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Board meeting through electronic mode

Khushboo Maheshwari (Company Secretary) (548 Points)

16 June 2009

Again a query, can a board meeting be held through e mode, i mean over the telephone and then the director giving his consent for the matters of board meeting through email. Will it constitute valid quorum and proper meeting ?

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17 Replies

PRAVEEN KUMAR (MBA (Finance) B.Com.(P)) (3438 Points)
Replied 16 June 2009

sorry dear,

It is not yet approved, also it is not practically viable.

Praveen

Khushboo Maheshwari (Company Secretary) (548 Points)
Replied 16 June 2009

Originally posted by :Praveen Kumar
"	sorry dear, It is not yet approved, also it is not practically viable. Praveen	"

but as per my knowledge email is considered as evidence under IT Act and evidence act and can be relied upon

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 16 June 2009

Dear Khushboo,

Board meeting can be held through video conferencing (but not on phone).

There appears to be confusion about the holding of Board Meetings of the Companies through electronic medium.

Considering in totality and with an open mind I think, YES it’s allowed. I couldn’t see if there is anything in the Companies Act 1956 that prevents holding of Board Meetings of the Companies through electronic medium. All that is required is some clear cut procedures and not the amendment to section 285.

As far as official words are concerned, in May 2002 MCA did announce that in principle a decision had been taken to allow Board Meetings via Electronic Media and J.J. Irani Committee on Company Law which submitted its Report on May 31, 2005 also advocated it.

However, 4 Meetings must be held through proper form. In addition to 4 meetings further meetings may be conducted throgh electronic mode.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 16 June 2009

Hi,

Please go through the link below regarding your query:

/forum/message_display.asp?group_id=32406

Regards

Pratik K (Student) (3406 Points)
Replied 17 June 2009

I think its possible where "One can see all and rest of all can see the One"

Ajay Mishra (Company Secretary) (74332 Points)
Replied 17 June 2009

Dear Ms. Khushboo,

In State of Maharashtra v. Dr Praful B. Desai (2003) the Supreme Court held, as to the question whether recording of evidence by video conferencing is permissible:

“Video conferencing has nothing to do with virtual realty. Advance in science and technology have now, so to say, shrunk the world. They now enable to see and here events, taking place for away, as they are actually taking place. Video conferencing is advancement in science in technology which permits one to see here and talk with someone far away with the same facility and ease as if he is present before you i.e. in your presence. In fact he/she is present before you on a screen. Except for touching one can see, here and observe as if the party is in the same room. In video conferencing both parties are in presence of each other. Recording of evidence by Video conferencing also satisfied the object of providing, in section 273, that evidence be recorded in the presence of the accused. The accused and his pleader can see the witness as clearly as if the witness was actually sitting before them. The advancement of science and technology is such that now it is possible to setup video conferencing equipment in the Court itself for recording the evidence through video conferencing.”

I think this decision of the Court will help You.

Regards

Khushboo Maheshwari (Company Secretary) (548 Points)
Replied 17 June 2009

Originally posted by :Ankur Garg
"	Hi, Please go through the link below regarding your query: /forum/message_display.asp?group_id=32406 Regards	"

hi i had already searched the whole forum regarding this, it does answer my query regarding conveying a decision through email

CS MD Osman Akthar (Company Secretary & CA(Final)) (78 Points)
Replied 25 July 2009

Dear Frnds,

Quorum for board meeting is Directors peronally present( including by Alternate Director) only, there is no exception for this rule. In addition to valid quorum present other Directors can participate over phone/thru Video Conference, but there participation is not counted as present for the meeting.

Information Technology really facilitated meeting of Directors at geographically not at same location, but it is not recognized.

One more point I would like to add here is, when ever the participation thru electronic mode is recognized then concept of Alternate Director will be lost completely.

Malav Shah (Company Secretary and AVP Legal) (171 Points)
Replied 27 July 2009

Friends

I agree with Mr. Akhtar. Particpation in meeting by video conference is not considered for quorum of the meeting. Thus you have to ensure that minimum quorum was present in the meeting. In my company foreign directors participate through teleconference and same is recorded in minutes also. But I ensure that 2 directors are personally present in the Board room.

May be other can do the same.

