Coronavirus Outbreak: Board Meets To Approve Financial Statements Can Be Held Via Video
Board meetings before June 30 for approval of financials can be conducted through video conferencing.
India has given an in-principle nod for approval of a company’s financial statements in board meetings held via videoconferencing or other audio-visual means as the nation pushes social distancing to counter the spread of new coronavirus.
Board meetings on or before June 30 for approving financial statements, the board’s report and other documents can be held without a physical quorum if a company complies with the requirements of the Companies Act, 2013, according to circular by the Ministry of Corporate Affairs. The ministry will make required amendments to the rules governing board meetings.
Private and public companies in India are regulated under the Companies Act, 2013. In addition, listed companies are all also subjected to market regulator’s listing agreement and regulations. Under these laws, a listed entity must submit audited financial statements within 60 days from the end of a financial year. But these can be be submitted only after the approval of the board of directors.
The Companies Act specifies a list of matters that can only be approved in a meeting convened through a physical quorum of directors. These include approval of annual financial statements and the boards report.
The ministry has now conditionally removed the requirement of physical quorum. To avail this facility, a company must ensure compliance with rules governing video meetings. The include:
- Make necessary arrangements to avoid failure of video or audio visual connection during a board meeting.
- Ensure sufficient security and identification procedures for participants in the board meeting.
- Ensure proper recording and storage of video of the proceedings of the board meeting.
- Take necessary steps to facilitate participation of all attendees entitled to attend the board meeting.
The ministry will later make necessary amendments to specify the mode of presentation and discussion of the financial statements at board meetings held through video conferencing.