Online Board Meetings Under The Companies Act, 2013
Section 173 of the Companies Act, 2013, has brought technology to the boardroom. It allows a director to participate in board meetings through video conferencing. This sounds as simple as making a video call and attending a board meeting. However, it is not that simple and a plethora of rules and regulations need to be complied with in order for such participation to be valid. We, in this post, shall talk about how an online board meeting is conducted and what are the compliances required.
What do you mean by video-conferencing?
Video-conferencing has been defined under Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014. It means an audio-visual electronic communication facility enabling people to participate in a meeting effectively and communicate concurrently without an intermediary. According to Section 173, all companies can hold board meetings via video conferencing.
Can all matters be dealt with in a board meeting through video-conferencing?
No, certain matters cannot be dealt through an online board meeting, these include:
Approval of the annual financial statements.
Approving the board’s report.
Approving the prospectus.
Approval of matters related to amalgamation, merger, demerger, acquisition and takeover.
However, please note that, if the quorum is completed by the directors who are physically present, then a director can vote on the aforementioned issues via video-conferencing.
What is the procedure to conduct an online board meeting?
The following steps are involved in conducting an online board meeting:
Notice: A notice for the board meeting needs to be sent 7 days in advance to all the directors. Inter alia, the notice shall intimate the directors regarding their option to participate through video-conferencing or other audio-visual means. Directors need to confirm in advance regarding their mode of participation.
Roll call: As a board meeting commences, a roll call is taken by the chairperson. Every director who is participating through video-conferencing or other audio-visual means is required to state their name, location, a confirmation that he/she has received the agenda and that no other person has access to the meeting.
Quorum: The chairperson shall record the names of all the directors present (including those attending through video-conferencing) and confirm if the required quorum is present for the board meeting to begin. Please note that as per Section 174 of the Companies Act, 2013, directors attending through video-conferencing or other audio-visual means are also included for the purposes of quorum.
Conduct of the meeting: Typically, every item of the business should be taken up individually. Every participant is required to identify himself/herself, before speaking. If a motion is objected, then it is required that the same be put for voting. Finally, the chairperson announces the summary and decision taken on each of the issues raised.
What are the post-meeting compliances required?
Post the meeting, the minutes of the meeting need to be recorded in a minute book and circulated among all the directors within fifteen days. Every director who was present including the directors participating through video-conferencing shall confirm the accuracy of the minutes. The minutes shall be entered into a minute book and the record of the same shall be preserved.
The facility of attending board meetings through video-conferencing or other audio-visual means is available to all companies and to all persons who may be required to attend the board meetings. This provision, enables quick conduct of board meetings, without inconveniencing directors who may be in a different geographical location.
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