Conducting business involves continuous meetings with varied persons. A company’s representative is the board of directors who is responsible for taking major decisions on behalf of the company. Therefore, it is essential for the board of directors to meet regularly to decide various matters. Sometimes, it becomes difficult for directors to meet physically at a common place as they are scattered over different locations. Also, the COVID-19 has pushed the workforce to become remote workers in many companies. Therefore, an alternative mode of video conferencing is adopted by Indian companies to call its executives at one place.
If your company is also planning to conduct board meeting through electronic means, then this article will help you to know about the guidelines prescribed in Companies Act, 2013, Companies (Meetings of Board and its Powers) Rules, 2014, and Secretarial Standard -1 on Meetings of The Board of Directors to be followed in the board meeting.
1. When to meet
Whenever any business need arises, directors can meet to arrive at a decision to be taken on behalf of the company. Statutorily, every company’s board of directors needs to meet between frequent intervals as given below.
|Type of company||Frequency|
|Private or public company||4 meetings in a calendar year with a maximum gap of 120 days in two meetings.|
|One person company with one director||No requirement to hold such meeting|
|Small or dormant company or one-person company with more than one director||1 meeting in each half of the calendar year with a maximum gap of 90 days in two meetings.|
|Section 8 company||1 meeting in each half of calendar months|
2. Measures to be taken for holding meeting through video conferencing
Different online platforms like Teams, Cisco WebEx, etc., are available for conducting online meetings. Therefore, it is of utmost importance to choose a good platform for your board meeting which also provides adequate security for data with a good connection facility. Also, companies should try to select that platform which provides a unique password to each director for joining the meeting.
The chairperson of the meeting and the company secretary, if any, shall take due and reasonable care –
- to safeguard the integrity of the meeting by ensuring sufficient security and identification procedures;
- to ensure availability of proper video conferencing equipment or facilities for providing transmission of the communications for effective participation of the directors and other authorized participants at the Board meeting;
- to record proceedings and prepare the minutes of the meeting;
- to store for safekeeping and marking the tape recording(s) or other electronic recording mechanisms as part of the records of the company at least before the time of completion of audit of that particular year.
- 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 audiovisual means; and
- to ensure that participants attending the meeting through video conferencing are able to hear and see the other participants clearly during the course of the meeting.
3. Sending notice to Board of Directors
A proper intimation through a notice to directors about convening a board meeting is required to be given at least before 7 days of the date of meeting through hand or by speed post or by registered post or by facsimile or by e-mail or by any other electronic means (email, etc.).
The notice shall state –
- the date and time of meeting.
- option of participation through video conferencing.
- agenda of the meeting.
- manner of voting.
- any other relevant information.
The director(s) who is/are interested to attend board meetings through video conferencing has to inform the company about the same. In case of no intimation, it is presumed that such a director will attend the meeting physically.
A company has to face a penalty of INR 25,000 in case it fails to provide notice of board meeting to its directors.
4. Agenda of Board Meeting
The matters to be discussed at a board meeting forms an agenda. Directors are informed about the agenda through notice. Any matter now can be placed before the board for discussion and decision through video conferencing.
Earlier, following matters were restricted to be dealt in a board meeting held through video conferencing:
- Approval of the annual financial statement;
- Approval of the Board’s report;
- Approval of the prospectus;
- Audit Committee meetings for consideration of financial statements including consolidated financial statements if any, to be approved by the board under Section 134(1) of the Act; and
- Approval of the matter relating to amalgamation, merger, demerger, acquisition, and takeover.
5. Quorum of Board Meeting
Quorum means the minimum number of directors to be present at the board meeting whether physically or through video conferencing. The quorum for a board meeting must be 1/3rd of the total number of directors or 2 directors whichever is higher.
The facility for joining the board meeting through video conferencing should be kept open at least 15 minutes before the time scheduled to start the meeting and should not be closed till the expiry of 15 minutes after such scheduled time. Once the board meeting starts, the Chairperson should take a roll call where every director participating through video conferencing will state the following details for the purposes of recording:-
- the location from where he is participating;
- that he has received the agenda and all the relevant material for the meeting; 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 (ii);
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 physically for the said meeting at the request or with the permission of the chairperson and confirm that the required quorum is complete.
The Chairperson has to ensure that the required quorum remains present throughout the meeting.
6. Voting in meeting
Upon achieving the required quorum, the meeting shall proceed to discuss items of business on agenda. Before speaking on any item, every director will identify himself for record purposes. Where a motion is objected to and voting is required, the chairperson will call the roll and note the vote of each director with his identity.
The chairperson will announce the summary of decisions taken on each item of agenda along with names of dissenting directors.
7. Minutes of meeting
Minutes are the summary of businesses transacted at the meeting. Every company is required to keep minutes of all Board Meetings in a minutes Book.
The draft minutes of the board meeting are required to be circulated among all the directors either in writing or in electronic mode as may be decided by the Board of directors within 15 days of board meeting.
After receipt of draft minutes, every director who attended the board meeting has to 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 of directors, failing which his approval shall be presumed. Thereafter, the minutes shall be entered in a minute book and signed by the chairperson.
Corporates are using the technology of video conferencing for conducting its board meetings and coming out with more collective and objective decision-making with wider participation of directors. The benefits of participation by video-conferencing are cost savings, more productivity, and time-saving in terms of reaching the venue of meeting, particularly when the concerned director(s) is/are located in another city or even another country, etc.