A company acts through the decisions made by its Board of Directors. The only way to prove that the decision was taken by the Board of Directors is by presenting the minutes of meetings. Minutes are to be maintained in accordance with Section 118 of the Companies Act, 2013 (Act) which states, every company shall maintain minutes prepare and maintain minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every Board meeting or committee meeting.
As held in Escorts Ltd. v. Sai Autos[1]
- …the only way to prove that a particular resolution was passed at a meeting of the Board of Directors of a company is that the minutes book in which the said resolution was recorded as having been passed should be produced in court as that alone can form evidence of the fact under Section 194[2]…
Section 173 of the Act permits directors to participate in meetings through videoconferencing or other audio-visual means. The manner of participation should be such as to enable recording and recognise participation of the directors, with the facility to record and store the proceedings of the meeting, with date and time. In times of the pandemic, these provisions have assumed greater importance. This article is a checklist for preparation, signing and maintenance of minutes of Board meeting conducted through videoconferencing.
1 Applicability.—The provisions of Section 118, read along with Companies (Meetings of Board and its Powers) Rules, 2014 should be referred for Board meeting to be conducted through videoconferencing. These provisions are applicable to all companies.
- Content to be Included in Minutes of Board Meeting through VC.—The minutes of the Board may contain the following aspects:
(a) Presence of sufficient security and identification procedures to safeguard integrity of the meeting.
(b) Availability of proper videoconferencing or other audio visual equipment or facilities for providing transmission of the communications for effective participation of the directors and invitees of the meeting.
(c) Process for recording the proceedings and preparing the minutes.
(d) Confirmation that no person other than the director or intended invitee was attending the meeting through videoconference. The said confirmation can be part of the roll call. An exception may be made for differently abled persons.
(e) Confirmation that participants attending the meeting through audio visual means can hear and see clearly during the proceedings of the meeting.
(f) Noting of the communication received from the director prior to the meeting to attend such meeting through videoconferencing.
(g) Noting in the minutes of meeting of first quarter of calendar year about the receipt of declaration of the director communicating his intention to attend all the meetings for the calendar year through videoconferencing mode. (This is not mandatory compliance.)
(h) Noting or approval resolution of the election or appointment of the Chairperson of the meeting (in accordance with the articles of association of the company).
(i) Noting of the confirmation by Chairperson that adequate quorum was present to initiate the proceedings of meeting.
(j) Manner of roll call taken by the Chairperson wherein each director has stated the following information for record purposes:
(i) Name of director.
(ii) Location from where he is participating.
(iii) He has received the agenda and all the relevant material for the meeting.
(iv) No one other than the director concerned is attending or having access to the proceedings of the meeting at the location mentioned.
(k) Recording of the names of persons present at the meeting apart from the directors and invitees, with the due permission of the Chairperson. Invitees may include CEO, CFO, Consultants, Head of Departments, etc.
(l) Where a director was interested in any of the business items, he has been excluded for the purposes of quorum for that business item.
(m) The place of the meeting shall be deemed to be the venue as mentioned in the notice of the meeting and the recording of the meeting shall be deemed to have been made at such location.
(n) Noting of the consent by the directors to sign the statutory registers as placed in the meeting at the scheduled venue.
(o) Identification by the members of the meeting before speaking on any matter of the meeting for record purposes.
(p) Repetition was sought where the statement of a director was unclear or interrupted by the Chairperson or Company Secretary.
(q) Manner of voting on every resolution (with necessary reference to the articles of association of company).
(r) Where a requirement for voting arose due to objection to any motion, the noting/approval procedure of calling the roll by the Chairperson, and noting the vote, after each director identifies himself before casting his vote for the record has been followed.
(s) After each agenda item, the Chairman summarised the decision along with noting the names of directors who dissented from the decision.
- Restrictions on Board of Directors to Discuss Certain Agenda Items in Board Meeting through Videoconferencing.—The following matters shall not be dealt with in any Board meeting held through videoconferencing[3]:
(a) Approval of the annual financial statements.
(b) Approval of the Board’s report.
(c) Approval of the prospectus.
(d) Audit committee meetings for consideration of financial statement including consolidated financial statement if any, to be approved by the Board.
However, where there is quorum presence in a meeting through physical presence of directors, any other director may participate conferencing through video or other audio-visual means.
- Circulation of Minutes.—Ensure that the draft minutes are circulated within 15 days of the meeting to every director who attended the meeting for his confirmation or comments on the content or accuracy of the draft minutes, either in physical or electronic mode, as is decided by the Board in its meeting. Every director attending the meeting should provide his comments on the draft minutes within 7 days or some reasonable period as specified.
- Minutes Book.—A company may maintain a distinct minute book for each type of meeting, namely: (i) general meetings of the members; (ii) meetings of the creditors; (iii) meetings of the Board of Directors; and (iv) meetings of each of the committees.
- Date of Entry.—The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within 30 days of the conclusion of the meeting;
- Signing and Initials of Minutes of Meeting.—The minutes shall be signed or initialled on every page and signed and dated on the last page by the Chairman of the meeting or the Chairman of the succeeding Board meeting.
- Place of Maintenance of Minutes of Board Meeting.—The minute books of Board meetings shall be kept at the registered office of the company or at such other place as may be authorised by the Board. The same shall be preserved permanently and kept in the custody of the Company Secretary or any director duly authorised by the Board.
- Compliance with Secretarial Standards issued by Institute of Company Secretaries of India (ICSI).—Every company shall ensure compliance of the Secretarial Standards with respect to general and Board meetings specified by the ICSI, and approved by Central Government.
* Gaurav N Pingle, Practising Company Secretary, Pune. He can be reached at gp@csgauravpingle.com.
[1] 1990 SCC OnLine Del 184 : (1991) 72 Comp Cas 483.
[2] Under Companies Act, 1956, corresponding to S. 118 sub-s. (7).
[3] For the period beginning from the commencement of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and ending on 31-12-2020, the meetings on the said matters may be held through videoconferencing or other audio-visual means.
