Are Virtual Board Meetings Legal? Implications and Compliance Considerations

Virtual board meetings are becoming a necessity, especially in recent times. The pandemic, coupled with rapid digitalization, has accelerated the shift of boards from physical to digital boardrooms. Today, many organizations worldwide have embraced virtual board meetings as part of their new normal operations.

Because of the sensitive nature of board meetings, board directors and corporate secretaries usually worry about the legalities and regulatory compliance of going digital. This led to boards reviewing their bylaws and regulations to verify if virtual meetings are a viable and legal option for their organization.

This raises an important question — what are the legal and compliance considerations when digitalizing your boardroom?

Legal and Compliance Considerations

To shift towards digital board meetings, boards must consider a few points to uphold the best governance practices while remaining compliant with regulations.

Regulations Review

Countries all over the world have varying regulations in conducting remote board meetings. Depending on the national regulatory laws, organizations are subject to specific regulations when conducting virtual board meetings. These federal regulations should shape the organizations’ constitutions.

Looking into these constitutions is necessary when holding virtual board meetings. Constitutions that do not have specific bylaws concerning the format of meetings give boards more flexibility. In cases wherein the bylaws do not permit virtual board meetings, there is a need to consider national regulations and the organization’s constitution to amend this.

Note that certain countries have different regulations per state, especially those with federal forms of government, such as the United States. If companies have decided to switch to online board meetings, the board should also agree on their implementation rules. It includes how they should empower their virtual meetings, from what platform they should utilize to how often they should meet.

Ultimately, how the board evolves in its meeting processes should be reflected in the company’s bylaws to ensure everything is on-point and follows national guidelines.

Engagement Requirements

There are various factors to be mindful of to ensure that your electronic board meetings are considered legal. One of which is communication fluidity. Regulating certain countries, such as South Africa and Hong Kong, consider remote proceedings a legal method for boards to convene as long as the communication methods offer real-time discussion.

Essentially, virtual board meetings should run as if the board is meeting in person. To do so, companies should choose software that can facilitate real-time discussions. The video conferencing feature used to run these virtual board meetings should also run smoothly. Furthermore, documents needed for the meeting should be available and ready to be accessed, annotated, and shared for viewing in real-time.

For a more dynamic experience, your meeting must meet digital technical requirements. Stable internet access should be available for all attendees to allow seamless communication and interaction, especially during deliberation and critical decision-making discussions.

Your meeting should also promote engagement among your members, especially during critical tasks like voting on pending resolutions.

Achieving a quorum among members is another factor to consider. Before conducting digital meetings, check if the same quorum rules apply for virtual and physical board meetings.

A “camera-on” policy can be implemented to ensure that quorum is initially met and maintained throughout the virtual meeting. Regular attendance checking measures must be conducted as well. Make sure the verification process does not hinder any part of the discussion. It should also avoid any grave inconvenience to the board member during the meeting.

Board Meeting Documentation

Proper documentation is essential, whether it is a physical or virtual board meeting.

However, recordings of virtual meetings are often regarded as unsafe or unnecessary by board members. Improper recording and careless storage can lead to a leak of information. Thus, recording and storing guidelines for every online session should be agreed upon by the board.

To ensure proper documentation, corporate secretaries and leaders should leverage their board software. This allows for faster generation of attendance reports, drafting of meeting minutes, and recording votes on vital decision points.

Tips For Compliance

The most important thing to remember when virtually holding board meetings is adhering to your company bylaws. This ensures compliance with your decision to conduct online board meetings.

Corporate secretaries play an integral role in ensuring board meetings comply with bylaws. Before shifting to a digital boardroom, they should determine the relevant provisions that need to be reviewed. This supports any further action steps by the collective.

In charge of overseeing the meetings’ legal compliance, corporate secretaries should provide sound advice to the board throughout the process. It is also their job to be at the forefront of the digital transition process. They need to lead as they are the ones who will execute any resolution the board sets for the endeavor.

Legal Virtual Board Meetings

Deciding how you will conduct a board meeting should be bound by a clear decision from the board itself. The meeting format should also be approved by everyone involved to guarantee alignment.

On top of the consensus, the board should decide on the software to effectively and efficiently facilitate the required virtual meeting process. Using board meeting software, such as Convene, can help you conduct more productive sessions while ensuring regulatory compliance.

Knowing the legal and compliance considerations in conducting online meetings is a must when digitalizing your boardroom. Learn more about the multiple benefits of utilizing a board meeting solution.

Watch our recent webinar, in collaboration with the Corporate Secretaries International Association Limited, to find out what experts from all over the world have to say about going digital in the boardroom.