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CS Alka Kapoor Joint Secretary Slide 2 E-Governance: Maintenance of books in electronic form Section 2(12) book and paper and book or paper include books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form; Section 2(36) document includes summons, notice, requisition, order, declaration, form and register, whether issued, sent or kept in pursuance of this Act or under any other law for the time being in force or otherwise, maintained on paper or in electronic form; Section 2(74) register of companies means the register of companies maintained by the Registrar on paper or in any electronic mode under this Act;. Slide 3 E-Governance: Maintenance of books in electronic form [Section 120] Section 120 provides that any document, record, register, minutes, etc., required to be kept by a company; or allowed to be inspected or copies to be given to any person by a company may be in electronic form in such form & manner as may be prescribed. Slide 4 E-Governance: Maintenance of books in electronic form- Rule 27 Rule 27 of Companies (Management and Administration) Rules, 2014 Every listed co. or a co. having not less than 1000 shareholders, debenture holders and other security holders, shall maintain its records in electronic form. In case of existing companies, data shall be converted from physical mode to electronic mode within six months from the date of notification(w.e.f 1-4-2014 therefore by 30-09-2014 companies need to comply). Slide 5 E-Governance: Maintenance of books in electronic form- Rule 28 Security of records maintained in electronic form The MD, CS or any other director or officer of the company as the Board may decide shall be responsible for the maintenance and security of electronic records. Slide 6 E-Governance: Maintenance of books in electronic form- Rule 29 Inspection and copies of records maintained in electronic form. Company shall allow inspection in records in electronic form or provide copies of those records containing a clear reproduction of the whole or part thereof, on payment of not exceeding ten rupees per page. Slide 7 Major E-Governance Provisions Under CA, 2013 Service of Documents (Sec 20) A document may be served on a company electronically. A document may be served on Registrar or any member by sending it in electronic mode Slide 8 Major E-Governance Provisions Under CA, 2013 Notice of Meetings Board meeting shall be called by giving not less than 7 days notice which may be sent by electronic means.(Sec 173(3)) General meeting may be called by giving not less than clear 21 days notice through electronic mode in prescribed manner.(Sec 101) Slide 9 Major E-Governance Provisions Under CA, 2013 Notice of Meetings Rule 18, Companies (Management and Administration) Rules, 2014 A company may give notice of meeting through electronic mode. A notice may be sent through e-mail as a text or as an attachment to e-mail or as a notification providing electronic link or URL for accessing such notice and simultaneously be placed on co.s website. Electronic mode shall mean any communication sent by a company through its authorized and secured computer programme which is capable of producing confirmation and keeping record of such communication addressed to the person entitled to receive such communication at the last electronic mail address provided by the member. Slide 10 Notice of Meetings (Rule 18) A record of any failed transmissions of notices and subsequent re-sending shall be retained by or on behalf of the company as proof of sending. The Company shall not be held responsible for failure in transmission beyond its control. If the member doesnot provide an updated e-mail address, the co. shall not be in default Major E-Governance Provisions Under CA, 2013 Slide 11 Voting through electronic means Section 108 read with Rule 20 of Companies (Management and Administration ) Rules, 2014 Every listed co. or a co. having not less than 1000 shareholders, shall provide to its members facility to exercise their right to vote at GM by electronic means. A member may exercise his right to vote at any GM by electronic means and co. may pass any resolution (ordinary/special) by electronic voting system. MCA Clarification vide circular No. 20/2014 dt 17 th June, 2014 Major E-Governance Provisions Under CA, 2013 Slide 12 Passing of Resolution By Circulation Section 175 --A resolution shall be deemed to have been duly passed by the Board, by circulation, only when it has been circulated in draft, together with the necessary papers, by hand delivery or by post or by courier, or through such electronic means.....which may include E-mail or fax. Major E-Governance Provisions Under CA, 2013 Slide 13 Payment of dividend Section 123 --any dividend payable in cash may be paid by: cheque or warrant or in any electronic mode to the shareholder entitled to the payment of the dividend. Slide 14 Major E-Governance Provisions under CA, 2013 Postal Ballot [Section 110 Read with Rule 22] A company shall pass resolutions only by postal ballot in respect of such items of business as declared by the Central Government. Postal ballot means voting by post or through electronic means within a period of 30 days from the date of dispatch of the notice. The provisions of rule 20 regarding voting by electronic means shall apply, as far as applicable, mutatis mutandis to this rule in respect of voting by electronic means. Slide 15 Admissibility of certain documents as evidence Any document reproduced or derived from returns and documents filed by a company with the Registrar on paper or in electronic form and authenticated by Registrar shall be admissible in any proceedings there under without further proof or production of the original as evidence Slide 16 VIDEO CONFERENCING [SEC 173(2)] Meetings of Board (2) A director may participate in a Board meeting either in person or through video conferencing or other audio visual means, as may be prescribed, which are capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meetings along with date and time. Slide 17 Rule 3 Companies (Meetings of Board and its Powers) Rules, 2014 The rules provide for a detailed manner in which a company may hold a meeting through video or audio visual connection. Every Co. shall make necessary arrangements to avoid failure of video or audio visual connection. Video conferencing or other audio visual means means audio- visual electronic communication facility employed which enables all the persons participating in a meeting to communicate concurrently with each other without an intermediary and to participate effectively in the meeting. Slide 18 Notice The notice of the meeting shall inform the directors regarding the option available to them to participate through video conferencing. Notice shall also include all the necessary information to enable