A Project Work of

Corporate Law
On

‘ONLINE COMPANY MEETING: A COMPARATIVE STUDY WITH

OFFLINE MEETINGS”

SUBMITTED TO: Dr. Dipak Das

FACULTY OF: - CORPORATE LAW

SUBMITTED BY: Shubhankar Thakur

SECTION C
ROLL NO.149

SUBMITTED ON:
24th July, 2020

HIDAYATULLAH NATIONAL LAW UNIVERSITY

Raipur, Chhattisgarh

Table of Contents

1
Declaration……………………………………………………………………………3
Acknowledgements…………………………………………………………………..4
Abtract……………………………………………………………………….……….5
INTRODUCTION ……………………………………………………………….6
Objective…………………………………………………………………………..…7
Scope of Study
Methodology
Essentials of Company Meeting………………………………..................................8
Impact of COVID-19 The Global Pandemic on the board meetings of a company…10

Sec 173(2) of the Act; Rule 3 and Rule 4 of The Companies (Meetings of Board and its
Powers) Rules, 2014 ……………………………………………………………….10
Procedure……………………………………………………………………………..14
Advantages and Dis-advantages of Online Meeting…………………………………15
CONCLUSION……………………………………………………………..………..17
REFERENCES……………………………………………………………………….18

2
 Declaration

I, Shubhankar Thakur, hereby declare that, the project work entitled, ‘‘ONLINE COMPANY
MEETING: A COMPARATIVE STUDY WITH OFFLINE MEETINGS’ submitted to the
subject teacher Dr. Dipak Das ( Faculty of Corporate Law) at H.N.L.U., Raipur is record of
an original work done by me.

Shubhankar Thakur

Roll No. 149

Section C

Batch XIII

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 Acknowledgements

First & foremost, I take this opportunity to thank Dr. Dipak Das, Faculty member of
Corporate Law, HNLU, for allotting me this interesting topic to work on.

I would also like to thank my dear colleagues and friends of the University, who have helped
me with ideas about this work. Last, but not the least I would thanks the University
Administration for providing us an opportunity to clear our backlog papers at this global
pandemic stage without which, no doubt this work would not have taken this shape in correct
time.

Shubhankar Thakur
Batch-XIII
Roll no- 149

4
 Abstracts:

Companies (Meetings of Board and its Powers) Amendment Rules, 2020- Regarding Board
meetings under the Companies Act, 2013:

Considering the need to take precautionary steps to overcome the outbreak of the coronavirus
(Covid-19) the Government has decided to relax the requirement of holding Board meetings
with physical presence of directors under section 173 (2) r/w rule 4 of the Companies
(Meetings of Board and its Powers) Rules, 2014 for approval of the annual financial
statements, Board’s report, etc. Such meetings may be held through video conferencing or
other audio-visual means by duly ensuring compliance of rule 3 of the said rules. This project
focus on studying the rules for

5
 Introduction

A company is a legal entity formed by a group of individuals to engage in and operate a

business either commercial or industrial enterprise. A company is an artificial person and is
also known as corporate personhood that it is an entity separate from the individuals who
own, manage, and support its operations. Companies are generally organized to earn a profit
from business activities, though some may be structured as non-profit charities. 1 It is
considered as a legal entity separate from its members in the eyes of law.

In a company several persons are associated and according to the views of the majority
members, decision is taken. Different matters are discussed and decided upon between the
members and between the directors at various meetings the discussion is took placed.
Needless to say, the importance of meetings cannot be under emphasized in case of
companies. The Companies Act 1956 contains several provisions regarding meetings.

In common parlance, the word meeting means an act of coming face to face, coming in
company or coming together. A meeting therefore, can be defined as a lawful association, or
assembly of two or more persons came together by previous notice for transacting some
business. The meeting is required to be validly summoned and convened. Such gatherings of
the members of companies are known as company meetings.

Why meetings are required?

A Company is an artificial identity, therefore it

a) Cannot act itself

b) Need some human intermediary

Thus

a) Shareholders,
b) Board of Directors (Section 291)2 They act on behalf of the company.

