Thursday, July 14, 2016

Directors can attend board meeting via videoconferencing without intimation at beginning of calendar year

Companies Act: Directors can attend board meeting via video-conferencing without intimating at beginning of calendar year as prior intimation required for conducting e- board meeting under Rule 3 (3)(e) is directory, not mandatory Rule 3(3)(e) of the Companies (Meeting of the Board and its Power) Rules, 2014 provides that if intimation is given at the beginning of the calendar year such declaration shall be valid for one calendar year. It is not said anywhere that if intimation is not given at the beginning of the year, video-conferencing is not to be provided in that calendar year. Therefore, it does not mean that the directors are not entitled to video- conferencing if intimation is not given at the beginning of the calendar year
Facts:
a) Applicant and his mother were the directors of the company. They wanted to attend the board meeting through video-conferencing as they were going outside India. Further, they requested to participate in Board Meeting through electronic mode.
b) As per the Rule 3 of the Companies (Meetings of Board and its power) Rules, 2014, any director who desires, to participate may express his intention of participation through the electronic mode at the beginning of the calendar year.


c) On the date of Board Meeting, Joint Managing Director denied appellants permission for participating in Board meeting through video-conferencing by stating that appellants were not permitted to participate in board meeting through electronic mode without intimation at the beginning of the year and that it would be violation of Rule 3.
The National Company Law Tribunal held as under:
1. Rule 3 provides that if intimation is given at the beginning of the calendar year, such declaration shall be valid for one calendar year. It is not said anywhere that if intimation is not given at the beginning of the year, video-conferencing is not be provided in that calendar year. Therefore, it does not mean that the directors are not entitled to video-conferencing if intimation is not given at the beginning of the calendar year, therefore, the appellants were entitled to participate in video conferencing even if intimation was not given at the beginning of the calendar year. - [2016] 71 taxmann.com 158 (NCLT-New Delhi)
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