Preparation & Recording Of Minutes Of Board Meeting Under The New Compliance Regime – Secretarial Standard 1
The Institute of Company Secretaries of India has issued the Secretarial Standards (SS1 on Meeting of the Board of Directors and SS2 on General Meetings) which were approved by the Central Government. The adherence by the Company to these Standards is mandatory, as per the provisions of Section 118(10) of the Companies Act, 2013.
Secretarial Standards came in force w.e.f. 01st July, 2015 and apply to all the Meetings of the Board of Directors of all the Companies except One Person Companies wherein only One director in the Board.
These Standards have overhauled the entire process of the Board Meeting. The highlights of the provisions relating to the preparation and recording of the minutes of the Meetings of the Board of Directors and committees thereof are narrated herein below:
Minutes of the Board/Committee Meetings: Every company shall keep Minutes of all Board and Committee Meetings in a Minutes Book. Minutes kept in accordance with the provisions of the Act evidence the proceedings recorded therein. Minutes help in understanding the deliberations and decisions taken at the Meeting.
1. A distinct Minutes Book shall be maintained for Meetings of the Board and each of its Committees.
2. Minutes may be maintained in electronic form in such manner as prescribed under the Act and as may be decided by the Board. Minutes in electronic form shall be maintained with Timestamp. A company may maintain its Minutes in physical or in electronic form with Timestamp. Every company shall however follow a uniform and consistent form of maintaining the Minutes. Any deviation in such form of maintenance shall be authorized by the Board.
3. The pages of the Minutes Books shall be consecutively numbered. This shall be followed irrespective of a break in the Book arising out of periodical binding in case the Minutes are maintained in physical form. This shall be equally applicable for maintenance of Minutes Book in electronic form with Timestamp.
4. In the event any page or part thereof in the Minutes Book is left blank, it shall be scored out and initialled by the Chairman who signs the Minutes.
5. Minutes shall not be pasted or attached to the Minutes Book, or tampered with in any manner.
6. Minutes of the Board Meetings, if maintained in loose-leaf form, shall be bound periodically depending on the size and volume and coinciding with one or more financial years of the company.
7. There shall be a proper locking device to ensure security and proper control to prevent removal or manipulation of the loose leaves.
8. Minutes of the Board Meeting shall be kept at the Registered Office of the company or at such other place as may be approved by the Board.
Contents of Minutes: Now the Secretarial Standards have also specified the contents of the minutes:
General Contents: Minutes shall state, at the beginning :
1. serial number and type of the Meeting;
2. name of the company
3. day, date, venue;
4. Time of commencement and conclusion of the Meeting.
5. Names of the Directors present physically or through Electronic Mode, Company Secretary
6. Minutes shall record the names of the Directors present physically or through Electronic Mode, the Company Secretary who is in attendance at the Meeting and Invitees, if any, including Invitees for specific items.
7. The names of the Directors shall be listed in alphabetical order or in any other logical manner, but in either case starting with the name of the person in the Chair. The capacity in which an Invitee attends the Meeting and where applicable, the name of the entity such Invitee represents and the relation, if any, of that entity to the company shall also be recorded.
8. Minutes shall contain a record of all appointments made at the Meeting.
In case a Meeting is adjourned, the Minutes shall be entered in respect of the original Meeting as well as the adjourned Meeting. In respect of a Meeting convened but adjourned for want of quorum, a statement to that effect shall be recorded by the Chairman or any Director present at the Meeting in the Minutes.
Where the Minutes have been kept in accordance with the Act and all appointments have been recorded, then until the contrary is proved, all appointments of Directors, First Auditors, Key Managerial Personnel, Secretarial Auditors, Internal Auditors and Cost Auditors, shall be deemed to have been duly approved by the Board. All appointments made one level below Key Managerial Personnel shall be noted by the Board.
Specific Contents: Minutes shall inter-alia contain:
1. Record of election, if any, of the Chairman of the Meeting.
2. Record of presence of Quorum.
3. The names of Directors who sought and were granted leave of absence.
4. The mode of attendance of every Director whether physically or through Electronic Mode.
5. In case of a Director participating through Electronic Mode, his particulars, the location from where and the Agenda items in which he participated.
