Under Section 173(2) and 174(1) Companies Act 2013, participation of a director through VIDEO CONFERENCING in a Board meeting:
Ais completely PROHIBITED for any agenda items, regardless of nature (cf. Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3) (cf. Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3) (cf. Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3)
Bis permitted only for independent directors, not for executive directors of the company (cf. Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3) (cf. Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3) (cf. Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3)
Cis PERMITTED subject to prescribed procedure under Rule 3 of Companies (Meetings of Board) Rules 2014, EXCEPT for matters such as approval of annual financial statements, Board's report, prospectus, audit committee meetings on financial statements, approval of any matter relating to amalgamation/merger/demerger/acquisition/takeover (these earlier-restricted matters were later allowed via VC by 2017 amendment)
Dis permitted only for foreign directors, not for Indian-resident directors of the company (cf. Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3) (cf. Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3) (cf. Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3)
Answer & Solution
Correct answer: C. is PERMITTED subject to prescribed procedure under Rule 3 of Companies (Meetings of Board) Rules 2014, EXCEPT for matters such as approval of annual financial statements, Board's report, prospectus, audit committee meetings on financial statements, approval of any matter relating to amalgamation/merger/demerger/acquisition/takeover (these earlier-restricted matters were later allowed via VC by 2017 amendment)
1. Section 173(2) Companies Act 2013 permits participation of a director in Board meetings by VIDEO CONFERENCING or other audio-visual means as prescribed.
2. Originally Rule 3 Companies (Meetings of Board) Rules 2014 excluded certain matters from VC participation: approval of annual financial statements, Board's report, prospectus, audit committee meeting on financial statements, approval of merger/demerger.
3. The Companies (Meetings of Board) Amendment Rules, 2017 RELAXED this and permitted VC participation for these matters provided at least the prescribed quorum was physically present.
4. Section 173(2) was further amended in 2020 / 2021 to facilitate VC during the COVID-19 period.
5. Hence option B is correct.
_Source: Companies Act 2013 (Act 18 of 2013), Govt. of India MCA — Companies Act 2013, Section 173(2); Companies (Meetings of Board and its Powers) Rules 2014, Rule 3_
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