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NASSCOM’s Representation to Ministry of Corporate Affairs on relaxation of provisions relating to maintaining time gap between two Board Meetings

As per section 173(1) of Companies Act, 2013, every company is required to hold minimum 4 meetings of its Board of Directors every year such that not more than 120 days shall intervene between two consecutive meetings.

In view of the disruptions caused by pandemic COVID-19, Securities and Exchange Board of India (“SEBI”) has recently granted relaxations in compliance stipulations specified under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR’) to listed entities.[1]

Listed companies are now exempt from observing the maximum stipulated time gap of 120 days between 2 meetings for meetings held/proposed between the period December 1, 2019 and June 30, 2020. However, board of directors / Audit Committee will ensure that they meet at least 4 times a year, as stipulated under regulations 17(2) and 18(2)(a) of LODR.

We have requested Ministry of Corporate Affairs (MCA) to harmonize and align the provisions under Section 173(1) of the Companies Act with SEBI circular exempting listed companies from observing time gap of 120 days between two board meetings/ audit committee meetings.

Further, we have also requested to extend the above relaxation for non-listed companies. This will greatly benefit such companies and provide them with the flexibility in time of this exigency, while complying with the provisions of law.

We will keep you posted on further developments in this regard.

[1] SEBI Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/38 dated March 19, 2020, see: 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

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