The government on Wednesday relaxed rules on holding physical board meetings in an attempt to reduce physical contact and limit the spread of the Covid-19 outbreak.
In a notification, the ministry of corporate affairs (MCA) said it has relaxed the requirements of holding board meetings requiring physical presence of directors till 30 June.
“Considering need to take precautionary steps to overcome the outbreak of the coronavirus (Covid-19), the government has in-principle decided to relax the requirement of holding board meetings with physical presence of directors," the MCA said in its notice.
Now, these meetings will be held through video-conferencing or other audio-visual means. The MCA is expected to notify the rules soon. Companies will be able to hold meetings for matters such as approval of financial statements, books of accounts, approval of the board’s report and approval of matters relating to mergers and restructuring. Currently, for such meetings, physical presence is mandatory.
The meetings in this quarter are also important as they would ratify interim dividends announced by at least two dozen companies. These dividends were announced to avoid higher dividend distribution tax (DDT) levy to promoters post the new provisions in budget this year.
To ensure safeguards, the companies would have to ensure adequate documentation of meetings held through video conferencing.
Even in the absence of the relaxation, many companies had been deferring or cancelling extraordinary general meetings (EGMs), and board meetings to reduce contact and community spread.
The most notable ones were by Piramal Enterprises and Future Lifestyle Fashions Ltd. Future on Wednesday deferred its EGM which was slated for Friday.
Piramal said on Wednesday that it has cancelled board meetings.