Introduction: The Institute of Company Secretaries of India (ICSI) plays a pivotal role in shaping corporate governance practices in India. In January 2024, the institute released a revised version of the Secretarial Standards, aimed at enhancing clarity, relevance, and compliance in the corporate sector. This article presents a comparative analysis of the changes introduced in the revised standards, highlighting their implications for company secretaries and the broader corporate landscape.
Understanding the Significance: Secretarial Standards serve as a cornerstone for ensuring transparent and efficient corporate governance practices. They provide guidelines and procedures for various corporate secretarial functions, facilitating consistency and standardization across companies. As regulatory landscapes evolve and business environments change, periodic revisions become imperative to address emerging challenges and align with global best practices.
Key Revisions:
Secretarial Standard-1 (Meeting of Board of Directors)
| Main Heading | Clause Ref No. | SS-1 (Second Version 2017) | SS-1 (Third Version 2024) | Specific Remarks |
| Scope | Scope of SS-1 | All companies incorporated under the act except OPC (having 1 director) and Section 8 companies | All the companies incorporated under the act except OPC (having 1 director) and Section 8. Specific exemptions to Section 8 and Private Company under the Act and the Standards only if it has not committed any default in filing Financial Statements or Annual Return | The amendment is in line with the MCA notification dated 05/07/2017 |
| Notice | 1.3.4 | The Director may intimate his intention of participation through electronic Mode at the beginning of the Calendar Year also, which shall be valid for such Calendar Year. | Director can still attend meeting in person even after his express intention for attending meeting through electronic mode for a particular calendar year provided he intimates the Company for such physical presence in advance. | – |
| Quorum | 3.3 | Directors shall not participate through electronic mode on excluded items of business under the provisions of the Act or any other law. | Directors shall not participate through electronic mode in the discussion on restricted items unless there is a Quorum in a Meeting through physical presence of directors. | – |
| Notice | 1.3.7 | Definition of Unpublished Price Sensitive Information (“UPSI”):
(i) financial results; (ii) dividends; (iii) change in capital structure; (iv) mergers, de-mergers, acquisitions, delistings, disposals and (v) changes in key managerial personnel (vi) material events in accordance with the listing agreement. |
New definition of UPSI does not include the point no. (vi) UPSI:(i) financial results; (ii) dividends;(iii) change in capital structure;(iv) mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions; and(v) changes in key managerial personnel |
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| Frequency of Meeting | 2.1 | One Person Company, Small Company or Dormant Company may hold one Meeting of the Board in each half of a Calendar Year and the gap between the two Meetings of the Board is not less than ninety days. | One Person Company, Small Company or Dormant Company and Private Companies recognised as Start-Up* may hold one Meeting of the Board in each half of a Calendar Year and the gap between the two Meetings of the Board is not less than ninety days.
*Start-up means a private company incorporated under the Act and recognised as start-up in accordance with the notification issued by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India. |
With this amendment, relief has been granted to startup companies (private limited) from the requirement of convening four meetings per year. Further the ammendment is in line with the exemptions already provided vide MCA notification dated 13/06/2017. |
| Meeting of Independent Directors (ID) | 2.3 | ID’s shall meet atleast once in a Calendar Year | ID’s shall meet atleast once in a financial year without attendance of Non-Independent Directors and members of management | The amendment is in line with the MCA notification dated 05/07/2017 |
| Quorum | 3.2 | In a Private Company, a Director who is interested in an item of business in a board meeting, shall be entitled to participate in respect of such item after disclosure of his interest. | In a Private Company, a Director who is interested in an item of business in a board meeting, shall be counted for the quorum and be entitled to participate in respect of such item after disclosure of his interest. | The amendment is in line with the MCA notification dated 05/07/2017 |
| Quorum | 3.3 | Directors participating through Electronic Mode in a Meeting shall be counted for the purpose of Quorum, unless they are to be excluded for any items of business under the provisions of the Act or any other law. | Directors participating through Electronic Mode in a Meeting shall be counted for the purpose of Quorum, except for restricted items in which Quorum shall be ascertained on the basis of physical presence of Directors. | |
