Customer Care No.

91-1145562222

NCLT upholds directors

right to participate in
board meeting through
video-conferencing
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Introduction
Technology Meets Trade
1.The Companies Act, 2013 ('the Act of 2013') ushered in a
new era in the corporate law regime in India and has brought
the Indian corporate laws in tune with the global corporate law
best practices. The various changes introduced in the Act of,
2013 will have a lasting impact on the way business is
conducted by companies in this country.
With the advent of an atmosphere of liberalisation, many new
provisions were introduced in the Act of 2013 to make it easy
to do business in India, whether for domestic players or for
foreign companies investing in Indian companies. One such
change which was formally introduced in the Act of 2013 was
the enabling power of directors of a company to participate in
its Board meetings via video-conferencing. The Act of 2013,
thus, allowed and permitted Board Meetings to be held and
conducted through the medium of video-conferencing and also
enabled company Directors desirous of participating in Board
Customer
No. 91-11Meetings Care
through
video-conferencing and intimating the

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Participation in Board Meetings Through Video-Conferencing Allowed: a Boon for Foreign
Directors and Indian Directors Alike
2. In 2014, the Ministry of Corporate Affairs notified the Rules governing such participation
through video-conferencing in the form of the Companies (Meeting of the Board and its Powers)
Rules, 2014 ('Board Meeting Rules'). The said Rules, which were notified on 31st March, 2014,
lay down the parameters for companies to be complaint while conducting and convening Board
Meetings through video-conferencing and other audio-visual mode.
Board Decisions that cannot be allowed to be taken via Video-Conferencing
3. With an intention of balancing the scales of power and to prevent abuse thereof, Rule 4 of the
Board Meeting Rules prohibits and does not permit certain important corporate decisions to be
taken by means of video-conferencing. Rule 4 makes it clear that the following matters shall not
be dealt with in any Board Meeting held through video-conferencing or through other audiovisual means:
(a) The approval of annual financial statements of the Company;
(b) The approval of the Report of the Board of Directors of the Company;
(c) The approval of the prospectus;
(d) The Audit
Customer
Care Committee
No. 91-11- Meetings for consideration of accounts; and

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While the aforesaid recent changes were intended to facilitate the meetings of the Board of
Directors of the companies to be conducted through video-conferencing, already litigations
have ensued in this regard. The recently constituted National Company Law Tribunal (NCLT)
had the occasion to deal with such an issue and its interpretation given vide NCLT New Delhi
Bench order dated 22nd June, 2016 in the case ofRupak Guptav.U.P. Hotels Ltd.
[2016] 71 taxmann.com 158 (NCLT - New Delhi)(in short Rupak Gupta order) will have a far
reaching impact on the functioning of meetings of Board of Directors of companies in India.
The main question that was answered in the said ruling was whether company Directors can
attend Board Meetings of the company via video-conferencing without prior intimation given at
the beginning of the calendar year conveying such intention of participation through videoconferencing.
Brief Facts of the Case: Rupak Gupta v. U.P.Hotels Ltd.
4.In the saidRupak Gupta'scase, (supra) the applicant and his mother were continuing as
Directors of the Respondent-Company. Owing to their travel plans overseas, they were desirous
of participating in the Company's Board Meeting to be held on 4th June, 2016viavideoconferencing. However, the Joint Managing Director of the respondent Company denied the
applicant and his mother the right to participate in the said Board meetingviavideoCustomer
Care No.
conferencing
and91-11albeit, certain important decisions were taken in that Boardwww.taxmann.com
Meeting,

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