This was a long-awaited (maybe hated) one-liner:
“In the Companies (Meetings of Board and its Powers) Rules, 2014, rule 4 shall be omitted.”
In much-hyped digital India and the digital economy, this was a bureaucratic legacy. In the early days of digitalization, neither top government officers nor senior directors were comfortable with the digital display of papers. Even when Indian companies and directors start showing comfort with online meetings, some matters were reserved for physical board meetings. We love a gathering and get-together too.
Rule 4 lists particular items which should be discussed in a physical board meeting only.
| Original as on 1 April 2014 | As on 14 August 2014 |
| (i) the approval of the annual financial statements; (ii) the approval of the Board’s report; (iii) the approval of the prospectus; (iv) the Audit Committee Meetings for consideration of accounts; and (v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover. | (i) the approval of the annual financial statements; (ii) the approval of the Board’s report; (iii) the approval of the prospectus; (iv) 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; and (v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover. |
One significant change came into force on 7 May 2018 when relief was granted to attend a board meeting by directors not physically present at the venue, where the quorum is present at the venue of the physical meeting. The provision read:
“Where there is quorum presence in a meeting through the physical presence of directors, any other director may participate conferencing through video or other audiovisual means.”
This relief was drafting or interpretation hardship. What was the position of directors present through video or other audiovisual means? Where they actually or legally present? If yes, will they be counted for quorum? If not counted for the quorum, will they be able to express their opinion? Will they vote?
Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 was paused on 19 March 2020. Finally, it could not survive from COVID – 19.
Before that, it hoped for a life revival on 30 September 2020, 31 December 2020 and finally on coming 30 June 2020. A stroke of mighty killed it on 15 June 2021.
What now?
Now, the deletion of Rule 4 paved the way for a full digital Board for companies. There is no legal restriction to have a digital meeting.
Soon, board rooms may not be in our corporate houses. Not only that, the hospitality industry may miss some of its frequent visitors. Their meeting rooms may be reshaped as shared offices.
One corporate feature we will not miss surely – a destination board meeting. I hope some of our clients will invite us for a destination board meeting in the year 2022.
FULL DIGITAL BOARD
AishMGhrana 