CS Divesh Goyal
SHORT SUMMARY:
In this Flash editorial, the author is referring to amendment i.e. Secretarial Standard -2 (here after referred as “SS-2”) issued on July, 1st, 2015 (here after referred as “Old SS”) and Revised version of SS-2 effective from 1st October, 2017 issued by issued by Institute of Company Secretary of India (“ICSI”) dated 30th August, 2017.
This is article no. 267 of the series of editorials written by the author on corporate laws
{Including Companies Act, 2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.
Introduction:
Revised Secretarial Standard shall be effective w.e.f. 1st October, 2017. There are some alterations made in the revised SS-2 in comparison to former SS-2.This Standard prescribes a set of principles for convening and conducting General meetings and matters related thereto.
AMENDMENT
I. Scope of SS-2: The standard shall not applicable on the followings:
- One Person Company
- Company licensed under Section 8 of the CA, 2013
OUTCOME: Old SS-2 was applicable on the Section 8 Companies also. However, revised SS exempt on the Section 8 Companies. It is in continuation of MCA’s Exemption Notification dated 5th June 2015.
II. Websites on Notice:
| As per Old SS | As per Revised SS |
| In case of companies having a website, the Notice shall be hosted on the website | In case of companies having a website, the Notice shall simultaneously be hosted on the website till the conclusion of the Meeting. |
OUTCOME: According to revised SS-2 now company have to publish the notice of General Meeting till the conclusion of meeting, after the conclusion it is not mandatory to telecast notice on website of the Company.
III. Notice on disclosure:
| As per Old SS | As per Revised SS |
| Notice shall clearly specify the nature of the Meeting and the business to be transacted thereat. In respect of items of Special Business, each such item shall be in the form of a Resolution and shall be accompanied by an explanatory statement which shall set out all such facts as would enable a Member to understand the meaning, scope and implications of the item of business and to take a decision thereon. In respect of items of Ordinary Business, Resolutions are not required to be stated in the Notice except where the Auditors or Directors to be appointed are other than the retiring Auditors or Directors, as the case may be. | Notice shall clearly specify the nature of the Meeting and the business to be transacted thereat. In respect of items of Special Business, each such item shall be in the form of a Resolution and shall be accompanied by an explanatory statement which shall set out all such facts as would enable a Member to understand the meaning, scope and implications of the item of business and to take a decision thereon. In respect of items of Ordinary Business, Resolutions are not required to be stated in the Notice. |
OUTCOME: Earlier it was mandatory to mention the resolution at Notice of each General meeting whenever the new Auditor or Director was being appointed other than retiring Auditor/ Director. Now there is no need to give the resolution in Notice in case of Ordinary Business.
IV. Form of Proxy:
| As per Old SS | As per Revised SS |
| An instrument appointing a Proxy shall be either in the Form specified in the Articles or in the Form set out in the Act. | An instrument appointing a Proxy shall be in the Form prescribed under the Act. |
OUTCOME: Now Company cannot on its own discretion design the proxy form through its Article, Common corporate practice is planned out from now on with regards to form of proxy which is given under the Act.
V. Deposit of Proxies and Authorizations:
| As per Old SS | As per Revised SS |
| ——————————————————————— | In case of remote e-voting:
(i) the letter of appointment of representative(s) of the President of India or the Governor of a State; or (ii) the authorization in respect of representative(s) of the Corporations; Shall be received by the scrutinizer/ company on or before close of e-voting. |
OUTCOME: New Clause is been introduced for president of India /Governor of State for Appointment of representative and for Corporations to authorize their representative, so they can participate in a meeting till on or before close of e-voting.
VI. Voting:
| As per Old SS | As per Revised SS |
| Every Resolution shall be proposed by a Member and seconded by another Member. | Every Resolution, except a Resolution which has been put to vote through Remote e-Voting or on which a poll has been demanded, shall be proposed by a Member and seconded by another Member |
OUTCOME: Now the Ambit of Practice for proposing the resolution by the member and its need to be seconded by another Member is been narrowed down to case of e-voting or on which poll is being demanded.
In the case of a listed company or a company with 1000 or more shareholders, it is mandatory to provide remote e-voting facility and in such cases, voting commences much before a physically convened general meeting is held. Therefore in such cases, if the formality of “proposed by” and “seconded by” need not be adhered to.
Further, in cases where a resolution on which a poll is demanded, proposing and seconding of such a resolution is not possible and hence should not be made applicable in such cases Accordingly, the amendment is suggested to bring clarity
VII. Voting Rights:
| As per Old SS | As per Revised SS |
| A Member who is a related party is not entitled to vote on a Resolution relating to approval of any contract or arrangement in which such Member is a related party. | A Member who is a related party is not entitled to vote on a Resolution relating to approval of any contract or arrangement in which such Member is a related party.
In case of a private company, a member who is a related party is entitled to vote on such Resolution. A member who is a related party is entitled to vote on a Resolution pertaining to approval of any contract or arrangement to be entered into by: (a) A Government company with any other Government company; or (b) An unlisted Government company with the prior approval of competent authority, other than those contract or arrangements referred in clause (a). |
OUTCOME: This exemption is given to Private Company and Government Company to give effect to Exemption Notification dated 5th June, 2015. A step towards ease of doing business is being taken up for private Companies where participation in decision making is being widen for Related party transaction, it might lead to greater pace for increase in development and efficiency in private sectors.