6. The name of Company Secretary who is in attendance and Invitees, if any, for specific items and mode of their attendance if through Electronic Mode.
7. Noting of the Minutes of the preceding Meeting.
8. Noting the Minutes of the Meetings of the Committees.
9. The text of the Resolution(s) passed by circulation since the last Meeting, including dissent or abstention, if any.
10. The fact that an Interested Director was not present during the discussion and did not vote.
11. The views of the Directors particularly the Independent Director, if specifically insisted upon by such Directors, provided these, in the opinion of the Chairman, are not defamatory of any person, not irrelevant or immaterial to the proceedings or not detrimental to the interests of the company.
12. If any Director has participated only for a part of the Meeting, the Agenda items in which he did not participate.
13. The fact of the dissent and the name of the Director who dissented from the Resolution or abstained from voting thereon.
14. Ratification by Independent Director or majority of Directors, as the case may be, in case of Meetings held at a shorter Notice and the transacting of any item other than those included in the Agenda.
15. The time of commencement and conclusion of the Meeting.
Apart from the Resolution or the decision, Minutes shall mention the brief background of all proposals and summaries the deliberations thereof. In case of major decisions, the rationale thereof shall also be mentioned. The decisions shall be recorded in the form of Resolutions, where it is statutorily or otherwise required. In other cases, the decisions can be recorded in a narrative form.
Where a Resolution was passed pursuant to the Chairman of the Meeting exercising his second or casting vote, the Minutes shall record such fact.
Recording of Minutes:
1. Minutes shall contain a fair and correct summary of the proceedings of the Meeting. The Company Secretary shall record the proceedings of the Meetings. Where there is no Company Secretary, any other person duly authorized by the Board or by the Chairman in this behalf shall record the proceedings.
2. The Chairman shall ensure that the proceedings of the Meeting are correctly recorded. The Chairman has absolute discretion to exclude from the Minutes, matters which in his opinion are or could reasonably be regarded as defamatory of any person, irrelevant or immaterial to the proceedings or which are detrimental to the interests of the company.
3. Minutes shall be written in clear, concise and plain language. Minutes shall be written in third person and past tense. Resolutions shall however be written in present tense. Minutes need not be an exact transcript of the proceedings at the Meeting. In case any Director requires his views or opinion on a particular item to be recorded verbatim in the Minutes, the decision of the Chairman whether or not to do so shall be final.
4. Any document, report or notes placed before the Board and referred to in the Minutes shall be identified by initialing of such document, report or notes by the Company Secretary or the Chairman. Wherever any approval of the Board is taken on the basis of certain papers laid before the Board, proper identification shall be made by initialing of such papers by the Company Secretary or the Chairman and a reference thereto shall be made in the Minutes.
5. Where any earlier Resolution (s) or decision is superseded or modified, Minutes shall contain a reference to such earlier Resolution (s) or decision.
6. Minutes of the preceding Meeting shall be noted at a Meeting of the Board held immediately following the date of entry of such Minutes in the Minutes Book. Minutes of the Meetings of any Committee shall be noted at a Meeting of the Board held immediately following the date of entry of such Minutes in the Minutes Book.
Finalization of Minutes:
1. Within fifteen days from the date of the conclusion of the Meeting of the Board or the Committee, the draft Minutes thereof shall be circulated by hand or by speed post or by registered post or by courier or by e-mail or by any other recognized electronic means to all the members of the Board or the Committee for their comments.
2. Where a Director specifies a particular means of delivery of draft Minutes, these shall be sent to him by such means. If the draft Minutes are sent by speed post or by registered post or by courier, an additional two days may be added for delivery of the draft Minutes.
3. Proof of sending draft Minutes and its delivery shall be maintained by the company.
4. The Directors, whether present at the Meeting or not, shall communicate their comments, if any, in writing on the draft Minutes within seven days from the date of circulation thereof, so that the Minutes are finalised and entered in the Minutes Book within the specified time limit of thirty days. If any Director communicates his comments after the expiry of the said period of seven days, the Chairman shall have the discretion to consider such comments.
5. In the event a Director does not comment on the draft Minutes, the draft Minutes shall be deemed to have been approved by such Director.
6. A Director, who ceases to be a Director after a Meeting of the Board is entitled to receive the draft Minutes of that particular Meeting and to offer comments thereon, irrespective of whether he attended such Meeting or not.
