It was in 2011 that the Government of India, through the Ministry of Corporate Affairs (MCA), permitted holding of Board and Board Committee meetings through video conference. The change was meant to introduce green initiatives into corporate governance1. The notification provided compliance requirements for video conference based board and board committee meetings.
A condition imposed in 2011 by the MCA was to ensure audio and video recordings of the meetings were made available. Guidance was provided on what to do if the recording was garbled and responsibilities assigned to the Chairman of the meeting and the Company Secretary.
A few years later, the guidance was revised and refined. Some matters as listed below could only be considered at a physical board meeting 2:
- The approval of the annual financial statements
- The approval of the Board’s report
- The approval of the prospectus
- 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
- The approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover
Now, COVID-19 has forced the MCA to allow Boards to take up the prohibited items at a Board Meeting held through video conference. However the relaxation is only up to June 2020.
Over the years, companies had made arrangements for recording their meetings in the board rooms. Now, with COVID-19 they need to take away the dependence on board room infrastructure. Instead, they need to quickly put new infrastructure in place that allows Board Members to attend from anywhere as well as record the entire meeting as required by the government.
Fortunately, with the introduction of technologies such as Zoom and Microsoft Teams, it has become very easy to hold these meetings. Companies are investing in the necessary infrastructure for a smooth and proper conduct of their Board and Board Committee meetings. COVID-19 had created the need and the opportunity. I am certain the MCA and the Institute of Company Secretaries of India will take cognizance that situations like COVID-19 may occur in the future as well and fresh guidance will be created in the light of these developments, allowing even the prohibited items.
From a cost and administrative convenience point of view, I am certain companies will embrace the changes provided the onerous compliance conditions for meetings by video conference are completely relaxed.