Research Methodology
1
https://www.investopedia.com/terms/c/company.asp
2
https://indiankanoon.org/doc/1202543/

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This project has been made by employing Doctrinal and Scholastic method of Research & by
using primary & secondary sources of information.

The data for this study has been mainly collected from various sources that are the amended
Rules and notifications regarding Board meetings under the Companies Act, 2013 declared
by the Government of India and various new articles and enacted legislation.

Scope of this project includes the updated rules for conducting board meetings at this global
pandemic outbreak, and also covering the procedures to be followed by the chairpersons and
the directors participating in the board meeting.

Various Articles from the Internet source has been broadly used in making this project and
accordingly proper citing of the source of information is done.

Objectives
1. To discuss the amended rules regarding Board meetings under the Companies Act,

2013.

2. To discuss the board meeting procedure laid down for the Chairperson and for the

participating directors that is required to be followed.

3. To study and compare the online source meeting with offline meetings.

4. To discuss the advantages and dis-advantages of online source for board meeting.

Necessity for holding meeting:

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 1. A Sharing and Learning Experience – In a company all the employee gain their
knowledge and experience through sharing of their own job with others and get from
others as vice-versa.

2. Problem solving – In a company meeting are held in order to solve the problems by
finding the best alternatives solution, the employees comes up with different
alternatives and the and discuss in the meeting and applied the best.

3. Finding new innovative idea: Meetings in a company are also held to find out the
new innovative idea from the employee, every company over the globe are so thirsty
for the new idea to expand or to solve the company’s defective area.

Openness with the shareholders with the company: The company hold a meeting with
their shareholders to share how the company is running whether the company is running
smoothly towards its growth or they are in lack of the capital.

When the time period of their board members expires: The company also holds a meeting
when the time period of their existing board member is expired so as to elect the new board
members, for this all the shareholders are required to vote in so call meeting.

Essentials of Company Meetings:

The essential requirements of a company meeting can be summed up as follows:

1. Two or More Persons: To constitute a valid meeting, there must be two or more
persons. For the meetings, at least there must be two members should attend. One
member cannot constitute a company meeting, even if the person holds proxies for
another member. However, the articles of association may provide for a larger number
of persons to constitute a valid quorum.

2. Lawful Assembly: The gathering must be for conducting a lawful business. An

unlawful assembly shall not be a meeting in the eye of law.

3. Previous Notice: Previous notice is a condition precedent for a valid meeting. A

meeting, which is purely accidental and not summoned after a due notice, is not at all
a valid meeting in the eye of law.

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 4. To Transact a Business: The purpose of the meeting is to transact a business. If the
meeting has no definite object or summoned without any predetermined object, it is
not a valid meeting. Some business should be transacted in the meeting but no
decision need be arrived in such meeting.

The management of a company's business is necessarily left to the discretion of the directors.
However, the ultimate control of the actions of the Board of directors is vested in the
members or shareholders of the company, and from time to time they must meet to ratify, or
express their disapproval of, the directors’ past conduct, and to consider their future plans.
The members express their will at general meetings by passing resolutions.

Shortly after the formation of a public company, a statutory meeting is held. This is the first
general meeting of the company. Then each year an annual general meeting is summoned to
consider the routine matters relating to the report of the directors, appointment of directors
and auditors, accounts and declaration of a dividend. In addition, occasions may arise when it
is necessary to consult the members on some urgent and unusual matter which justifies the
summoning of an extraordinary meeting.

Further, there are class meetings of shareholders of different classes of shares, and of
creditors and debenture-holders. Directors of the company also take decisions in Board
meetings. The shareholders’ meetings are conducted for the shareholders to give their verdict
on the decisions and steps taken by the board of directors.

1. Meetings are a crucial part of the management of a company as mentioned in the

Companies Act, 1956.
2. Meetings enable the shareholders to know the ongoing proceedings of the company
and allow the shareholders to deliberate on certain issues.
3. There are various types of meetings held by a company.
4. Various criteria must be fulfilled for the calling, convening and conduct of the
meetings.

