Recent Changes in the Companies Act w.r.t Board Meetings

CONDUCTING BOARD MEETINGS THROUGH VIDEO CONFERENCING AND OTHER AUDIO VISUAL MEANS - RECENT CHANGES IN THE COMPANIES ACT

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 16^th 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:

Matters not to be dealt with through Video Conference

The following matters shall not be dealt with in any meeting held through video conferencing or other audio visual means –

1. The approval of the Annual financial statement and consolidated Fin. St. (FS)
2. The approval of the Board's report,
3. The approval of the prospectus,
4. The Audit Committee Meetings for consideration of FS including consolidated FS to be approved by Board u/s 134(1); and
5. Approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

Implications of the amendment

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 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 30^th 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 all together. This means from hence forth 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 at through VC & OAVM.

The author is an associate member of the ICSI, and Govt of India certified GST practitioner a law and an MBA finance graduate having four years of experience dealing with matters related to the Companies Act, GST and FEMA He is a mentor for various start ups, MSME's and corporate law consultant for MNC'S. The author is based in Hyderabad and can be reached out on mail id: cskarthikp7@gmail.com