VIII. Board Approval:
| As per Old SS | As per Revised SS |
| Authorize the Chairman or in his absence, any other Director to receive the scrutiniser’s register, report on e-voting and other related papers with requisite details. | This point is removed. |
OUTCOME: The step is taken towards showing confidentiality of documents so the decisions cannot be hampered, so the integrity of the decision is maintained.
IX. Declaration of Results in case of e-voting:
| As per Old SS | As per Revised SS |
| Based on the scrutiniser’s report received on Remote e-voting and voting at the Meeting, the Chairman or any other Director so authorized shall countersign the scrutiniser’s report and declare the result of the voting forthwith with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not | The scrutiniser(s) shall submit his report within three days from the date of the Meeting to the Chairman or a person authorized by him, who shall countersign the same and declare the result of the voting forthwith with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not. |
OUTCOME: Time Bound is introduce for scrutiniser’s to submit report and to maintain the integrity of decision making directors are excluded to handle scrutiniser’s report , they can handle it only at a discretion of Chairman, if he authorize them to do so.
X. Declaration of results in case of conduct of poll:
| As per Old SS | As per Revised SS |
| Based on the scrutiniser’s report, the Chairman shall declare the result of the poll within two days of the submission of report by the scrutiniser, with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not. | The scrutiniser(s) shall submit his report within seven days from the last date of the poll to the Chairman who shall countersign the same and declare the result of the poll within two days of the submission of report by the scrutiniser, with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not. |
OUTCOME: Time Bound is introduce for scrutiniser’s to submit report and to maintain the integrity of decision making directors are excluded to handle scrutiniser’s report , they can handle it only at a discretion of Chairman, if he authorize them to do so.
XI. Adjournment of meetings:
| As per Old SS | As per Revised SS |
| If a Meeting, other than a requisitioned Meeting, stands adjourned for want of Quorum, the adjourned Meeting shall be held on the same day, in the next week at the same time and place or on such other day, not being a National Holiday, or at such other time and place as may be determined by the Board | If a Meeting, other than an Annual General Meeting and a requisitioned Meeting, stands adjourned for want of Quorum, the adjourned Meeting shall be held on the same day, in the next week at the same time and place or on such other day or at such other time and place as may be determined by the Board. |
OUTCOME: Now adjourned meetings can be held at National holidays. This is to align with the provisions of the Act.
XII. Notice for the postal Ballot:
| As per Old SS | As per Revised SS |
| In case of companies having a website, Notice of the postal ballot shall also be placed on the website | In case of companies having a website, Notice of the postal ballot shall simultaneously be placed on the website. |
Outcome: Now notice shall remain on the website till date of General meeting.
XIII. Declaration of results:
| As per Old SS | As per Revised SS |
| Based on the scrutiniser’s report, the Chairman or any other Director authorised by him shall declare the result of the postal ballot on the date, time and venue specified in the Notice, with details of the number of votes cast for and against the Resolution, invalid votes and the final result as to whether the Resolution has been carried or not. | The scrutiniser shall submit his report within seven days from the last date of receipt of postal ballot forms to the Chairman or a person authorized by him, who shall countersign the same and declare the result of the postal ballot on the date, time and venue specified in the Notice, with details of the number of votes cast for and against the Resolution, invalid votes and the final result as to whether the Resolution has been carried or not |
| The result of the voting with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not, along with the scrutiniser’s report shall be displayed on the Notice Board of the company at its Registered Office and its Head Office as well as Corporate Office, if any, if such office is situated elsewhere, and also be placed on the website of the company, in case of companies having a website. | The result of the voting with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not, along with the scrutiniser’s report shall be displayed for at least three days on the Notice Board of the company at its Registered Office and its Head Office as well as Corporate Office, if any, if such office is situated elsewhere, and also be placed on the website of the company, in case of companies having a website. |
OUTCOME:
XIV. Maintenance of Minutes:
| As per Old SS | As per Revised SS |
| 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. |
| Minutes Books shall be kept at the Registered Office of the company or at such other place, as may be approved by the Board. | Minutes Books shall be kept at the Registered Office of the company. |
OUTCOME:
- No need of time Stamp on Electronic Minutes.
- Minute’s book can be Kept only at the registered office of the Company. To align with the provision of Companies Act, 2013.
XV. General content:
| As per Old SS | As per Revised SS |
| Minutes shall state, at the beginning the Meeting, name of the company, day, date, venue and time of commencement and conclusion of the Meeting | Minutes shall state, at the beginning the Meeting, name of the company, day, date, venue and time of commencement of the Meeting. |
OUTCOME: No need to mention the time of conclusion of General Meeting.
CONCLUSION:
After elaborate deliberations, the Institute of Company Secretaries of India (ICSI) has amended the Secretarial Standard – 2. Amendments are made for better compliance of the law. Compliance with the strict rules — that would help strengthen corporate governance practices and help curb corporate misdoings would be ensured by company secretaries.
(Author can be reached at csdiveshgoyal@gmail.com )
Author Bio
In point no xi revised ss.2 it was written that If a Meeting, other than an Annual General Meeting and a requisitioned Meeting, so other than requisitioned meeting can also be held on national holiday…….
In VI above the outcome has to be corrected as under
” Now the necessity for proposing and seconding is applicable only to resolutions other than those covered by e
voting or on which poll is demanded”