Using Video Conference for Board and General Meetings in India
By Gunjan Sinha, Associate, Business Advisory Services, Dezan Shira & Associates
Mar. 11 – With the advent of high-capacity broadband telecommunication systems in India, along with constantly evolving computer processors and video compression techniques, video conferencing has become a regular and popular feature for businesses across the country.
The regular use of video-conferencing has lead to the increased involvement of people who are now able to participate in meetings and communicate via audio and video channels without the need for an intermediary or actually being physically present at the meeting.
After having received notices from various administrative bodies to legitimately recognize the participation in board meetings, shareholders meetings and general meetings through video conference, the Ministry of Corporate Affairs (MCA) finally took the initiative to incorporate digital means for the deliverance of official notices (i.e., the digital delivery of board meeting notices and the actual holding of board meetings electronically via video conference).
The reason the MCA decided to incorporate such digital means was to increase participation at these meetings, to curb costs borne by shareholders who attended these meetings, and to expedite the meeting procedures.
Board meeting notices are also now allowed to be dispatched through electronic means to all directors per section 13 of the 2000 Information Technology Act (i.e., notices shall inform the directors about the meeting being held electronically, seek confirmation of attendance from the director (either electronically or physically) and must contain the email address or contact numbers of the authorized person).
Company shareholders readily welcomed the announcements made by the MCA. The use of technology to hold virtual meetings will provide flexibility and increase the participation of company shareholders scattered throughout the country. However, an added risk is that these companies will now have to be careful of security threats that may arise out of holding virtual meetings.
Provisions regarding the convening of meetings
A company must comply with the following requirements and procedures in addition to the normally listed procedures for the convening of a board meeting:
1. Each Director must personally attend at least one board meeting per financial year;
2. The Chairman and/or Secretary shall have the following responsibilities:
a. Ensuring the integrity of the meeting held via videoconference
b. Ensuring that the videoconferencing equipment and facilities are proper and fit
c. Maintenance of the meeting minutes
3. No person(s) other than the concerned Director or authorized participant(s) may attend the meeting via video conference;
4. There must be confirmation and correction of all words and remarks said by the person(s) on the video conference call;
5. In order to ensure complete transparency, attendance must be called by the Chairman or Secretary at the beginning of the meeting to ensure that the correct people are present. Repetitive roll calls are to be held to ensure that the required quorum is maintained throughout the entire process;
6. The Chairman must be physically present at the actual place in which the board meeting is held per section 288 of Companies Act 1956, where they shall maintain all of the records by them self;
7. The Statutory Registers shall be deemed to have been signed by the Directors via video conference if the directors give their consent for such during the meeting;
8. At the end of the meeting, the Chairman shall announce the summary of the meeting and also prepare the meeting minutes. The meeting minutes shall also disclose the particulars of the directors who attended the meeting; and
9. Each copy of the meeting minutes shall be circulated (in soft copy form) to all of the directors within seven days for confirmation and feedback.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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