2. Board Meetings: Present Scenario
Governing Law: Provisions of the Companies Act
• Section 285 atleast one meeting in every 3 months
and atleast 4 such meetings shall be held every
year
• Section 286 notice shall be given in writing
• Section 287 prescribes the minimum Quorum to
facilitate conduct of the meeting
• Section 288 contains the provisions where a
meeting is adjourned for the want of the quorum
• Certain Powers of the Board can be exercised at
the Board meetings only, others can be exercised
thru Circular Resolution as well
3. Board Meetings: Present Scenario
Peremptory Norms in the Industry
• Convening:
– Proper Authority
– Proper and Adequate Notice
• Constitution
– Chairman
– Quorum
– Proxies and Representatives
• Conduct
– Ascertaining Sense of the meting
– Voting
– Passing of Resolutions
– Circular Resolutions
– Motion, Amendment, Point of Order
4. Board Meetings: Present Scenario
Move towards Normativity for Board Meetings
Introduction of Secretarial Standards by The
Institute of Company Secretaries of India
Though only recommendatory in nature in the
initial stages, the Institute intends to
introduce uniformity in the practices adopted
in the Industry
Secretarial Standard-1 (SS-1) on ‘Meetings of
the Board of Directors’ seeks to prescribe a
set of principles for convening and conduct
of Board Meetings and matters related thereto
5. Recognition of Technological Advancement in Laws
• Need to accord legal recognition to technological
innovations
• Need to have a sound regulatory mechanism and
infrastructure so as to:
- ensure effective utilization of the changed
technology so that benefits accrue for the benefit
of all users;
- ensure that misuse of the changed technology is
decimated or nipped in the bud
IT Act is a move in this direction
Francis Bennion in Statutory Interpretation has
stressed the need to interpret a statute by giving
“allowances for any relevant changes that have
occurred, since the Act’s passing, in law, social
conditions, technology, the meaning of the words and
other matters.”
6. Board E-Meetings
Issues Involved
• Convening the meeting and electronic
notice
• Place for holding Meeting in
electronic Form
• Constitution of ‘Meeting’
• Conduct of electronic meeting
7. Board E-Meetings: Issues Involved
Convening the meeting:
• Sec-286-the notice in writing
• Proper Authority- written notice needs to be
authenticated by the authorized person
Convening the meeting electronically: Legal Validity
IT Act
• Sec-4 accords legal recognition to the electronic
records
• Sec-5 accords legal recognition to digital
signatures affixed in accordance with the Act and
rules made thereunder
• Provides for the authentication, attribution,
acknowledgment and despatch of electronic records
and hence providing a sound regulatory mechanism
• Sec-81 gives overriding effect to the Act
Also SS-1 issued by ICSI recognizes the electronic
media as a mode of giving notices
8. Board E-Meetings: Issues Involved
Place for Holding meeting
• No Provision in Companies Act, that Board Meeting to
be held at a particular place as stated in the notice
• Except that Section 288(1) gives rise to presumption
that there must be a definite place where a Board
meeting can be held
Place for Holding meeting electronically
• In one of the decided case of Byng vs London Life
Association Club, in context of shareholder’s meetings
held in 3 adjoining rooms connected via audio-visual
links, it was held that “…the meeting was held at the
place of which notice had been given, namely Cinema1,
since this was where the center of gravity of the
meeting was to be found”
• But the issue is unsettled as to determine the place
of meeting in the case of electronic board meetings
9. Board E-Meetings: Issues Involved
Constitution of Meeting
• Sec-287 Quorum should be present, else meeting stands adjourned as per
Sec-288
• Meeting to be Chaired by the person legally elected (AoA or by
Directors)
• Physical presence of Directors:
– Sec-301(2)- Register of Contracts to be placed before the Board and
signed by the directors present (only if Company has entered into a
contract or arrangement in which directors are interested)
– As per Table A, Common Seal to be affixed in presence of 2
Directors and CS (the prov can be altered by making prov in AoA)
– No other stipulation in Companies Act requiring physical presence
of Directors
• IT Act contains enabling provisions to regulate the electronic ways
and mechanisms adopted in meetings, transactions, trade, commerce
• But the judiciary is in state of conflict, where few recognizes that
the rationale behind the provision of meetings is to enable the
directors to effectively discuss the matters and take decisions in the
interests of the Company, so it shall be sufficient that everyone
participating are able to see, hear, communicate with each other and
hence Board meetings can be held electronically but others interpret
‘meetings’ to require physical presence of Directors
10. Board E-Meetings: Issues Involved
Conduct of Board Meetings
• Subject to AoA, the Board can regulate the conduct of their
meetings
• The Question arises that whether the meeting thru video and tele-
conferencing, net-meeting can be treated as being in electronic
form and whether the signals, images, sounds transmitted in course
of meeting can be treated as ‘electronic records’
• As per IT Act:
– Sec 2(r) ‘electronic form’ w.ref.t information means any information
generated, sent, received or stored in media, magnetic, optical,
computer memory, micro film, computer generated micro fiche or similar
device
– Sec 2(v) ‘information’ includes data, text, images, sound, voice, codes,
computer programmes, software and databases or micro film or computer
generated micro fiche
– Sec 2(t) ‘electronic record’ means data, record or data generated, image
or sound stored, received or sent in an electronic form or micro film,
computer generated micro fiche
• Hence, the Board meeting can be conducted electronically and IT
Act contains enabling provision to give legal sanctity to
electronic records and contains provs for attribution,
acknowledgment and despatch of electronic records
• Thus, motions, resolutions, voting, discussions can be conducted
electronically in accordance with the IT Act and rules made
thereunder
11. Board E-Meetings: Legal sanctity
• In the light of above discussion, technological
advancement and enabling provisions of IT Act,
it appears that Board Meetings thru electronic
means are permissible (except under few
instances)
• But in absence of any specific provs in the
substantive law governing the Companies, Board
Meeting held thru electronic means is capable
of being challenged in a Court of Law
12. Board E-Meetings: International Scenario
• In few Countries, the substantive Company Law
itself has been amended to facilitate holding of
Board Meetings through Electronic Means
• In UK a spl Order termed Companies Act, 1985
(Electronic Communications) Order, 2000 under the
Electronic Communications Act, 2000 has been
passed which enables companies to hold Board
Meetings thru electronic means
• In Canada, a specific provision to facilitate
Board Meetings thru tele-conferencing has been
introduced in Canada Business Corporations Act
• In U.S. the Massachusetts (USA) Business
Corporation Law has made a specific provision for
conduct of Board Meetings thru electronic means
13. Board E-Meetings: What needs to be done
• The Companies Act, 1956 needs to be amended
• The modalities for such meetings could be
prescribed through specific rules
• The Articles of Association of the
Companies needs to be amended to contain
enabling provisions to the effect
