Government tweaks rules for companies' audit committee meetings

NEW DELHI: The audit committee meeting of a company for consideration of consolidated financial statement cannot be conducted through video conferencing or other audio visual means, according to new rules.

In this regard, changes have been made to rules under the Companies Act, 2013.

"... for the words 'consideration of accounts', the words 'consideration of financial statement including consolidated financial statement, if any, to be approved by the board under sub-section (1) of Section 134 of the Act," shall be substituted," the Corporate Affairs Ministry said in a notification issued on August 14.

Section 134 of the Act pertains to financial statement and board's report, among others.

The latest changes have been made through Companies (Meetings of Board and its Powers) Second Amendment Rules, 2014.

As per the rules, issued in March this year, audit committee meetings for consideration of accounts were barred from being conducted through video conferencing or other audio visual means.

Besides, many other matters are not allowed to be taken up by the board in meetings that are held through video conferencing and other audio visual means.

Such things include approval of the annual financial statements, board's report, prospectus and matters relating to amalgamation, merger, demerger, acquisition and takeover.

The new companies law, many of whose provisions came into force from April 1, provides for stringent measures to strengthen overall corporate governance standards.