CS D Hem Senthil Raj
Overview: Secretarial Standard on General Meeting issued by the Council of the ICSI and approved by Central Government is to be mandatorily adhered by all Companies as per the Provision of Section 118 (10) of Companies Act, 2013.
The Corporates have to follow the stringent norms such as providing detailed explanation on implications of particular resolutions while conducting shareholder’s meetings.
1st July, 2015.
Secretarial Standards should be followed by all Companies on all General Meetings being held on 1st July, 2015 or thereafter as the case may be.
All types of General Meetings (Members or Debenture-Holders or Creditors or Meetings called by CLB, NCLT or prescribed authority) of all Companies except OPC and class or classes of Companies exempted by the Central Government through notification.
New Insertions/Critical Points to Be Noted:
1. Secretarial Standard provides the facility of sending the notice of general meeting through hand delivery or ordinary post for the companies which does not provide e-voting facility and postal ballot option in additions to other means as specified in “The Company (Management and Administration) Rules, 2014”.
2. Mandatory hosting of notice in the Website of the Company, if any available.
3. To maintain the system of confirmation of the total number of recipients e-mailed and a record of each recipient to whom the Notice has been sent and copy of such record and any Notices of any failed transmissions and subsequent resending shall be retained by or on behalf of the company as ‘‘proof of sending’’.
4. Notice shall contain complete particulars of the venue of the Meeting including route map and prominent land mark for easy location. In case of companies having a website, the route map shall be hosted along with the Notice on the website.
5. If any proposed resolution contains any reference to document, contract, agreement, the Memorandum of Association or Articles of Association, the relevant explanatory statement shall state that such documents are available for inspection and such documents shall be so made available for inspection in physical or in electronic form during specified business hours at the Registered Office of the company and copies thereof shall also be made available for inspection in physical or electronic form at the Head Office as well as Corporate Office of the company, if any, if such office is situated elsewhere, and also at the Meeting.
6. In case of appointment of Independent Directors, the justification for choosing the appointees for appointment as Independent Directors shall be disclosed and in case of re-appointment of Independent Directors, performance evaluation report of such Director or summary thereof shall be included in the explanatory statement.
7. Quorum shall be present not only at the time of commencement of the Meeting but also while transacting business.
8. One person can be an authorised representative of more than one body corporate. In such a case, he is treated as more than one Member present in person for the purpose of Quorum. However, to constitute a Meeting, at least two individuals shall be present in person.
9. Secretarial Auditors or authorised representative of Secretarial Auditors to attend the meeting (qualified).
10. All Proxies received by the company shall be recorded chronologically in a register kept for that purpose.
11. Every Resolution shall be proposed by a Member and seconded by another Member.
12. Every company, which has provided e-voting facility to its Members, shall also put every Resolution to vote through a ballot process at the Meeting. A Proxy can vote in the ballot process.
13. Based on the scrutiniser’s report received on Remote e-voting and voting at the Meeting, the Chairman or any other Director so authorised 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.
14. The qualifications, observations or comments or other remarks on the financial transactions or matters which have any adverse effect on the functioning of the company, if any, mentioned in the Auditor’s Report shall be read at the Annual General Meeting and attention of the Members present shall be drawn to the explanations / comments given by the Board of Directors in their report.
15. The qualifications, observations or comments or other remarks if any, mentioned in the Secretarial Audit Report issued by the Company Secretary in Practice, shall be read at the Annual General Meeting and attention of Members present shall be drawn to the explanations / comments given by the Board of Directors in their report.
16. No gifts, gift coupons, or cash in lieu of gifts shall be distributed to Members at or in connection with the Meeting.
17. 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 authorised by the Board.
18. Minutes shall state, at the beginning of the Meeting, name of the company, day, date, venue and time of commencement and conclusion of the Meeting.
19. Minutes shall record the names of the Directors and the Company Secretary present at the Meeting.
Specific Contents to form part of the Minutes of General Meeting as per SS- 2:
1. Election of Chairman, if any shall be recorded.
2. The fact that certain registers, documents, the Auditor’s Report and Secretarial Audit Report, as prescribed under the Act were available for inspection.
3. Presence of Quorum.
4. Number of Members present in the meeting including the representative.
5. The number of proxies and the number of shares represented by them.
6. The presence of the Chairmen of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee or their authorised representatives.
7. The presence if any, of the Secretarial Auditor, the Auditors, or their authorised representatives, the Court/Tribunal appointed observers or scrutinisers.
8. Summary of the opening remarks of the Chairman.
9. Reading of qualifications, observations or comments or other remarks on the financial transactions or matters which have any adverse effect on the functioning of the company, as mentioned in the report of the Auditors.
10. Reading of qualifications, observations or comments or other remarks as mentioned in the report of the Secretarial Auditor.
11. Summary of the clarifications provided on various Agenda Items.
12. In respect of each Resolution, the type of the Resolution, the names of the persons who proposed and seconded and the majority with which such Resolution was passed.
13. In the case of poll, the names of scrutinisers appointed and the number of votes cast in favour and against the Resolution and invalid votes.
14. If the Chairman vacates the Chair in respect of any specific item, the fact that he did so and in his place some other Director or Member took the Chair.
15. The time of commencement and conclusion of the Meeting.
16. In respect of Resolutions passed by e-voting or postal ballot, a brief report on the e-voting or postal ballot conducted including the Resolution proposed, the result of the voting thereon and the summary of the scrutiniser’s report shall be recorded in the Minutes Book and signed by the Chairman or in the event of death or inability of the Chairman, by any Director duly authorised by the Board for the purpose, within thirty days from the date of passing of Resolution by e-voting or postal ballot.
Responsibility of Person to Comply SS
As per section of 205 of the Act, the function of the Company Secretary (CS) includes to ensure that the company complies with the applicable SS. This means that it would be the duty of the CS, which is a apt position also, to ensure that SS relating to general and Board meetings or such other SS as may be specified by the ICSI, and approved by the Central Government (‘CG’) are complied with. Nevertheless, there would be many more SS which would be required to be complied with upon approval of the CG in the time to come.
Point of Deliberation
Section 118 states that every company shall observe SS. This means that irrespective of the criteria of capital, listing, turnover, profit etc., all companies are required to observe SS. On the other side, requirement of appointment of whole-time CS lies only with the listed companies and every other company whose paid-up capital is Rs.5 crores or more. The questions that now arose is that who would be responsible to observe the SS in the companies those are not required to appoint whole-time CS. There may be a argument that if the company is not required to appoint CS then the requirement of observing SS would not arise as compliance of SS is the function of CS. However, this argument would not sustain as section 118 requires all the companies to observe SS.
The intention of the legislatures to observe SS appears to be clear as it would oblige the companies to adopt uniform practices in conducting Board & general meetings, matter pertaining to placing agenda, finalisation of minutes etc. Further, miniscule compliance and corporate governance is bound to increase tremendously once the companies, irrespective of capital, turnover, profit etc., start complying with the SS.
Compliance with the strict rules would help strengthen the corporate governance practices and help curb corporate misdoings would be ensured by the Company Secretaries.
These Secretarial Standards would also help boost the investor confidence, particularly the fund’s managers and overseas investors.