Board Meeting through Video Conferencing under Companies Act 2013

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.

For most of the previous century, quorum meant a Director physically present at the Meeting. Latest technologies and specifically the Information Technology Act, 2000 made it possible for director to attend meeting via video conferencing. However, 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. 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.

What is Video-conferencing?

Rule 3 of The Companies (Meetings of Board and its Powers) Rules, 2014 defines Video conferencing or other audio-visual. 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 (the Act) read with Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014 (the Rules), 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 -

1. the approval of the annual financial statements;
2. the approval of the Board's report;
3. the approval of the prospectus;
4. 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
5. 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 proviso.

For E.g.: If ABC Limited has 8 Board Members and quorum is 3 Directors which are present at the venue of meeting. Remaining Director can attend meeting through VC even if the agenda item included any of the 5 agenda point. Which prior to the recent amendment were not allowed via VC.

PROCEDURE

Notice of Board Meeting:

The notice of the meeting shall be sent to all the directors 7 days in advance as per section 173 (3) of the Act and the notice shall inform the directors regarding the option available to them to participate through video conferencing mode or other audio-visual means and shall provide all the necessary information to enable the directors to participate through video conferencing mode or other audio-visual means.

Important points to remember for notice of Board Meeting:

1. The notice of the meeting shall inform the Directors regarding the option available to them to participate through video conferencing mode.
2. The notice shall also contain all the necessary information to enable the directors to participate through video conferencing mode. Like: contact no. or e-mail address of the Chairman or any other person authorized by the Board, to whom the Director shall confirm in this regard.
3. Notice shall seek advance confirmation from the Directors as to whether they will participate through Electronic Mode in the Meeting.
4. Director who intends to participate through video conferencing shall give prior intimation to Chairman of the Company (In the absence of intimation it shall be assumed that Director will attend in person).
5. Notice shall clearly mention the venue of the Meeting and it shall be the place where all the recordings of the proceedings at the Meeting would be made.

Who can participate in meeting through video conferencing or other audio-visual means

1. Chairperson,
2. Directors,
3. Company Secretary; and
4. Any other person whose presence is required by the Board

The responsibility of the Chairman and Company Secretary of the Meeting:

The Chairperson/ Secretary shall take due and reasonable care –

1. To safeguard the integrity of the meeting.
2. To ensure availability of proper video conferencing or audio-visual facility.
3. To record proceedings and prepare minutes of the meeting.
4. To store, safekeeping and marking recordings of the meetings before the time of completion audit of that particular year.
5. To ensure that only concerned directors are attending the meeting.
6. To ensure that the required quorum is present throughout the meeting.
7. To ensure that participants are able to hear and see the other participants clearly during the course of the meeting.
8. To ensure that notice of the meeting shall be sent to all the directors in accordance with the provisions of section 173(3) of the Act.

Points to be observed before the meeting

STEP 1: Roll Call

A roll call should be taken at the commencement of the meeting by the Chairperson/ Secretary of the Company.

At the commencement of the meeting, a Roll Call shall be taken by the Chairperson when every director participating through video conferencing or other audio-visual means shall state, for the record, the following namely:-

• Name;
• The location from where he is participating;
• That he has received the Agenda and all the relevant material for the meeting (Like: Draft Resolutions, Notes to Agenda etc) and
• That no one other than the concerned director is attending or having access to the proceedings of the meeting at the location mentioned in clause (b)

STEP 2: Chairman or CS to read out names of the person attending.

1. The Chairperson /Secretary shall then read out the names of persons (other than the Directors who are present at the meeting) to assist/guide/witness the proceedings of the Meeting the Board. (A Non-Director could attend at the request/permission of the Chairperson.)
2. The attendance register shall be deemed to have been signed by the Directors participating through Electronic Mode, if their attendance is recorded by the Chairman or the Company Secretary in the Attendance Register and the Minutes of the Meeting.

STEP 3: Requirement of Quorum

1. The Chairperson /Secretary shall confirm that the required quorum is present throughout the meeting.
2. The statutory registers which are required to be placed in the Board meeting as per the provisions of the Act shall be placed at the scheduled venue of the meeting.

STEP 4: Transaction during Meeting

1. Each item of business should be taken up one by one as per the Agenda specified in the Notice.
2. Every participant shall identify himself for the record before speaking on each item of business on the agenda.
3. If a statement of a director in the meeting is interrupted or garbled, the Chairperson or Company Secretary shall request for a repeat or reiteration by the Director.
4. If a motion is objected to and there is a need to put it to vote, the Chairperson shall call the roll that is to say that he shall first announce that he shall be doing the roll call and call out the name of each director who shall identify himself while casting his vote and the Chairperson shall then note the vote of each director.
5. The Chairperson shall then announce the summary of the decision taken on such item along with names of the directors, if any, who dissented from the decision taken by majority.

Post Meeting Compliance / Minutes

• After completion of the meeting, the minutes shall be entered in the minute book as specified under section 118 of the Act and signed by the Chairperson and minutes shall disclose the particulars of the directors who attended the meeting through video conferencing or other audio-visual means.
• The draft minutes of the meeting shall be circulated among all the directors within fifteen days of the meeting either in writing or in electronic mode, which includes fax or e-mail, as may be decided by the Board.
• Every director who attended the meeting, whether personally or through VC shall confirm or give his comments in writing, about the accuracy of recording of the proceedings of that particular meeting in the draft minutes, within seven days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed.
• Finally the minutes shall be entered in the minute book as specified under section 118 of the Act and signed by the Chairperson

Preservations of Records:

I. The recording of attendance of Meetings through Electronic Mode shall be preserved for a period of at least 8 Financial Years (FY) and can be destroyed thereafter only with the approval of the Board.

II. Minutes of all Meetings shall be preserved permanently.

III. Office copies of Notices, Agenda, Notes on Agenda and other related papers shall be preserved in good order in physical for as long as they remain current or for 8 FY, whichever is later and can be destroyed thereafter with the approval of the Board

Other important points

1. Place of Meeting: The scheduled venue of the meeting as set forth in the notice convening the meeting, shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting shall be deemed to be made at such place.
2. Statutory registers which are required to be placed in the Board meeting as per the provisions of the Act shall be placed at the scheduled venue of the meeting and where such registers are required to be signed by the directors, the same shall be deemed to have been signed by the directors participating through electronic mode, if they have given their consent to this effect and it is so recorded in the minutes of the meeting.
3. From the commencement of the meeting and until the conclusion of such meeting, no person other than the Chairperson, Directors and any other person whose presence is required by the Board shall be allowed access to the place where any Director is attending the meeting either physically or through video conferencing without the permission of the Board.
4. The attendance register shall be deemed to have been signed by the Directors participating through Electronic Mode, if their attendance is recorded by the Chairman or the Company Secretary in the Attendance Register and the Minutes of the Meeting.

About Author: CS Jigar Shah is the Founder and Partner at JMJA & Associates LLP. With over 10 years of work experience in various listed companies and conglomerates, CS Jigar Shah has a rich and varied experience in his portfolio.

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Read about the important points that one must take care of before conducting a Board Meeting though Video Conferencing here