the directors to participate through video conferencing. Draft SS- Notice shall contain contact number or e- mail addresses of Chairman or Secretary or any authorised person to whom the director may confirm about his participation through video conferencing. Rule(3) [Sub-rule(3)(b)] Slide 19 Intimation by the Director The director intending to participate through VC shall give prior intimation to that effect sufficiently in advance to the company. Director who desires to participate through VC may intimate his intention at the beginning of the calendar year, such intimation shall be valid for 1 year. In the absence of any intimation by director of mode of attendance, it shall be assumed that the director shall attend the meeting in person. Rule(3) [Sub-rules(3)(c),(d),(e)] Slide 20 Rule(3) [Sub-rule (6)] Place of Meeting The place of the meeting as given in the notice convening the meeting, shall be deemed to be the place of the said meeting. The scheduled venue of the meeting, which shall be in India, shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting shall be deemed to be made at such place. All statutory registers shall be placed at scheduled venue. Slide 21 Roll Call It shall be taken by the Chairperson, who shall confirm from the member the following :- (a) name; (b) the location from where he is participating; (c) that he has received the agenda and all the relevant material for the meeting; and (d) that no one other than the concerned director is attending or having access to the proceedings of the meeting Rule(3) [Sub-rule (4)] Slide 22 Quorum A director participating in a meeting through video conferencing or other audio visual means shall be counted for the purpose of quorum. The Chairperson shall ensure that the required quorum is present throughout the meeting. Rule(3) [Sub-rule (5)] Slide 23 Identification & Voting Every participant shall identify himself for the record before speaking on item of business agenda. If a motion is objected to and there is a need to put it to vote, the Chairperson shall call the roll and note the vote of each director who shall identify himself while casting his vote. Rule(3) [Sub-rules (8)&(9)] Slide 24 Role of the Chairperson of the meeting and the company secretary, to take due and reasonable care: to safeguard the integrity of the meeting by ensuring sufficient security and identification procedures; to ensure availability of proper video conferencing or facilities for effective participation of the directors; to record proceedings and prepare the minutes of the meeting; to store for safekeeping and marking the tape recording(s) or other electronic recording mechanism. to ensure that no person other than the concerned director are attending or have access to the proceedings of such meeting to ensure that participants attending the meeting through audio visual means are able to hear and see the other participants clearly during the course of the meeting. Rule(3) [Sub-rule(2)] Slide 25 Minutes The minutes shall disclose the particulars of the directors who attended the meeting through video conferencing. Draft SS Minutes shall also record the location from where the director participated and the agenda in which he participated. The draft minutes of the meeting shall be circulated among all the directors within 15 days of the meeting either in writing or in electronic mode. Every director who attended such meeting shall confirm or give his comments in writing, about the accuracy of recording of the proceedings, within 7 days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed. Rule(3) [Sub-rules(11) &(12)] Slide 26 Committee Meetings The rules provide for convening and conducting the Board meetings through video conferencing or other audio visual means. It shall be presumed that the provisions apply to the Committee Meetings as well. Rule(3) Slide 27 Matters not to be dealt with in a meeting through video conferencing or other audio visual means: the approval of the annual financial statements; the approval of the Boards report; the approval of the prospectus; the Audit Committee Meetings for consideration of accounts; and the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover. Companies (Meetings of Board and its Powers) Rules, 2014 Rule(4) Slide 28 Issue-1 The scheduled venue of the meeting, which shall be in India, shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting shall be deemed to be made at such place. Does that mean video conferencing cannot be held outside India? Slide 29 Issue-2 The Chairperson shall ensure that the required quorum is present throughout the meeting. What happens where the connection of one or two members gets disrupted? Will the meeting continue where quorum requirement is still fulfilled? Slide 30 Issue-3 The Chairperson of the meeting and the company secretary, if any, shall take due and reasonable care - to record proceedings. What happens if the recording gets corrupted before the recording of minutes? Slide 31 Issue-4 Q.The statutory registers which are required to be placed in the Board meeting shall be placed at the scheduled venue of the meeting. How will these registers be signed by directors participating through video conferencing. Response: Rule (3) sub rule(7) provides that where such registers are required to be signed by the directors, the same shall be deemed to have been signed by the directors participating through electronic mode, if they have given their consent to this effect and it is so recorded in the minutes of the meeting. Slide 32 Issue-5 Q. What about the attendance register in such a case? Response The draft secretarial standard issued by ICSI attendance register shall be deemed to have been signed by directors participating by electronic mode if their attendance is recorded by the Chairman or secretary in attendance register and in minutes of the meeting. Slide 33 Issue-6 Q. What about preserving the records of proceedings of the meeting Response It is the duty of chairman and the CS to maintain the tape recording of the meeting as a part of the records at least before the time of completion of audit of the particular year. (Rule 3 (2)(e)). Draft SS-- The recording of the proceedings of the Meetings through Electronic Mode shall be preserved for atleast eight financial years and may be destroyed thereafter with the approval of the Board. Slide 34 Issue-7 The rules provide for certain matters not to be taken up at the meeting held through video conferencing. (i.e. Only at physical meeting) the approval of the annual financial statements; the approval of the Boards report; the approval of the prospectus; the Audit Committee Meetings for consideration of accounts; and the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover What if certain members wish to participate through Video Conferencing in such meetings? Slide 35 THANKS