| Chairman | 5.1.2 | In Private Company, Chairman may hold the position and participate in the meeting after disclosure of his interest | In Private Company, Chairman may hold the position, be counted for quorum and entitled to participate in respect of such item after disclosure of his interest | In the new version, the Chairman of a private company continues to be counted for quorum and is entitled to participate in the meeting after disclosing his interest. |
| Passing of Resolution by Circulation | 6.2.2 | Proof of sending and delivery of the draft of the Resolution and the necessary papers shall be maintained by the company for such period as decided by the Board, which shall not be less than three years from the date of the Meeting. | Proof of sending and delivery of the draft of the Resolution and the necessary papers shall be maintained by the company for such period as decided by the Board, which shall not be less than three years from the date of circulation of such Resolution. | The difference lies in the starting point for determining the three-year period: the date of the Meeting in the first version and the date of circulation of the Resolution in the second version. |
| Items not to be passed by circulation | Annexure A | In case of a public company, the appointment of Directors to fill casual vacancies is subject to the provisions outlined in the Company’s Articles. | The appointment of Directors to fill casual vacancies, subject to the provisions outlined in the Company’s Articles must be approved in the immediate next General Meeting of the Company. | Previously, the restriction only applied to public companies. However, the revised version has extended the restriction to all companies, prohibiting the passage of the specified item through circulation. Additionally, it has imposed an additional requirement of obtaining approval in the immediate next AGM. |
Secretarial Standard-2 (General Meetings)
| Main Heading | Para No. | SS-2 (Second Version 2017) | SS-2 (Third Version 2024) | Specific Remarks |
| Scope | scope of SS-2 | All companies incorporated under the act except OPC and Section 8 companies | All companies incorporated under the act except OPC and Section 8 companies and specific exemptions given to a private company and Government company in this Standard available if it has not committed any default in filing Financial Statements or Annual Return. | The amendment is in line MCA notifications dated 5th June, 2015 and 13th June, 2017 |
| Definitions | Ordinary Business | Ordinary business means business to be transacted at an Annual General Meeting relating to: (i) the consideration of financial statements, consolidated financial statements, if any, and the reports of the Board of Directors and Auditors; (ii) the declaration of any dividend; (iii) the appointment of Directors in the place of those retiring; and (iv) The appointment or ratification thereof and fixing of remuneration of the Auditors. |
Ordinary business means business to be transacted at an Annual General Meeting relating to: (i) the consideration of financial statements, consolidated financial statements, if any, and the reports of the Board of Directors and Auditors; (ii) the declaration of any dividend; (iii) the appointment of Directors in the place of those retiring; and (iv) the appointment and fixing of remuneration of the Auditors. |
Companies (Amendment) Act, 2017 Omitted the following proviso to Section 139 (1):
“Provided that the company shall place the matter relating to such appointment for ratification by |
| Notice | Para 1.2.4 | AGM shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated | AGM shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated. However, AGM of an unlisted company may be held at any place in India, if prior consent is given by all the members either in writing or by Electronic Mode. Such consent shall be received before the Meeting. | The amendment aligns with the proviso inserted under Section 96 (2)under Companies (Amendment) Act, 2017 |
| Notice | Para 1.2.4 | AGM of a Government company shall be held at its registered office or any other place with the approval of the Central Government, as may be required in this behalf. | AGM of Govt. Company shall be held at its registered office or such other place within the city, town or village in which the registered office of the company is situated or such other place as the Central Government may approve in this behalf. | The Amendment is in line with MCA Exemption Notifications dated 13th June, 2017 Exemption to Govt. Company (In partial Modification to Principle exemption notification dated 5th June, 2015) |
| Notice | Para 1.2.4 | EGM may be held at any place within India | EGM may be held at any place within India. In case of a wholly owned subsidiary of a company incorporated outside India, EGM may be held outside India. | The amendment aligns with the proviso inserted under Section 100 (1) under Companies (Amendment) Act, 2017 |