Entry in the Minutes Book:
1. Minutes shall be entered in the Minutes Book within thirty days from the date of conclusion of the Meeting. In case a Meeting is adjourned, the Minutes in respect of the original Meeting as well as the adjourned Meeting shall be entered in the Minutes Book within thirty days from the date of the respective Meetings.
2. The date of entry of the Minutes in the Minutes Book shall be recorded by the Company Secretary. Where there is no Company Secretary, it shall be entered by any other person duly authorized by the Board or by the Chairman.
3. Minutes, once entered in the Minutes Book, shall not be altered. Any alteration in the Minutes as entered shall be made only by way of express approval of the Board at its subsequent Meeting in which such Minutes are sought to be altered.
Signing and Dating of Minutes: Minutes of the Meeting of the Board shall be signed and dated by the Chairman of the Meeting or by the Chairman of the next Meeting. Minutes of the previous Meeting may be signed either by the Chairman of such Meeting at any time before the next Meeting is held or by the Chairman of the next Meeting at the next Meeting.
The Chairman shall initial each page of the Minutes, sign the last page and append to such signature the date on which and the place where he has signed the Minutes. Any blank space in a page between the conclusion of the Minutes and signature of the Chairman shall be scored out.
If the Minutes are maintained in electronic form, the Chairman shall sign the Minutes digitally.
Minutes, once signed by the Chairman, shall not be altered, save as mentioned in this Standard.
A copy of the signed Minutes certified by the Company Secretary or where there is no Company Secretary, by any Director authorized by the Board shall be circulated to all Directors within fifteen days after these are signed.
Inspection and Extracts of Minutes: The Minutes of Meetings of the Board and any Committee thereof can be inspected by the Directors. A Director is entitled to inspect the Minutes of the Meetings held during the period of his Directorship, even after he ceases to be a Director. The Company Secretary in Practice appointed by the company, the Secretarial Auditor, the Statutory Auditor, the Cost Auditor or the Internal Auditor of the company can inspect the Minutes as he may consider necessary for the performance of his duties. Inspection of Minutes Book may be provided in physical or in electronic form.
1. While providing inspection of Minutes Book, the Company Secretary or the official of the company authorized by the Company Secretary to facilitate inspection shall take all precautions to ensure that the Minutes Book is not mutilated or in any way tampered with by the person inspecting.
2. A Member of the company is not entitled to inspect the Minutes of Meetings of the Board.
3. Extracts of the Minutes shall be given only after the Minutes have been duly entered in the Minutes Book. However, certified copies of any Resolution passed at a Meeting may be issued even earlier, if the text of that Resolution had been placed at the Meeting.
4. A Director is entitled to receive, a copy of the Minutes of a Meeting held before the period of his Directorship.
5. A Director is entitled to receive a copy of the signed Minutes of a Meeting held during the period of his Directorship, even if he ceases to be a Director.
6. Extracts of the duly signed Minutes may be provided in physical or electronic form.
Preservation of Minutes and other Records: Minutes of all Meetings shall be preserved permanently in physical or in electronic form. If electronic form then with Timestamp.
Where, under a scheme of arrangement, a company has been merged or amalgamated with another company, Minutes of all Meetings of the transferor company, as handed over to the transferee company, shall be preserved permanently by the transferee company, notwithstanding that the transferor company might have been dissolved.
Office copies of Notices, Agenda, Notes on Agenda and other related papers shall be preserved in good order in physical or in electronic form for as long as they remain current or for eight financial years, whichever is later and may be destroyed thereafter with the approval of the Board.
Office copies of Notices, Agenda, Notes on Agenda and other related papers of the transferor company, as handed over to the transferee company, shall be preserved in good order in physical or electronic form for as long as they remain current or for eight financial years, whichever is later and may be destroyed thereafter with the approval of the Board and permission of the Central Government, where applicable.
Minutes Books shall be kept in the custody of the Company Secretary. Where there is no Company Secretary, Minutes shall be kept in the custody of any Director duly authorised for the purpose by the Board.
Disclosure: The Annual Report and Annual Return of a company shall disclose the number and dates of Meetings of the Board and Committees held during the financial year indicating the number of Meetings attended by each Director.
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