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Procedure for Conducting Board Meeting Through Video Conferencing

Background 

  • Every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation and thereafter hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board [Section 173(1) of the Companies Act, 2013] 
  • The participation of Directors in a meeting of the Board may be either in person or 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. [Section 173 (2) of the Companies Act, 2013] 
  • Video conferencing or other audio-visual means, 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. [SS-1] 

Rule/Section/Regulation 

  • Section 173 of the Companies Act, 2013 
  • Rule 3 of the Companies (Meeting of Board & its Powers) Rules, 2014 
  • Regulation 30 and 46 of the SEBI (LODR) Regulations 2015 
  • Secretarial Standards-1 

Mandatory Requirements & Important Points 

  • The Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio-visual means. [First Proviso of Section 173 (2) of the Companies Act, 2013] 
  • Where there is quorum in a meeting through physical presence of Directors, any other director may participate through video conferencing or other audio-visual means in such meeting on any matter as specified under the first proviso as above. [Second Proviso of Section 173 (2) of the Companies Act, 2013] 
  • Every Company shall make necessary arrangements to avoid failure of video or audio-visual connection. [Rule 3(1) of the Companies (Meeting of Board & Its Powers) Rules, 2014] 
  • The Chairperson of the meeting and the company secretary, if any, shall take due and reasonable care –

(a) To safeguard the integrity of the meeting by ensuring sufficient security and identification procedures; 

(b) To ensure availability of proper video conferencing or other audio visual equipment or facilities for providing transmission of the communications for effective participation of the directors and other authorised participants at the Board meeting; 

(c) To record proceedings and prepare the minutes of the meeting; 

(d) To store for safekeeping and marking the tape recording(s) or other electronic recording mechanism as part of the records of the company at least before the time of completion of audit of that particular year. 

(e) To ensure that no person other than the concerned director are attending or have access to the proceedings of the meeting through video conferencing mode or other audio visual means; and 

(f) To ensure that participants attending the meeting through audio visual means are able to hear and see the other participants clearly during the course of the meeting. Provided that the persons, who are differently abled, may make request to the Board to allow a person to accompany him. 

Procedure for Conducting Board Meeting Through Video Conferencing [SS-1 & Rule 3 of the Companies (Meeting of Board & Its Powers) Rules, 2014] :

  • Notice of the Board Meeting shall be issued to all Directors at their registered addresses by post or hand delivery or by electronic means at least 7 days before the date of the board meeting, with provision for shorter notice in case of urgent business.  
  • The notice shall include Agenda, Notes to Agenda, and Draft Resolution.  
  • The Notice shall inform the Directors about the option available to them to participate through Electronic Mode and provide them all the necessary information to enable the directors to participate through video conferencing mode or other audio-visual means. [Rule 3(3)(b) of the Companies (Meting of the Board & Its Power) Rules, 2014] 
  • Notes on items of business which are in the nature of Unpublished Price Sensitive Information may be given at a shorter period of time than stated above, with the consent of a majority of the Directors, which shall include at least one Independent Director, if any  
  • A director intending to participate through video conferencing or audio-visual means shall communicate his intention to the Chairperson or the company secretary of the company. 
  • If the director intends to participate through video conferencing or other audio-visual means, he shall give prior intimation to that effect sufficiently in advance so that company is able to make suitable arrangements in this behalf. 
  • Any director who intends to participate in the meeting through electronic mode may intimate about such participation at the beginning of the calendar year and such declaration shall be valid for one year. Provided that such declaration shall not debar him from participation in the meeting in person in which case he shall intimate the company sufficiently in advance of his intention to participate in person 
  • In the absence of any intimation by the director it shall be assumed that the director shall attend the meeting in person. 
  • Quorum shall be checked for conducting the board meeting. Quorum is required not only at the time of commencement of business but also while transacting the business. 
  • Leave of absence shall be granted to a Director only when a request for such leave has been communicated to the Company Secretary or to the Chairman or to any other person authorized by the Board to issue Notice of the Meeting.  
  • The Chairman of the company shall be the Chairman of the Board. If the company does not have a Chairman, the Directors may elect one of themselves to be the Chairman of the Board.  
  • 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: – 

(a) Name; 

(b) The location from where he is participating; 

(c) That he has received the agenda and all the relevant material for the meeting; and 

(d) 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); 

  • After the roll call, the Chairperson or the Company Secretary shall inform the Board about the names of persons other than the directors who are present for the said meeting at the request or with the permission of the Chairperson and confirm that the required quorum is complete. 

