 "Tata Global Beverages board meet: Failure to keep video recording may attract Rs 10,000 fine")
Non-compliance with company law provisions relating to safe storage of audio-visual recordings may not have a major consequence, though it raises questions about long-standing Tata values and culture.
The relatively recent provision that seeks to streamline processes relating to board meetings where one or more members participate through video-conferencing shot into the limelight following the board meeting of Tata Global Beverages earlier this month.
Experts said the provisions of Section 173 of the Companies Act — which require recording of meetings that involve participation through video conferencing be kept for safe storage at least till the audit for the year is completed — did not specifically provide for any remedy for contravention or non-compliance.
J N Gupta, managing director, Stakeholders Empowerment Services, said in such cases provisions of Section 450 of the Act —which covers contravention for all such sections where no specific penalty has been prescribed — would come into play.
“Under Section 450, the company or the officer in default can be penalised up to Rs 10,000, and in case the contravention is continuing a fine of up to Rs 1,000 per day can be levied for every day such contravention occurs,” Gupta said.
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Compliance professionals said these provisions of the company law had not been tested since complaints had not yet surfaced. They added it would be interesting to see what the response of the exchanges and the ministry of corporate affairs was in case an aggrieved director filed a complaint.
Sources close to Cyrus Mistry, who was removed as chairman of Tata Global Beverages at its November 15 board meeting, have alleged this was an effort to “hide the truth of what transpired in the meeting”.
Sources said both sides had exchanged emails as Mistry’s comments were sought on the draft minutes of the board meeting, during which he is said to have asked for the video recording of the proceedings.
The Mistry camp has alleged that Tata Global Beverages’ version of events at the board meeting filed with stock exchanges was “not borne out by facts”. Sources said Mistry had questioned the “convenient” excuse of systemic failure that prevented the recording. “None of this adheres to long-standing Tata values and culture,” Mistry is said to have alleged.
Tata Global is said to have responded to Mistry’s allegations saying the lapse was genuine and requested him not to attribute motives or “treat this in any manner that does not reflect Tata values and culture”.
The Tata Global Beverages compliance team is said to have prepared the draft minutes based on meticulous notes of the proceedings. Some Tata Global Beverages directors are said to have given their confirmation to the draft minutes.
