Comparative Analysis of amendments in Secretarial Standards on Meetings of the Board of Directors (SS-1)
The Institute of Company Secretaries of India (ICSI) has been playing a significant role in shaping corporate governance practices in India. One of the essential tools it employs is the issuance of Secretarial Standards.
The Institute of Company Secretaries of India (ICSI) issues Secretarial Standards to promote good corporate governance practices and ensure compliance with applicable laws and regulations. These standards provide guidelines and best practices for company secretaries, directors, and other stakeholders involved in corporate affairs.
Recently, ICSI has issued revised Standards under Section 118(10) of the Companies Act, 2013 which are effective from 1st April, 2024. The institute has incorporated amendments in many rules and also introduced new rules.
This article covers the new rules issued by the institute and a short comparison between previous and new standards.
Secretarial Standards on Meetings of the Board of Directors (SS-1)
| Expanding exception of applicability to Section 8 Companies | The exemption is also applicable to Section 8 (i.e formation of companies with charitable objects, etc.) of the Act. However, it is clarified that Section 8 companies need to comply with the applicable provisions of the Act relating to board meetings. |
| Inclusion of Company Secretary Firm under definition of Secretarial Auditor | The definition first included only a company secretary in practice, appointed in pursuance of the Act to conduct the secretarial audit of the company. The revised standards provide that the firm of company secretary(ies) in practice would also be included in the definition. |
| Removal of restriction of conducting Board meeting on National Holiday | Previously a board meeting may be convened at any time and place, on any day, excluding a National Holiday. However, now this restriction has been removed. Thus, now a board meeting can be held on a national holiday. |
| Maintaining proof of sending (a) notice, (b) agenda and (c) notes on agenda and its delivery of the Board Meeting | The company was required to maintain the proof of sending (a) notice, (b) agenda and (c) notes on agenda and its delivery of all the Board Meeting held by such company. With the amendment a new power has been bestowed upon the Board to decide for such a period for which such documents shall be maintained in record, which shall not be less than three years from the date of the meeting. |
| Removal of the Requirement of Holding meeting in each Calendar Quarter | Post amendment the companies were required to hold one board meeting in every calendar quarter, with a maximum interval of one hundred and twenty days between any two consecutive board meetings. The revised standard required a company to hold at least four board meetings in one each calendar year with a maximum interval of one hundred and twenty days between any two consecutive meetings of the board. |
| Certified minutes not to be circulated to the directors who have waived their right to receive the same | The company was required to circulate certified minutes to the directors within 15 days of the meeting. With the new Standards the company is not required to circulate the signed minutes to directors who have waived their right to receive the same either in writing or such waiver is recorded in the minutes. |
| Ratification of any resolution required to make it a final decision if taken without the consent of majority of directors | Previously, the consent of the majority of directors (including one independent director was required for taking up any item not included in the agenda. Now, the item can be taken even without permission of the chairman and with the consent of a majority of the directors. However, such a decision (i.e. for which the consent of the majority directors was not taken) shall be ratified by a majority of the directors of the company to be final, unless such item was approved at the meeting itself by a majority of directors of the company. |
| Disclosure of number and dates of board meeting on Annual Report | The company was required to disclose the number and dates of meetings of the board and committees held in a financial year in its annual return. The revised SS-1 now states that now a statement on compliances of applicable secretarial standards shall be included for in board report. |
Conclusion: ICSI’s recent amendments to Secretarial Standards usher in a new era of corporate governance practices. The changes impact various aspects of board meetings, documentation, and disclosure requirements. Understanding these revisions is crucial for company secretaries, directors, and stakeholders involved in corporate affairs. As these standards come into effect from April 1, 2024, companies must promptly adapt to ensure seamless compliance and uphold the principles of good corporate governance in India.
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