Regards

Malav

Megha Shah (Company Secretary & Corporate Legal) (45 Points)
Replied 11 September 2009

Can anyone resolve the same ...with reference to the secretarial standards........?

(Guest)

The company can hold the board meeting through the teleconferencing and It will be valid even if they give their consent through the email.

Looking at the Secretarial Standard 5 : Secretarial Standard on Minutes.

Section 2.2.1. (d) says that

The minutes should contain

(d) In case of a director joining through video or teleconference the place from and the agenda items in which he participated.

So, Secretarial standard gave the recognition of meeting through the teleconferencing.

Moreover, Mr. Akhtar's viewpoint on the alternate director is wrong because.

When the concept of alternate director has come there was not such a wide exposure on the E-media. And the in the today's context word physically present doesn't mean that the director has to be there, it will be ok if the director is mentally at the board room.

In furtherance of my claim I would like to say that, the Legislation will definitely abolish the provision of the Alternate director, But it can't do so, because now a days 99% companies doesn’t uses the E-media for the meeting and only 1% company uses the video conferencing mode. So, law can't abolish the provision related to alternate director.

Further, Mr. malav's viewpoint on the requisite quorum is also wrong. Because the director's are present in their mental capacity in the meeting.

And physical presence is not important in the board meeting, but it is the Mental presence that is required in the meeting. Because the decision can be levied with the help of mental presence and not with the physical presence.

So, It will be ok, if there is no director present at the actual meeting place. It will be ok if every director is on the phone line.

If you need clarification than contact me.

Ankur Shah (Practicing Company Secretary)

“Guru Gautam” Bungalow, Inside Parshwa Tower,

Nr. Shyamal Cross Road, 132ft. Ring Road,

Satellite, Ahmedabad – 15

Contact: + 91-9427633901

E-mail: ankurjewel @ gmail.com

Blog: csankur.blogspot.com

1 Like

CS MD Osman Akthar (Company Secretary & CA(Final)) (78 Points)
Replied 12 September 2009

Dear Ankur,

I feel pity for myself, for poor knowledge of provisions of Companies Act 1956 (which is still in force statute in India) regarding Quorum for Board Meetings.

To my Knowledge though Secretarial Standard contains the provisos to recognize the participation of Directors in Board Meeting thru Electronic mode, they are NOT MANDATORY in nature. (New Company Law Bill 2009 seeks it to be Mandatory, but we need to wait till it becomes Act).

Ankur, can answer,

1.Where you found the concept of “MENTAL PRESENCE” in Companies Act 1956 ?

2. “physical presence is not important in the board meeting, but it is the Mental presence that is required in the meeting. Because the decision can be levied with the help of mental presence and not with the physical presence. So, It will be ok, if there is no director present at the actual meeting place. It will be ok if every director is on the phone line”

Can you submit any court verdict backing the above statement?

Thank you.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 12 September 2009

Dear Ankur Shah,

Please Sir, please read section 287 of the Companies Act, 1956.

(Guest)

I know the section 287 very well.

and I have mentioned the concept of "Mental Presence" as an example.

And bear one thing in mind that Everything is not mentioned in the Company law itself. You have to interpret the Legislation according to the situation.

And If you want to follow the company law strictly,

then tell me why directors place an order for the tea or snacks for client?

Because company law doesn't any where mention about promoting business by way of providing little refreshment to the clients.

So, directors violates the company law.

The answer will be no.

And according to you, physical presence is only necessary, then all the directors will play the cricket or do something else in the board meeting and simply agree on the secretary's proposal.

And directors will tell the legislator that only physical presence is necessary and they are in the board meeting physically because company law doesn't mention anywhere about the "Mental presence" so, directors can do anything in the board meeting.

One thing should be noted that Directors are navigators of the company, their mental presence in the board meeting makes the board meeting worthful and not the physical presence.

And the point of Quorum, section 287 was made in the 1956. and at that time in india nobody does ever heard the word like computer, email or conferencing through the e-media.

that's why the legislator has used the word "Physical presence"

Now a days the judgement of the supreme court has overridding effect over the section 287. (see Mr. Ajay Mishra's post)

and to prove this I will give one short example.

e.g.

Though the Gay relations are prohibited by the Indian penal code, High court has approved such relations and now The judgement of High court has the overridding effect on the Indian Penal code.

I think now this topic doesn't have any doubt left unattended.