Home / Opinion / Views /  Covid may have spelt the end of the board meeting as we know it

Covid has turned things topsy-turvy, with a downward-spiralling economy that often seems to rival the pandemic in anxiety generation. It’s a crisis that is not going away anytime soon. Assorted curves and a multitude of alphabets used by experts for the pandemic and an economic recovery appear to have confused everyone, including boards of directors.

Yet, corporate boards must address myriad issues. There are mandatory ones that they have to pass resolutions on—from borrowing, lending and investing, to the firing and hiring of senior executives and even monitoring the mental health issues faced by employees.

Boards could pass resolutions without meeting even before the pandemic, by using a resolution-by-circulation (RBC) mechanism. But this is not a good solution, as it is non-interactive and more like a postal ballot. The digital platforms and programmes available today for board meetings have turned the RBC approach archaic.

As board meetings go virtual, they’re also getting shorter and crisper. Is decision-making becoming faster at the cost of deeper insights? Is the ministry of corporate affairs (MCA) framing appropriate rules for video board meetings? The rules for these were set in 2011 and could be refreshed now in view of our post-covid dynamics. They have been modified from time to time, and with a bureaucratic stamp that is too obvious to miss.

Take, for instance, the requirement of a roll call. Even if the chairperson can see the face of each director present on a screen, she or he must mandatorily call out their names and verify. Such a rule is a waste of time, especially as video meetings tend to be shorter and enterprises invariably have more productive work to do.

Since March 2020, there have not been any physical board meetings. Currently, almost everyone is working from home. This throws up a bigger question: Is this the end of the board meeting as we know it?

It will be some time before video board meetings spell an end to physical meetings. Or perhaps not, as many board members we spoke to are happy with the increased productivity they say they have experienced, thanks to shorter-duration calls, etc, as against travelling to meeting location and spending the whole day in meetings. Yes, they miss the travel, bonhomie with other members and the all the side talk, complete with whispers and jokes.

The meeting rules for physical board meetings may not be relevant in an era where the pandemic has fast-forwarded a tech revolution of sorts. With board portals, data tools and software packages that enable virtual meetings, things have changed drastically today. Businesses seem to have moved beyond cobbling together short-term solutions, and ventured into long-term rethinking on structures and processes. What if this socially-distanced and sanitised form of business (or way of life, for that matter) becomes an enduring reality?

Next question: How would this new approach or format alter corporate governance? Remember the last proper pre-lockdown meeting of your board? Gathered around the table, flipping through your board folder, hearing the chair say “next item on the agenda", sitting through presentations by the chief executive officer and company secretary, shooting comments back and forth, and cracking jokes with the government nominee next to you? You could not have guessed it at the time, but what if that was the final instance of this board gathering for a face-to-face meeting?

Despite all the technology and speed that have re-invented business over recent decades, many of our corporate forms are still very archaic. Read a 2020 legal brief, and the language and capitalisation look like relics of the 19th century. Some of the stock and commodity exchanges in the world still have yellers and runners on crowded trading floors. But even before covid, stock exchanges in most developed countries had gone electronic, and trades moved at the speed of light. Now, what about the retro idea of gathering busy people around a board table? Some directors have to be flown in from other parts of the world and provided with luxury accommodation and much else. Unless your business goals include reviving such corona-battered industries as hospitality and travel, why would you spend shareholder money on all that?

We are not the only ones who have wondered if the shift to virtual board meetings (and governance overall) is the future. Several discrete and short “board meetings" help directors focus on their governance role at regular intervals. This “drip feed" approach of virtual governance tends to keep corporate issues salient on a day-to-day basis and also cuts meeting costs by an estimated 90% or so.

In most in-person board meetings, electronic devices are distractions. Online board sessions, however, make the wired director a one-person network, tuned in to others while absorbing short presentations, resource material, external research and side chats all at once. Even with board portals, the board “book" is still largely designed as a single package of information, rather than as a hyperlinked menu of material, the way it could be.

At a time when board diversity is a scandal of sorts, the benefits of “boardroom chemistry" in seeking new members fade. Recruiting new talent has traditionally meant looking around the table for who else you knew who could fit in. Taking board searches online opens up the pool to fresh, diverse prospects.

Meanwhile, the adoption of the Kotak Committee’s recommendations on reforms covering board appointments seems likely to be delayed by another couple of years, but the MCA and Securities and Exchange Board of India would do well to hasten the process in response to changing circumstances.

We can’t yet predict that the traditional sit-down-around-a-mahogany-table boardroom meeting is dead. But after this year’s shake-up, it sure looks endangered.

Assuming that board meetings as we know them will end sooner rather than later, many directors have raised questions on the need to comply with old meeting rules. There are several anachronisms that need to be addressed by framing new meeting rules for the digital era.

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