The Ministry of Corporate Affairs (“MCA”) amended Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 by a notification G.S.R. 409(E) dated June 15, 2021. By this amendment, the MCA relaxed restrictions on certain agenda items which were not allowed to be approved in a Board Meeting (“BM”) conducted through Video Conferencing (“VC”).
Background: Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 lists various matters which cannot be approved in a BM held through VC and require a physical BM. These matters are: (a) approval of annual accounts, (b) approval of the board’s report, (c) approval of prospectus, (d) convening of audit committee meetings for consideration of annual accounts, and (e) approval of matters pertaining to amalgamation, merger, demerger, acquisition and takeover.
Amendment: Post amendment, a physical BM is no longer compulsory to approve aforementioned items under (a) to (e). All these matters can be discussed and approved through VC as well. All necessary compliances as applicable for holding a BM through VC will remain the same.
PSA’s view: Earlier, the MCA had granted this relaxation on a temporary basis but now, the provision restricting approval of aforesaid items through VC has been removed permanently. Hence, the Government will not have to go back and forth for relaxing these items and it will also ease the holding of BMs by companies even after the pandemic.