules as palladium against the outbreak of Novel Coronavirus (COVID-19) across the world.
As the Companies which are registered in India have Indian as well as foreign directors, thus, the MCA has easedthe above said rules and has allowed the meeting of Board of Directors through video conferencing on the matters which were restricted in the Act and Rules.
What does video conferencing or other audio-visual means?
“Video conferencing or other audio-visual means” means audio- visual electronic communication facility employed which enables allthe participants (that can be Auditor/Director/ Special Invitee) in a meeting to communicate concurrently with each other without any intermediary and to participate effectively in the meeting.
Under Rule 4 of Companies (Meetings of Board and its Powers) Rules, 2014 the following matters have been restricted to be transacted through Video Conferencing mode:
- the approval of annual financial statements
- the approval of the Board’s report
- the approval of the prospectus
- Audit Committee Meetings for consideration of the financial statement including the consolidated financial statement if any, to be approved by the board under section 134(1) of the Companies Act and
- the approval in the matter relating to amalgamation, merger, demerger, acquisition and takeover.
However, pursuant to the aforementioned amendment, the meetings of Board of Directors for the above said matters can also be held through video conferencing mode till 31stDecember 2020 which was further extended to 30th June 2021.
Also, the meetings held through VC have to be in compliance with Rule 3 of Companies (Meetings of Board and its Powers) Rules, 2014.
Key points to be noted:
- Is notice of Board meetings to be held through Video Conferencing given?
Yes, The notice of the meeting shall be sent to all directors (or any other person as specified in act) in accordance with the provisions of sub-section (3) of section 173 of the Act.
- Areminutes are prepared for Board meetings held through video conferencing mode or not?
Yes, Pursuant to Rule 3 of Companies (Meetings of Board and its Powers) Rules, 2014 every company holding a meeting through Video Conferencing mode must record the proceedings and prepare the minutes of the meeting.
- Are the draft minutes circulated amongst the directors for their approval or comments?
Yes, Pursuant to sub-rule 12 of Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014 the draft minutes are circulated amongst the directors within fifteen days of the meeting for their approval and directors have to within seven days or such reasonable time as decided by the Board, give their approval, or communicate their comments.
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Posted by: CA Neetu Saini