Coronavirus is impacting the world economy at a much faster pace than imagined, forcing businesses to shut down, layoffs, forcing employees to take leave without pay and the so-called lucky ones are given work from home. In order to contain the spread of coronavirus, the government of India is adopting measures to promote social distancing. In view of the threat of contamination due to the coronavirus outbreak, the Ministry of Corporate Affairs (MCA) has allowed companies to hold meetings of their board of directors through video conferencing till June 2020.
As per a media report, a senior government official said that the move was a response to representations by industry bodies and major corporates that board members may not be able to travel due to travel restrictions.
Post the announcement. which is expected in the next few days, companies will be able to hold meetings via video conferencing for matters dealing with approval of financial statements as well as books of accounts, approval of the board’s report and approval of matters relating to mergers and restructuring.
Currently, companies are allowed to hold board meetings via video and audio conferencing, but meetings dealing with the above mentioned issues need to be held with directors physically present.
“Mergers, demergers and any restructuring are major issues for which a physical meeting is a must, but given the situation where a lot of people are reluctant to travel and the end of the financial year fast approaching, we feel it is necessary to give a relaxation in this regard,” said the government official, adding that the three month relaxation would help businesses remain compliant with rules on board meetings under the Companies Act.
The official added there are already sufficient safeguards under the companies law to ensure proper documentation of such board meetings, noting that these companies will be required to store recordings of the meetings.
“This move was much needed. It will allow companies with foreign directors or directors who do not want to travel given the circumstances to continue making key decisions including approval of financial statements which is set to come up next month,”said Ankit Singhi, partner at law firm Corporate Professionals.
As per a media report, a representative of an industry body said the industry had approached the Corporate Affairs Ministry on this issue and that this was a very timely move. “In the first week or 10 days of April, there will be a lot of board meetings and foreign directors cannot travel which would mean that the quorum of board member required may not be complete and the board would not be able to conduct business,” said the representative, adding that the availability of video conferencing as an option would allow the boards of these companies to continue functioning.
