Timelines for holding board meetings amid the pandemic COVID 19

Nitu Poddar and Ambika Mehrotra

corplaw@vinodkothari.com

As one maybe aware that during this period of disruptions caused by COVID 19, several relaxations have ben provided by the Ministry of Corporate Affairs (MCA) vide its Notifications dated 19th March, 2020[1] and March 24, 2020[2] and the Securities and Exchange Board of India (SEBI) vide its Circular dated March 19, 2020[3]. Further the Institute of Company Secretaries of India has also issued its Guidance dated April 4, 2020[4] on the applicability of Secretarial Standards on board and general meetings.

A snapshot of the relaxations granted by the above authorities wrt board meetings are:-

S. No MCA for Companies Act, 2013 SEBI for LODR
1. Time gap for conducting board meetings relaxed to 180 days from present 120 days – for the first two quarters of FY 2020-2021

 

i.e BM from 24th March 2020 till 30th September 2020 can be conducted with a larger gap of 180 days

 

Time gap for conducting board and audit committee meeting has been relaxed without any upper limit – for meetings held / proposed to be held between December 1, 2019 and June 30, 2020.

 

However, it is to be ensured that there are 4 meeting of board and audit committee held during the FY.

 

 

2. Board meetings can be held through video conferencing or other audio visual means for all matters including the otherwise restricted matters mentioned in Rule 4 of the MBP Rules.

 

The time limit for submitting the annual financial results with the stock exchange has also been extended to June 30 from May 15 (for unaudited results) and May 30 (for audited results)
3. For the FY 2019-20, a ID meeting per se as per Schedule VI has been relaxed. If the IDs so deem necessary, the views may be shared through telephone / email or any other mode of communication

 

 

On close perusal of the relaxations granted by MCA and SEBI, it is understood that the relaxations are different for a listed and an unlisted company and the quarter for which the meeting pertains to. The major points to be kept in mind with respect to board meetings are:

  1. There has to be minimum 4 meetings in the FY;
  2. The maximum gap between two board meeting cannot be more than 180 days (stricter of the provisions to be applicable – MCA allows maximum time gap of 180 days and SEBI does not prescribes any maximum time gap.

Mostly, listed companies might have had their last board meeting held in the month of Feb, 2020. In that case, the next meeting can be held within 180 days but before 30th June, 2020 since that is the last date of filing financial results for Q4 of FY 2019-20 for both equity and debt[5] listed companies.

It is to be noted that the debt listed companies are required to make half-yearly intimation of financial result u/r 52 of LODR. However, where a debt-listed company is a subsidiary / joint venture or associate of an equity listed company, it needs to prepare and gets its results approved quarterly for the purpose of consolidation.

For unlisted company, the maximum time gap of 180 days is extended till all board meeting to be held before September 30, 2020.

  1. The relaxation is only with respect to the approval of financial results of Q4 of FY 19-20 which is till June 30, 2020. There is no relaxation w.r.t the approval of financial results for Q1 of FY 20-21. Accordingly, the same will have to be held within 45 days of the end of the quarter; i.e by 14th August, 2020.

In view of the same, we have put together the timelines wrt listed and unlisted companies in the table below:-

BMs to be held/held during the quarter MCA Relaxation SEBI Relaxation Equity Listed Debt Listed Unlisted
FY 2019-20 – Q4

 

Maximum time gap between two meetings can be 180 days Results of Q4 to be approved latest by June 30, 2020

 

BM to be held within June 30, 2020 BM to be held within June 30, 2020 Maximum time gap between two meetings can be 180 days
FY 2020-21 – Q1

 

Maximum time gap between two meetings can be 180 days No relaxation currently for approving results of Q1

 

 

BM to be held within August 14, 2020 If the financial results are consolidated with an equity listed company – BM to be held within August 14, 2020

 

 

If the financial results are not consolidated with an equity listed company – will have to ensure that the gap between two board meeting is not more than 180 days

FY 2020-21 – Q2

 

Maximum time gap between two meetings can be 180 days No relaxation currently for approving results of Q2

 

BM to be held within November 14, 2020  

 

[1] http://www.mca.gov.in/Ministry/pdf/Rules_19032020.pdf

[2] http://www.mca.gov.in/Ministry/pdf/Circular_25032020.pdf

[3] https://www.sebi.gov.in/legal/circulars/mar-2020/relaxation-from-compliance-with-certain-provisions-of-the-sebi-listing-obligations-and-disclosure-requirements-regulations-2015-due-to-the-covid-19-virus-pandemic_46360.html

[4] https://www.icsi.edu/media/webmodules/Guidance_on_applicability_of_Secretarial_Standards.pdf

[5] https://www.sebi.gov.in/legal/circulars/mar-2020/relaxation-from-compliance-with-certain-provisions-of-the-sebi-listing-obligations-and-disclosure-requirements-regulations-2015-and-certain-sebi-circulars-due-to-the-covid-19-virus-pandemic-cont-_46395.html

15 replies
  1. Narendra
    Narendra says:

    Our last Board meeting was held on 27th July’s. The next Board meeting has to pass the Audited Accounts.. Upto what time we have to hold the Board meeting. Kindly advice. Thank you.

