How the new normal impacts on virtual board meeting governance

Virtual Meetings and Regulatory Compliance

In our previous two articles, we looked at ways companies can tackle the challenges of virtual meetings and discussed the opportunities they bring in a distributed environment. In this article, we’ll take a closer look at the regulatory environment around virtual meetings.

Even before the pandemic hit, company law in many countries had already started addressing the electronic compliance needs for company administration. These updates were largely driven by the rise in video conferencing a few years back. Thankfully, this means that the road to legal compliance in the current world, where platforms like Microsoft Teams, Cisco Webex, and Zoom have become everyday tools, is mostly already paved.

For example, in South Africa, the electronic duties of board directors are clearly outlined in the Companies Act of 2008. According to the Act, the responsibilities and accountabilities of directors are the same whether their attendance at board meetings is in person or electronic. However, compliance can still be a bit tricky.

Key Regulatory Changes and Compliance for Virtual Meetings

There are several technical changes due to electronic advancements that require governance adjustments. Below are some areas where company law must introduce specific provisions for electronic compliance. These provisions are based on South African law, specifically the Companies Act 71 of 2008 and the Electronic Communications and Transactions Act 25 of 2002 (ECT Act).

The Impact of Electronic Compliance

Under the Companies Act, board meetings can legally be held electronically or even as hybrid events, as long as the company's MOI (Memorandum of Incorporation) doesn’t explicitly prohibit it. So, joining a board meeting via video conferencing is legally considered the same as attending in person.

Additionally, board meeting notices can be sent electronically to directors via email, provided there’s reasonable lead time when sending it. The Companies Act also allows directors to electronically sign resolutions and other board documents as part of the electronic communications process.

Verifying Matters

While the Companies Act doesn’t specify particular requirements for signature verification, the ECT Act defines an ‘advanced electronic signature’. This is a signature generated through an authentication service, designed to identify the holder of the electronic signature to others.

In practice, this means that if a director clicks to confirm a vote and has been properly authenticated, it meets the requirements of both the Companies Act and the ECT Act for an advanced signature. When an agenda item is up for an electronic vote, it’s perfectly acceptable for directors to vote via email or another electronic system, provided this isn’t explicitly prohibited by the company’s MOI.

Conclusion

Virtual board meetings have become a standard for many organisations. However, business leaders must remain aware of the regulatory requirements to ensure they stay compliant with governance standards.

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[Updated: March 2025]