Ministry of Corporate Affairs (MCA) has now allowed all matters of Board to be approved through Virtual Meeting. Earlier, Rule 4 restricted some Board matters only to be passed through physical Board Meeting. This provision has been omitted now, effective 15th June, 2021
Summary of Changes under Rule 4 of Companies (Meeting of Board and its Powers) Rules, 2014
The purpose of this amendment is to completely remove/ omit the restrictions of Rule 4 which mentioned the matters not to be dealt with in a meeting through Video conferencing or other audio-visual means, and to provide companies relaxation to conduct meetings physically with necessary business transactions without any hindrance.
Effective 15th June 2021, Rule 4 has been omitted from the Companies (Meeting of Board and its Powers) Rules 2014.
Hence, all matters can now be taken up in virtual Board Meetings.
With the advent of this amendment, the matters which were kept exclusive for physical Board Meetings can now be dealt with in a meeting through video conferencing or other audio-visual means.
However, Companies will need to follow Video Conferencing guidelines laid down by MCA under Rule 3 in order to consider any virtual meeting as valid. Refer guidelines under Rule 3 here.
Prior to 15th June 2021, Rule 4 mentioned the following matters shall not be dealt with in any meeting held through video conference or other audio-visual means:
- Approval of the annual financial statement
- Approval of the Board’s Report
- Approval of the Prospectus
- Audit committee meetings for consideration of Financial Statement
- Approval of the matters relating to amalgamation, merger, demerger, acquisition and takeover
Benefits of Omission of Rule 4–
- Practically all matters can now be taken up in virtual Board Meetings held through Video Conferencing. Although MCA rules/ guidelines (Rule 3) with respect to Video Conferencing will need to be adhered to.
- This includes, Board of Directors approving Financials, Board’s Report, through video conferencing.
- Options to use online tools for holding the Board Meeting will need to be selected wisely, considering they adhere to directions laid down in Rule 3 of The Companies (Meetings of Board and its Powers) Rules, 2014.