| Notice | Para 1.2.7 | Notice and accompanying documents may be given at a shorter period of time if consent in writing is given thereto, by physical or electronic means, by not less than ninety-five percent of the Members entitled to vote at such Meeting | Notice and accompanying documents may be given at a shorter period of time if the requisite consent of Members in writing is given accorded thereto, by physical or electronic means, as under: (i) In case of an Annual General Meeting, consent by not less than ninety-five percent of the Members entitled to vote at such Meeting.However, the Financial Statements and other documents required to be annexed thereto may be given at a shorter period of time if the requisite consent of Members in writing, by physical or electronic means, is accorded thereto: (a) if the company has a share capital, consent by the majority in number of members entitled to vote and represent not less than ninety-five per cent of such part of the paid-up share capital of the company as gives a right to vote at the Meeting; (b) if the company has no share capital, consent by the Members having not less than ninety-five per cent of the total voting power exercisable at such Meeting.(ii) In case of any other General Meeting- (a) if the company has a share capital, consent by the majority in number of members entitled to vote and represent not less than ninety-five per cent of such part of the paid-up share capital of the company as gives a right to vote at the Meeting; (b) if the company has no share capital, consent by the Members having not less than ninety-five per cent of the total voting power exercisable at such Meeting. Where any Member of a company is entitled to vote only on some resolution or resolutions to be moved at a Meeting and not on the other, then vote of the Member with respect to shorter notice shall only be counted for the purpose of the resolution on which the Member can vote. |
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| Voting | Para 7.5.2 | 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. | 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, except in case of a company in which ninety percent or more Members, in number, are relatives of promoters or are related parties.
Further in case of wholly owned subsidiary, the resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between wholly owned subsidiary and holding company. |
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| Voting | Para 7.5.2 | 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). |
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 with Central Government or any State Government or any combination thereof; or (b) An unlisted Government company with the prior approval of competent authority, other than those contract or arrangements referred in clause (a). |
The amendment aligns with the MCA notification dated 15th June 2015, concerning the primary exemption pertaining to Government Companies, which was partially revised by the MCA notification dated 2nd March 2020. |
| Passing of Resolutions by postal ballot | Para 16.1 | Every company, except a company having less than or equal to two hundred Members, shall transact items of business as prescribed, only by means of postal ballot instead of transacting such business at a General Meeting. | Every company, except a company having less than or equal to two hundred Members, shall transact items of business as prescribed, only by means of postal ballot instead of transacting such business at a General Meeting.
However, such item of business may be transacted at a General Meeting by a company which is required to provide e-voting facility to its Members. |
The amendment aligns with the proviso inserted under section 110 (1)under Companies (Amendment) Act, 2017 |
| Rescinding the Resolution | Para 16.8 | A Resolution passed by postal ballot shall not be rescinded otherwise than by a Resolution passed subsequently through postal ballot. | A Resolution passed by postal ballot shall not be rescinded otherwise than by a Resolution passed subsequently through postal ballot or passed at a General Meeting by a company which is required to provide e-voting facility to its Members | The amendment aligns with the proviso inserted under section 110 (1)under Companies (Amendment) Act, 2017 |
Conclusion: ICSI’s 2024 Secretarial Standards signify a proactive step towards fostering robust corporate governance. The revisions, intricately analyzed above, hold profound implications for company secretaries, ensuring alignment with evolving regulatory frameworks. As the corporate landscape witnesses continuous transformation, these standards serve as a beacon, guiding practitioners and entities towards compliance, transparency, and global best practices. Company secretaries and stakeholders are encouraged to delve into the detailed revisions to navigate the nuanced contours of the revised Secretarial Standards.
Some important links:
• SS-1 for Board Meeting: https://bit.ly/3wf8kot
• SS-2 for General Meeting: https://bit.ly/4bvrDtX
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Author: RV FCS Abhinav Agarwal, a Practicing Company Secretary and Registered Valuer from Delhi and can be contacted at abhinav@atulyadvisors.com
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