ABC Ltd., is a Joint Venture between an Indian Company and a Multi-National Company. In present Covid pandemic situation, a Board Meeting through video conference was held on 29th October, 2020 at a shorter notice of 3 d
CS Professional · Governance, Risk Management, Compliances and Ethics · PYQS · June 2021
ABC Ltd., is a Joint Venture between an Indian Company and a Multi-National Company. In present Covid pandemic situation, a Board Meeting through video conference was held on 29th October, 2020 at a shorter notice of 3 days. One of the agenda items was approval of the financial statements for the quarter ended 30th September, 2020. One of the Directors joined late in the Board Meeting and was not present while discussing one agenda item. None of the Independent Directors were present. The Company needs funds and is proposing to issue rights shares. Board recommended increase in authorised share capital as well as approved convening of an EGM through Video Conference on 31st December, 2020. The Board discussed on a business proposal at length in the Board Meeting. When minutes were circulated by the Company Secretary, both the joint venture nominee Directors on the Board of the Company had different views on the discussions made and suggested modifications to the minutes which were not in harmony with the minutes circulated by the Company Secretary. Chairman of the Board of Directors is nominee of Indian Company. He is firm that Chairman's decision is final in finalising the minutes of the meeting. Based on the above facts, answer the following questions: Discuss whether the financial statements can be approved in Board Meeting through Video Conferencing ?
Answer & Explanation:
Approval of financial statements for the quarter ended 30th September 2020 should have been approved at a physically held Board Meeting as per Section 173 and Section 179 of the Companies Act, 2013 read with Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014. However, on account of current scenario due to COVID-19 pandemic, Ministry of Corporate Affairs had relaxed these provisions vide Companies (Meetings of Board and its Powers) Amendment Rules, 2020 dated 19th March 2020 by providing that for the period beginning from the commencement of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and ending on the 30th June 2020 (later extended upto 30th June, 2021), the meetings on all matters referred to in sub-rule (1) of Rule 4 may be held through video conferencing or other audio visual means in accordance with rule 3. Therefore, the resolution passed is proper. (Note: Rule 4 has been omitted vide the Companies (Meetings of Board and its Powers) Amendment Rules, 2021 dated 15.06.2021 implying that all business matters can now be dealt in meetings held through video conferencing or other audio visual means in accordance with Rule 3)
Topics: Board Meetings
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