The increasing number of organisations transitioning to remote board meetings is supported by the growing presence of board portals in the software as a service (SaaS) market. From this alone, it seems that the road to the digitisation of meetings is smooth and steady, but that’s not always the case. Concerns over the legal implications of remote board meetings have been brought to attention, the first of which is, Are remote board meetings legal?
The obvious answer is yes, but the real answer is this: The laws of where your organisation is located may govern the frequency and the manner with which board meetings are held. It’s best to refer to these laws to see whether or not remote board meetings can be legally held in your city, state, or country. For this article, we’ll look at the laws of some countries to give you an idea.
Remote board meetings are allowable in the UK provided that the meeting notice should indicate how directors who can’t be physically present will communicate during the meeting. However, completely virtual meetings are not permitted, so the meeting notice should specify an exact location and at least one director should be physically present there at the time of the meeting. If a decision is made while majority of the directors are in a remote location different from the one specified in the meeting notice, one can argue that the decision is made not in the specified location indicated in the meeting notice, but in the remote location where majority of the directors are physically present. If the said remote location is outside of the UK, this could lead to tax consequences. For example, a meeting notice can say that a meeting will be held in London, but if majority of the directors are remotely joining from Tokyo, any decision made in the meeting can be argued to be covered by Japan laws, and not UK laws, leading to tax complications. Organisations are advised to handle such a situation accordingly.
Remote board meetings are allowable in most states in the US provided that all directors can hear each other, enabling real-time debate and deliberation over decisions. The attendance of the directors in remote locations counts as if they were physically present. However, remote board meetings without the audio component violate the legal requirement, so organisations should be careful not to rely solely on visual media. Though directors have the option to attend a meeting remotely, a physical location where they can go to if their schedule permits should be set, and at least one designated person should be present in the said location. Given these restrictions, email meetings are not allowed unless for non-board business reasons (such as scheduling meetings) or emergencies. In case of an emergency, written consent by the board should be provided, whether individually as directors or collectively as a group.
Remote board meetings are allowable in South Africa provided that the communication methods employed enable all participating directors to communicate with each other simultaneously without the need for an intermediary. Faxes, telephone communications and conference calls are considered suitable electronic communications for meeting purposes. Virtual presence is considered to have the same weight as physical presence in terms of attendance. Remote board meetings in South Africa should facilitate real-time, interactive discussions among all participating directors to ensure decisions are made with everyone’s complete participation, whether physically or remotely present.
Remote board meetings are allowable in Australia provided that the technology used is agreed upon by all directors, and that participating directors can still hear and speak to one another. It’s expected that the technology gives reasonable opportunity for directors to participate, thus enabling them to hold meetings in two or more venues. However, ‘reasonable opportunity’ is subject to interpretation, so organisations have to be careful with how they choose to interpret this law.
For these countries we covered, a pattern emerges: Remote board meetings are perfectly legal, but only under certain conditions that should be satisfied; otherwise, a violation is committed. Also, the concept of a completely virtual meeting is not yet fully embraced because remote board meetings are still expected to be anchored to a physical location. We haven’t reached the total virtual stage yet, but that may change in the next few years.
Nevertheless, there’s a common thread that ties all these countries: Minutes are required to be documented in a board meeting for later reference. This is expected in physical, paper-based, face-to-face board meetings, and is also expected in virtual, paperless, remote board meetings. Documentation has always been a key legal requirement for board meetings, and the introduction of technology didn’t change that.
But how else will technology change board meetings in the future? We’re already seeing remote board meetings and the way they’re changing the meeting landscape, but they still have a long way to go. According to Some Legal Uncertainties in Electronic Corporate Meetings, a paper published in International Journal of Computer Theory and Engineering in April 2013, the corporate laws for remote board meetings are still in infancy stage with their ambiguities and unclear scopes, which are interpreted differently by varying jurisdictions. We can only hope that laws can evolve as quickly as technology does. For now, we advise you to refer to legal counsel for any law-related question you may have about remote board meetings. Take note that this article explores only the surface of the legal implications of remote board meetings, and serves only as a discussion piece and not as a formal reference.
Has your legal counsel given your organisation the go-signal for remote board meetings? Then try out Convene, our highly usable and multi-platform board portal that facilitates automated and streamlined remote board meeting processes. As a digital solution that works on iOS, Android, and Windows, directors have the option to choose their own device to access meeting documents and attend meetings from remote locations while connected to the Internet. Partner Convene with teleconferencing tools to enjoy the complete remote board meeting experience.