The Ministry of Corporate Affairs vides its notification dated 15th June 2021 further amended the Companies (Meetings of Board and its Powers) Rules, 2014 and makes rules, the Companies (Meetings of Board and its Powers) Amendment Rules, 2021.
This governing step of ministry ensures the businesses, carry on their important matters to be dealt with the aid of technology and reduces the hurdles faced by an entity in a long way.
Through this amendment, rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 has been omitted which deals with the restriction of conducting Board Meeting through Video Conferencing/Other Audio-Visual Means for selected agenda items.
Conducting Board Meetings Through Video Conferencing and Other Audio-Visual Means
The COVID-19 pandemic had a profound impact on human lives to a great extent. Simultaneously it also has changed the ways and means of doing business in India. The recent amendment of Companies (Meeting of Board and Its Powers) Amendment rules, 2021 dated 16th June 2021 is the right move by the Ministry of Corporate Affairs which will further ease the conduction of board meetings through VC & OAVM. By this amendment, the ministry has omitted Rule 4 of companies (meetings of board and its powers), rules 2014. The omitted rule read as follows:
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 statement and consolidated Financial Statement (FS)
- The approval of the Board’s report,
- The approval of the prospectus,
- The Audit Committee Meetings for consideration of FS including consolidated FS to be approved by Board u/s 134(1); and
- Approval of the matter relating to amalgamation, merger, demerger, acquisition, and takeover.
Earlier companies (amendment) act, 2017 has relaxed certain provisions of this rule where it stated that where there is a physical quorum for the board meeting, then the matters mentioned in the rule – 4 can be dealt with through VC by the remaining directors.
But the pandemic has forced the MCA to grant further relaxations wherein the companies are allowed to hold board meetings, discuss and vote upon all the items including the items of the above-mentioned rule 4 till 30th June 2021.
However, by recognizing the severe pandemic conditions that are prevailing in the country the ministry came out with a recent amendment wherein the entire rule 4 has been omitted altogether. This means from henceforth the board can deal, discuss and vote on any matters including the items in rule 4 through VC.
However, the companies should follow all other applicable provisions of section 173 and secretarial standards – 1 (board meetings) mandatorily which prescribes the procedures and safeguards to be taken while conducting the board meetings through VC & OAVM.
Due to the COVID pandemic, MCA granted relaxation for conduction meetings through VC till 30th June 2021, which now permanently allows virtual resolutions on matters referred to in rule 4.
Boards of Directors of the Companies can now approve annual financial statements, Board’s report, Prospectus, and matters related to mergers, amalgamations, at meetings held through video conferencing