Ministry has issued, The Companies (Meetings of Board and its Powers) Amendment, Rules 2021 passed on 15th June 2021. These Rules came into effect on 15th June 2021.
Section 173 of Companies Act, 2013 allows holding Board Meeting through physical as well as video conferencing mode. However, Rule 4 restricts some matters (mentioned below) which cant be discussed in Board Meeting through Video Conferencing.
Before the amendment, if Company wants to conduct the business mentioned under Rule 4 then the physical presence of quorum was mandatory. If a physical quorum of directors was present, then other directors were allowed to attend the meeting through video conferencing.
- Approval of financial statements;
- Approval of matter relating to merger/amalgamation;
- Approval of matter relating to takeover/acquisition;
- Approval of prospectus for issue of shares.
Extract of Amendment:
In the Companies (Meetings of Board and its Powers) Rules, 2014, rule 4 shall be omitted.
Extract of Rule 4:
(1) The following matters shall not be dealt with in any meeting held through video conferencing or other audio-visual means.-
- the approval of the annual financial statements;
- the approval of the Board’s report;
- the approval of the prospectus;
- the Audit Committee Meetings for consideration of accounts consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under subsection (1) of section 134 of the Act; and
- the approval of the matter relating to amalgamation, merger, demerger, acquisition, and takeover
Effect of Amendment:
After the above-mentioned amendment of 15th June 2021, Companies can deal with any type of matter in the Board Meeting through Video Conferencing. Now, there is no restriction on discussion on any matter in a Board meeting through video conferencing.
Whether Financial statements can be approved through video conferencing for FY. 2020-21 or onwards?
A Company can hold Board Meeting through video conferencing for any matter includes approval of financial statement on or after 15th June 2021. Financial Statement of 2020-21 and onwards can be approved in Board Meeting through video conferencing.
Increase in the responsibility of Company:
The responsibility of the Company’s management increases. If Company proposes to conduct any Board meeting through Video Conferencing, it has to maintain video recording of the same as proof of actual conduction of the meeting.
Some of the advantages of meeting through Video Conferencing are-
- The physical presence of Directors at the venue of the meeting is not required;
- Attendance to the meeting from any part of the world;
- Saving of time and traveling cost.
In this regard, the Companies should think positively about holding Board meetings through Video Conferencing subject to compliance with MCA rules.
As per amendment w.e.f. 15th June 2021 Company can hold Board Meeting through video conferencing and discuss any agenda in such meeting. There is no restriction on any agenda for BM through video conferencing.