Comparing offline and online sources for Company board meeting: One will find that
online board meeting is more accessible and time saving for every person participating in the

9
meeting. Also, as according to the prescribed rules for Board Meeting, the Chairperson shall
have to make roll calls of attending Directors at the commencement of the Meeting and has to
read out the name of the persons attending other than the Director. and accordingly, such
director has to represent his identity himself thereby ensuring that no other person have
access on that meeting. This shows the active participation of persons in the meeting.

Impact of COVID-19 The Global Pandemic on the board meetings of a company.

The COVID-19 pandemic has drastically altered the way Companies are conducting business.
The dependency on the technology has increased considerably. From the secretarial point of
view things are no different and many companies are rethinking their approach towards
complying with various statutes.

Most of the companies had already given away the age-old practice of sending hard copies of
the agenda papers and implemented paperless Board Meetings. This itself was a huge step
towards digitalization of the Board Meetings. Next step is conducting meetings through
Video-conference. Again, this is also not a new concept for Indian companies, however this
would be the first time for many companies where all the participants attend the meeting
through remote locations.

The Companies Act, 2013 (Act) allows every Company to conduct meetings through video
conferencing or other audio-visual means (VC) which are capable of recording and
recognizing the participation of the Directors and of recording and storing the proceedings of
such meetings along with date and time. “Video conferencing or other audio-visual means”
means audio-visual electronic communication facility employed which enables all the
persons participating in a meeting to communicate concurrently with each other without an
intermediary and to participate effectively in the meeting.

Many companies have already been using VC for conducting Board Meetings for Directors
who request for the same. With COVID19 pandemic and the lockdown, Video conferencing
has become need of the hour.

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Below are few points for conducting a Board meeting via Video Conferencing. The following
broad overview also provides some suggestions to ensure a smooth conduct of the meeting.

Applicable provisions:

 Sec 173(2) of the Act; Rule 3 and Rule 4 of The Companies (Meetings of Board and
its Powers) Rules, 20143

 Section 173(2)of the Companies Act allows participation of directors in a meeting of

the Board either in person or through VC, as may be prescribed, which are capable of
recording and recognizing the participation of the directors and of recording and
storing the proceedings of such meetings along with date and time. However, the
proviso to section 173(2) allowed Central government to decide the items which shall
not be dealt with in a meeting through VC.4

 Rule 4 of The Companies (Meetings of Board and its Powers) Rules, 20145 lists down
the matters that cannot be dealt in any meeting through VC. Currently the list includes
five such matters:
1) the approval of the annual financial statements;
2) the approval of the Board’s report;
3) the approval of the prospectus;
4) the Audit Committee Meetings for consideration of financial statement including
consolidated financial statement if any, to be approved by the board
5) the approval of the matter relating to amalgamation, merger, demerger, acquisition
and takeover.

Further to remove the hardships caused by these exceptions, the Companies Amendment Act,
2017 which became effective from 7th May, 2018 inserted another proviso to this section
stating where there is quorum in a meeting through physical presence of directors, any other
director may participate through VC in such meeting on any matter specified under the first
proviso.

Furthermore, to conduct Board meetings during the lockdown period, Ministry of Corporate
Affairs has issued Companies (Meetings of Board and its Powers) Amendment Rules, 2020
3
https://taxguru.in/company-law/companies-meetings-board-powers-amendment-rules-2020
4
ibid.
5
ibid.

11
dated 19th March, 2020.6 As per the amendment, For the period beginning from the
commencement of these Rules and ending on the 30th June,2020, the meetings on matters
referred to in sub-rule (1) may be held through VC means in accordance with rule 3.7

Exception for COVID 19 lockdown:

For Board Meetings conducted up to 30th June, 2020, all the items including the five items in
rule 4 can be conducted through Video-conferencing as per Rule 3 without any requirement
of quorum through physical presence of directors.

Rule 3 of The Companies (Meetings of Board and its Powers) Rules, 2014 lays down the
procedure or convening and conducting the Board meetings through VC.