    Reply
  2. Naresh Sharma
    Naresh Sharma says:

    Of we held a meeting on 21 Feb 2020, can we hold next on 30 Sept 2020 I.E after 187 days of previous meeting. Thanks

    Reply
    • Shaifali Sharma
      Shaifali Sharma says:

      Pursuant to Para II of the MCA General Circular No. 11/2020 dated 24th March, 2020, the maximum time gap between two board meetings can be 180 days for the first two quarters of FY 2020-21 i.e. till 30th September, 2020. Considering the intent is to grant temporary relaxation for holding board meetings during this period of disruptions caused by COVID-19, the period of 180 days shall be counted from the last meeting held in the FY 2019-20, which in given case is February 21, 2020.

      Assuming your case to be of an unlisted company, since the last board meeting was held on 21st February, 2020, the next board meeting shall be scheduled maximum upto 19th August, 2020. i.e. 180 days from 21st February, 2020.

      Reply
  3. Srinivas
    Srinivas says:

    A board meeting was held on 17th December 2019 and next BM was scheduled for 27th March 2020. Due to lock down that meeting was postponed and held on 9th June 2020. Is it alright or is there any remedy?

    Reply
  4. Urvashi Aggarwal
    Urvashi Aggarwal says:

    Hello Nitu and Ambika,

    Thank you for the article. According to the relaxations provided by MCA, I understand that the gap between 2 Board meetings can be 180 days but we still have to conduct 4 Board meetings in a calendar year. Please correct me if I’m wrong.

    Regards,
    Urvashi

    Reply
    • Ambika Mehrotra
      Ambika Mehrotra says:

      As rightly pointed, there has been no specific relaxation wrt the requirement of holding four board meetings in an year. Having said that, please note that pursuant to Section 173(1) of CA, 2013 read with Reg. 17(2) of LODR, 2015, the Companies are required to hold a minimum number of four board meetings every year.

      Reply
  5. Neha
    Neha says:

    1) If a Company holds it Board Meeting in December 2019 and have not called any Board Meeting between January – March 2020 due to Covid -19.

    As per the relaxations granted by MCA the gap between two board meeting needs shall be 180 days so suppose If i call my Board Meeting on 1 June so will I number it as my 4th Meeting for F.Y 2019-2020 or will it be first Board meeting for F.Y 2020-2021. What will I number this Board Meeting as there is mandatory requirement to hold 4 meetings and this has not been relaxed.

    Reply
    • Ambika Mehrotra
      Ambika Mehrotra says:

      Although the said board meeting would pertain to the matters relating to FY 2019-20, however, technically the meeting is being held in FY 2020-21 only. Therefore, this should be numbered as 01/2020-21. In any case, since there has been no specific relaxation wrt the requirement of four board meetings in an year, the authorities may come up with a clarification in this regard. However, considering the specificity of the current situation, this should not be a violation of law.

      Reply
      • Ajay Ranade
        Ajay Ranade says:

        Hello,

        Is there any relaxation given by MCA for holding MINIMUM FOUR Board meetings in a year in view of relaxation of time gap of 180 days between two Board Meetings is extended till 31st Dec 2020? OR still the companies required to hold at least four board meetings?

        Reply
  6. Rahul
    Rahul says:

    Is their any relaxation for newly incorporated Companies formed in the month of March’20.

    Else they require to hold first BM within 30 days from the date of incorporation?

    Reply
    • Ambika Mehrotra
      Ambika Mehrotra says:

      As per the Circular, the relaxation specifically pertains to the mandatory requirement of holding the board meetings with the gap of 120 days and does not include any relaxation wrt requirement of holding the first board meeting within 30 days of incorporation. Accordingly, the said requirement shall still remain the same.

      Reply
  7. Kwinkle
    Kwinkle says:

    Dear Mam,

    As per MCA Notification, temporary relaxation of time gap of 180 days is applicable for FY 20-21 but in your article above you have mentioned-

    i.e BM from 24th March 2020 till 30th September 2020 can be conducted with a larger gap of 180 days

    Requesting you to please clarify the duration to be taken into account for applying 180 days. Does relaxation apply to FY 19-20 Q4? And how?

    Thanks in anticipation.

    Awaiting your response.

    Reply
    • Nitu Poddar
      Nitu Poddar says:

      Para II of the MCA Circular dated 24.03.2020 grants relaxation of 60 additional days (180 days in total) for time gap between two board meetings “till” next two quarters i.e till 30th September. That is the date upto which the relaxation by MCA will extend to. However, the applicability of the relaxation will start from the date of the Circular. Also, any other interpretation of the same will not serve the purpose of granting such special relief by the MCA.

      Reply

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