CS Manohar Mishra
The Ministry of Corporate Affairs conferred its approval to Secretarial Standard-1 (relating to Board Meeting) and Secretarial Standard-2 (relating to General Meeting) issued by the Institute of Company Secretaries of India (ICSI). No other country of the world except India has yet adopted the Secretarial Standards (SS). The Board of Directors play an imperative role in the functioning, governing, progression of an organization. Therefore, it is required that it shall function in such a manner, it can satisfy the requisite of various stakeholders. As per section 118(10) of the Companies Act, 2013, every company has to follow Secretarial Standards issued by the ICSI. Company Secretary either in employment or in practice has to ensure that the Company or their clients has complied with the Secretarial Standards provisions. Therefore, we can say that massive responsibility is imparted on the Company Secretaries.
The various provisions of Secretarial Standard-1 are enlisted below:
Applicability: Secretarial Standard 1 (SS-1) applies to:
All meeting of the Board of Directorsof the Companies and committees of the Board thereof held on or after 1st day of July, 2015.
Non Applicability: One Person Company (OPC) consists of only one (1) director on the Board. The MCA vide its notification dated 5th June, 2015 has exempted section 8 companies (companies as per section 8 of the Companies Act, 2013) to comply with the provision of section 118 except the recording of Minutes within 30 days of the meeting.
Key Definition’s: Some of the important definitions introduced by SS are as under:
1. Calendar Year: Period of 12 months as per Gregorian calendar i.e. starting from 1st January and ends on 31st December;
2. Invitee: means any person other than Director and Company Secretary, who attends a meeting by invitation;
3. National Holiday: It includes 26th January i.e. Republic Day, 15th August i.e. Independence Day, 2nd October i.e. Gandhi Jayanti and such other day as may be decided by the Central Government;
4. Timestamp: It means the current time of an event that is recorded by an electronic device (secured computer system) to recognize the time when a file is printed or any data is added, removed, modified, sent or received by the receiver.
Example: Saturday 30th January, 2016, 6.00 P.M.
Key Highlights of various provisions
A. Convening of a Board meeting
1. Any director and the Company Secretary, if any, of the Company may, at any time, summon a meeting of the Board on any day excluding a National Holiday. It means a Board Meeting can be held on Sunday also (if it’s not a National Holiday).
2. The Meeting should be called at any time, and it can be held outside India also.
3. Every meeting of the Board of Directors held on or after 01s July, 2015 shall be consecutively number and number can be similar to 07/BM/2015-16 (07 indicates number, BM indicates Board Meeting(BM) and 2015-16 indicates the year of the BM).
B. Notice of Board/Committee Meeting
C: Notes on agenda of Business
Each item of business requiring approval at the meeting shall be supported by a note. Each item of business to be taken up shall be consecutively numbered. Any Notes shall contain the following;Details of the proposal;Relevant material fact;Scope and implication of the proposal; andNature of interest or concern, if any, of the Director in the proposal.
D: Frequency of Board Meeting
The Board of Directors of every company except Small, One person and Dormant Company shall meet at least once in every calendar quarter, so that maximum gap between the two Board Meeting should not exceed 120days and so that 4 board meeting should have been held.
The quorum of a Board Meeting shall be 1/3rd of the total strength of the Board or 2 Directors whichever is higher. Any fraction contained in the calculation of quorum shall be rounded off to the next one. If the Number of Interested Director exceeds or is equal to two-thirds of the total strength, the remaining directors present at the Meeting, being not less than 2, shall be the Quorum. Quorum shall be present throughout the meeting. Interested director shall not present in the meeting either by physical or electronic mode, during discussion and shall not vote on such item.
F. Meeting of Committees of Board
1. All the members of the Committee shall be to present in a meeting to constitute the quorum.
2. The Committee members can also have participation through Electronic mode.
3. There is no frequency to hold committee meetings.
G. Attendance of Meetings
Serial Number;Date of meeting;Name of the committee in case of committee meeting;Place of the meeting;Time of the meeting; Name and signature of the Director present and the Company Secretary who is in attendance and also of the person who attends the Meeting by invitation.
2. In case of Director attends a Meeting by Electronic Mode; the Chairman shall confirm the attendance of Such Directors by taking a roll call at the commencement of the Meeting. The Director shall state the full name and location form where he is participating. The attendance register of Director participating through electronic mode shall be deemed to be signed by him, if their attendance is recorded by the Chairman or the Company Secretary.
3. The attendance register shall be maintained at the Register office of the Company unless permitted by the Board to be maintained at any other place. It is open for the inspection by the director. The Company Secretary in practice or the Secretarial Auditor appointed by the Company can also inspect the attendance register for the performance of his duties. The Member of the Company can’t inspect the attendance register of the Board or Committee Meetings. The attendance register shall be preserved for a minimum period of 8 Financial Year and thereafter it can be destroyed with the approval of the Board. It shall be kept under the Custody of Company Secretary, if any.
1. The Chairman of the Company shall be the Chairman of the Board. In case the Company does not have a Chairman then the Existing Directors may elect one of themselves to be the Chairman of the Board.
2. A member of the Committee appointed by the Board or elected by the Committee as the Chairman of the Committee, shall conduct the Meeting of the Committee.
I. Minutes of Meeting
Conclusion: Through the induction of Secretarial Standard-1, now there is a complete clarity on Calling of Board Meeting, Issuance of Notice along with the relevant notes and agenda, Conduction of Board Meeting, how the Directors can participate, what extra facilities’ they can get, what they have to disclose, within what time they will get the draft Minutes of the proceeding of the Meeting, what they have to do after receiving of the draft Minutes and within how much time they will get the certified copies of the Minutes.