Some important points to be ensured for a meeting conducted through VC:

A. Notice of Board Meeting [Section 173, Rule 3(3) of Rules and Para 1.3 of
Secretarial Standard-1]: Along with the Notice of the Board Meeting, Directors
have to be informed that the VC option has been made available for the Board
Meeting and seek confirmation from them if they wish to attend the meeting through
VC. However, since the meeting for the quarter and year end 31st March, 2020 has to
be conducted through VC, it would be a good practice to inform the Directors in
advance and seek their confirmations. The contact details of the person to be
mentioned to whom the confirmation has to be given. The notice shall specify the
venue of the meeting, and it shall be the place where all the recordings of the
proceedings at the Meeting would be made.
All the necessary information to enable the directors to participate through VC should
be shared with them along with the notice or separately. Necessary information
includes the link to download the app, steps to do so, login id and password if
required and important instructions to use the applications. Do a trial run before the
meeting with a greater number of participants and take the test results, for any issues
faced get the same clarified with an expert. While testing the application, also try
presenting and sharing of the documents to facilitate the same during the Board
Meeting.

6
https://www.caclubindia.com/notice_circulars/companies-meetings-of-board-and-its-powers-amendment-
rules-2020--9313.asp
7
ibid.

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 B. Arrangements: Necessary arrangements to avoid failure of video or audio-visual
connection. Inform all the participants in advance the bandwidth requirement, get the
application downloaded few days before the meeting for smooth conduct of the Board
meeting, ensure availability of proper equipment like additional speakers or camera
for effective participation.

C. Safeguard Integrity: The Chairperson/Secretary shall ensure that no person other

than the concerned director are attending or have access to the proceedings of the
meeting conducted through VC.

D. Proper Facility: The participants attending the meeting through VC should be able to
hear and see the other participants clearly during the course of the meeting.
Companies are using applications like Zoom, Skype, Microsoft Teams, Vidyo
Connect, Webex, GoToMeeting etc. It is important to ensure that the application helps
you comply with the requirements of the Act. Hence after thorough check the right
application should be chosen.

E. Recording the proceedings: The application that you have chosen should have
audio/video recording facility which can be then stored for safekeeping and marking
the tape recording(s) or other electronic recording mechanism as part of the records of
the company at least before the time of completion of audit of that particular year.

F. Quorum: Ensure that the required quorum is present throughout the meeting.

G. Statutory registers: Registers required to be placed in the Board meeting as per the
provisions of the Act shall be placed at the scheduled venue of the meeting and where
such registers are required to be signed by the directors, the same shall be deemed to
have been signed by the directors participating through electronic mode, if they have
given their consent to this effect and it is so recorded in the minutes of the meeting.

Procedure:

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Roll call by the Chairperson [Sub rules 4 and 5 of Rule 3 of Rules and Para 4.1.3 of
Secretarial Standard-1]: To make a roll call at the commencement of the meeting and the
director’s participating through electronic mode shall state the following:

- Name;
- Location from where he is participating;
- Confirmation the receipt of the agenda and relevant material facts of the meeting;
- Confirming that no person other than him/her is attending or have access to the
proceedings of the meeting.

A note mentioning the above details can be shared with the participants for them to better
prepared at the meeting.

Chairman/ Company Secretary to read out the name of the persons attending other
than the Director

After the roll call, the Chairperson or the Company Secretary shall inform the Board about
the names of persons other than the directors who are present for the said meeting at the
request or with the permission of the Chairperson and confirm that the required quorum is
complete.

Proceedings of the Meeting [Sub rules 8,9 and 11 of Rule 3 of Rules]

- Every person participating in the meeting over VC shall identify himself for the
record before speaking on any item of business on the agenda.
- If a statement of a director in the meeting through VC is interrupted or garbled, the
Chairperson or Company Secretary shall request for a repeat or reiteration by the
Director
- If a motion is objected to and there is a need to put it to vote, the Chairperson shall
call the roll that is to say that he shall first announce that he shall be doing the roll call
and call out the name of each director who shall identify himself while casting his
vote and the Chairperson shall then note the vote of each director.

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 - Chairperson to summarize the decisions taken during the meeting on each item of
agenda transacted along with the voting details, at the end of the meeting Chairperson
to make roll call at the end of the meeting and after every break.