Note: A director participating in a meeting through video conferencing or other audio-visual means shall be counted for the purpose of quorum, unless he is to be excluded for any items of business under any provisions of the Act or the rules. 

  • Every company shall maintain attendance register for the Meetings of the Board and Meetings of the Committee. For this purpose, at the commencement of the Meeting, the Chairman shall take a roll call. The Chairman or Company Secretary shall request the Director participating through Electronic Mode to state his full name and location from where he is participating and shall record the same in the Minutes. The proceedings of such Meetings shall be recorded through any electronic recording mechanism and the details of the venue, date and time shall be mentioned.  
  • With respect to every meeting conducted through video conferencing or other audio-visual means authorized under these rules, 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. 
  • Register of contracts or arrangements in which Directors are interested shall be placed before the meeting of board.  
  • If the Chairman is interested in an item of business, he shall entrust the conduct of the proceedings in respect of such item to any Non- Interested Director, with the consent of the majority of Directors present, and resume the chair after that item of business has been transacted. However, in case of a private company, the Chairman may continue to chair, be reckoned for quorum and entitled to participate in respect of such item after disclosure of his interest.  
  • 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 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. 
  • Supplementary Notes on any of the Agenda Items may be circulated at or prior to the Meeting but shall be taken up with the permission of the Chairman and with the consent of a majority of the Directors present in the Meeting, which shall include at least one Independent Director, if any 
  • Every participant shall identify himself for the record before speaking on any item of business on the agenda. 
  • If a statement of a director in the meeting through video conferencing or other audio-visual means is interrupted or garbled, the Chairperson or Company Secretary shall request for a repeat or reiteration by the Director. 
  • If a motion is objected to and there is a need to put it to vote, the Chairperson shall call the roll and note the vote of each director who shall identify himself while casting his vote. 
  • The chairman shall have a casting vote in case of equal votes.  
  • From the commencement of the meeting and until the conclusion of such meeting, no person other than the Chairperson, Directors, Company Secretary 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. 
  • At the end of discussion on each agenda item, the Chairperson of the meeting shall 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 and the draft minutes so recorded shall be preserved by the company till the confirmation of the draft minutes. 

Post Meeting Requirements 

As per Rule 3 of the Companies (Meeting of Board & Its Powers) Rules, 2014: 

  • The 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 as may be decided by the Board. 
  • Every director who attended the meeting, whether personally or through video conferencing or other audio-visual means, 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. 
  • 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. 
  • Listed companies shall disclose the outcome of the Board Meeting to the Stock Exchange within 30 minutes of Board Meeting/ 3 hours as applicable*[Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015] and on website of the Company within 2 working days from the date of passing of resolution. [Regulation 46 (3) of LODR 2015]. The listed entity may provide the exact link to the webpage of each of the recognized stock exchanges where such information has already been made available by the listed entity.  

*If the Board meeting is concluded after normal trading hours but more than 3 hours before the beginning of the normal trading hours the outcome to be disclosed within 3 hours from the closure of the board meeting.  

[It is pertinent to note that SEBI has provided timeline for disclosing events given in Part A of Schedule III of LODR as 12 hours/24 hours, however in a small note appended at the end of the said document, it’s stated that where the event emanates from a decision taken in Board Meeting, the same shall be disclosed within 30 min/3 hours as applicable as per Regulation 30(6), from the closure of the meeting as against the timeline of 12 hours] 

Punishments & Penalties  

1. As per Companies Act, 2013  

  • Section 173:  
  • Every officer of the company whose duty is to give notice under this section and who fails to do so shall be liable to a penalty of twenty-five thousand rupees.  

 

2. As per SEBI (LODR) Regulations, 2015  

  • Regulation 30:  
  1. General penalty:   

Listed entity/any other person who contravenes any provision of the regulations shall be liable for one or more of the following penalties/actions as deemed fit by the regulator:   

a) Action as per Securities Law,  

b) Fine,  

c) Suspension of trading,  

d) Freezing of promoter/promoter group holding of designated securities, as may be applicable, in coordination with depositories,  

e) Any other action specified by Board 

  • Regulation 46(3): Advisory/warning letter per instance of non-compliance per item ₹10,000 per instance for every additional advisory/warning letter exceeding the four advisory/ warning letters in a financial year.  

Disclaimer: The information contained in this Article is intended solely for personal non-commercial use of the user who accepts full responsibility of its use. The information in the article is general in nature and should not be considered to be legal, tax, accounting, consulting or any other professional advice. We make no representation or warranty of any kind, express or implied regarding the accuracy, adequacy, reliability or completeness of any information on our page/article. 

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