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Call this a New Year gift from government to Corporate India during the current trying pandemic times. In a significant relief for India Inc, the Corporate Affairs Ministry (MCA) has extended by six months the window to conduct Board meetings via video conferencing or other audio visual means for approval of annual financial statements, Board’s report, proposals on mergers, de-mergers, acquisitions and takeovers besides meetings of audit committees.
This is the fourth time that MCA is extending this facility and for the first time being done for six months — from December 31, 2020 to June 30, 2021. The earlier extensions were for three monthly periods up to June 30, September 30 and December 31, 2020.
Relief for companies
This extension will come in handy for India Inc that is now focussed on revival of business after the Covid-19 pandemic wreaked havoc on the economy since March this year. It maybe recalled that the Indian economy had contracted in both the first and second quarters this fiscal.
Under the existing Companies Act 2013, companies are required to hold “physical” meetings of their directors for approval of financial statements, board’s report etc.
The latest MCA move comes at a time when Indian economy is on a strong recovery mode and several international organisations and rating agencies have already upgraded the growth forecasts for 2021 after a disappointing 2020 due to Covid-induced lockdown. Ever since the pandemic broke out in March 2020, the MCA had announced several relaxations and allowed corporates to adopt digital modes for compliance with corporate law and procedures including conduct of board meetings via video conference, holding of virtual EGMs of shareholders etc.
Aseem Chawla, Managing Partner, ASC Legal, a law firm, said: “The dispensation is a welcome move and it equally signifies how technology has come to aid in assisting companies and its being able to conduct their corporate actions in an effective manner and ably discharge the obligations. This should be legislated as an option going forward as an efficacious alternate option available especially for small companies for all time to come.”
Abir Lal Dey, Partner, L&L Partners, said:”This is a prudent step taken by MCA in view of the ongoing pandemic. Until June 30, 2021 companies can conduct Board meeting through video conferencing or other audio visual means to approve important matters such as annual financial statement, Board’s report, prospectus and matters relating the amalgamation, merger, demerger, acquisition and takeover.”
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