Minutes of Board Meeting [Section 118, Sub rules 11 and 12 of Rule 3 of Rules and Para
7 of Secretarial Standard-1]:

The minutes shall disclose the particulars of the directors who attended the meeting through
VC. The draft minutes of the meeting shall be circulated among all the directors within
fifteen days of the meeting either in writing or in electronic mode as may be decided by the
Board. Every director shall confirm and give his/her comments in writing, about the accuracy
of recording of the proceedings of that particular meeting in the draft minutes, within seven
days or some reasonable time as decided by the Board, after receipt of the draft minutes
failing which his approval shall be presumed. The minutes shall then be entered in the minute
book as specified under section 118 of the Act and signed by the Chairperson.

Advantages of Online Meeting through Video Conferencing:

1. It’s More Engaging:

Participants in audio conferences or meeting in-person tend to loosen concentration or
zone out and multitask because they feel disconnected from the other members in the
meeting. With video, however, there’s pressure to maintain “virtual eye contact”,
translating to superior levels of engagement.
When each conference member is visible, you’re inclined to use the communication
skills.
2. It’s Efficient:
Reducing commuting time is one of the most obvious but significant benefits of video
conferencing. In-person meetings with directors and other shareholders can take up
valuable hours of your day.
3. It Saves on Travel Money
Not only is travel time-consuming, but it’s also inexpensive. People often travel great
distances for conferences and meetings, and in most cases, these in-person
communications can be accomplished via video conferencing. It saves the money.

15
 4. It Improve Communication
5. It Connects a team
6. It improves the productivity
7. It improves Attendance
8. It helps in Employee Retention
9. It provides more structure and mediums for conducting meeting.
10. It provides Sustained Competitive Advantage

Disadvantages of Online Meetings

1. Decrease in personal contact

2. Instability in connection
3. Reduce human contact.
4. Chances of Hacking and leaking of secret information’s.

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 CONCLUSION

A company is an artificial identity, so a company meeting is important on a regular interval

of period, for the sharing and learning experience. company meeting may be held on different
types either be it offline or online board meeting but the company must hold meeting. All the
subjects which is going to discuss in the meeting should make clear before the meeting to all
the members, and the resolution should be passed at the end of the meeting there are different
ways to passed the resolution and on the other hand the resolution make clear to all the
attendants of the meeting. board of director’s must be there while the meeting, they are the
most important for passing the resolution.

The procedure for conducting Board Meeting through VC is an elaborative one considering
the fact that the Board discussions are highly sensitive and sanctity and integrity of the same
has to be maintained. Before the online meeting commence, there should be proper check of
the channel links to ensure non-disclosure of the subjects of the meeting. For conducting such
meetings, company may also hire any highly expertise authorities through which Hacking of
the server could not take place. However, until now one or two members would remotely
attend the meeting through VC and hence following the above-stated procedure was possible.
But for now, if all the participants are joining through VC, the procedural part might become
repetitive and time-consuming for instance, every person to identify himself before speaking
on an agenda item or for the Chairman to take a roll call after every break might disrupt the
free-flowing discussions.

Given the current situation it would be helpful if certain procedures can be relaxed. Also, it is
time to re-think the entire procedure and be future-ready. If the Act allows all business to be
transacted through VC without requirement of the quorum, companies may conduct more
such meetings in the future. The relaxation in procedure should not compromise the safety
and integrity of the meetings. Hence focus has to be on good systems/applications with
necessary security measures in place. The authorities can also prescribe safety standards and
parameters, which can be made mandatory for the application to be allowed to be used for the
Board Meetings. This way we can make Digitalized Board Meetings a reality.

17
 REFERENCES

Webliography:

https://www.caclubindia.com/notice_circulars/companies-meetings-of-board-and-its-powers-
amendment-rules-2020

https://taxguru.in/company-law/companies-meetings-board-powers-amendment-rules-2020.html

https://taxguru.in/company-law/digitalisation-board-meetings-companies-act-2013.html

www.indiankanoon.org

www.jstor.org

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