CS Divesh Goyal
Background- The Ministry of Corporate Affair (MCA) has issued circular Dated: 10th April, 2015 vide Letter No. 1/E/2014/CA/I and same has been notified in official Gazette on 23rd April, 2015. Secretarial standard are applicable on Companies from 1st July, 2015.
After elaborate deliberations, the Institute of Company Secretaries of India (ICSI) has prepared these standards, which have been approved by the Corporate Affairs Ministry. Compliance with the strict rules — that would help strengthen corporate governance practices and help curb corporate misdoings — would be ensured by company secretaries.
This Standard prescribes a set of principles for convening and conducting Meetings of the Board of Directors and matters related thereto.
ICSI President Atul H Mehta today said these rules would lead to “higher standard of corporate governance”.
According to ICSI, these standards would help boost investor confidence, particularly fund managers and overseas investors.
THESE STANDARDS, WHICH HAVE BEEN NOTIFIED, WOULD BE EFFECTIVE FROM JULY 1, 2015
If any time there is any amendment come into Companies Act, 2013 and such changes or any provisions of Companies Act, 2013 are contradictory to the Secretarial Standard than “Provisions of Companies Act will prevail over Secretarial Standard”.
Applicability & Non Applicability:
|CHAIRMAN||Chairman of the Board or its Committee, as the case may be, or The Chairman appointed or elected for a Meeting.|
|CALENDAR YEAR||Calendar year as per Gregorian calendar i.e. a period of one year which begins on 1st January and ends on 31st December|
Keeping of registers and records either in physical or electronic form, as may be permitted under any law for the time being in force, and includes the making of appropriate entries therein, the authentication of such entries and the preservation of such physical or electronic records
A formal written record, in physical or electronic form, of the proceedings of a Meeting
A Book maintained in physical or in electronic form for the purpose of recording of Minutes.
|NATIONAL HOLIDAY||Republic Day i.e. 26th January,
Independence Day i.e. 15th August,
Gandhi Jayanti i.e. 2nd October and
Such other day as may be declared as National Holiday by the Central Government.
Time, Place, Mode and Serial Number of Meeting:
A. Notice, Agenda and Notes of Agenda:
Notice, Agenda and Notes of Agenda in writing of every Meeting shall be given to EV ERY DIRECTOR by following ways:
Address for the Notice, Agenda and Notes of Agenda:
Responsibility to Issue of Notice, Agenda and Notes of Agenda:
Specification of Notice, Agenda and Notes of Agenda:
The Notice, Agenda and Notes of Agenda shall specify the Serial Number, Day, Date, Time and Full Address of the venue of the Meeting.
Time Period for Issue of Notice, Agenda and Notes of Agenda:
Notice of Adjourned Meeting:
To Whom: Shall be given to all Directors including those who did not attend the Meeting on the originally convened date and
Date of Adjourned Meeting: Unless the date of adjourned Meeting is decided at the Meeting, Notice thereof shall also be given not less than seven days before the Meeting.
Notice, Agenda and Notes of Agenda to Alternate Director:
The Notice, Agenda and Notes on Agenda shall be sent to the Original Director also at the address registered with the company, even if these have been sent to the Alternate Director.
Each item of business requiring approval at the Meeting shall be supported by a note
Note of Agenda shall include the following:
***Where approval by means of a Resolution is required, the draft of such Resolution shall be either set out in the note or placed at the Meeting.
SUPPLEMENTARY NOTES OF AGENDA:
Circulation of Supplementary Notes:
But shall be taken up with the permission of chairman (+) with the consent of Majority of Directors present in the Meeting. (Majority of directors include at least one Independent director, if any)
***DISCUSSION ON ANY OTHER MATTER IN MEETING:
Any item not included in the Agenda may be taken up for consideration with the permission of the Chairman (+) with the consent of a majority of the Directors present in the Meeting, which shall include at least one Independent Director, if any.
In case of Absence of Independent Director:
The Minutes shall be final only after at least one Independent Director, if any, ratifies the decision taken in respect of such item.
In case of Company doesn’t have Independent Director:
The Minutes shall be final only on ratification of the decision taken in respect of such item by a majority of the Directors of the company, unless such item was approved at the Meeting itself by a majority of Directors of the company.
Example: If Majority of Directors are present in the Meeting and same has been approved by them then no ratification required.
CALLING OF MEETING ON SHORTER NOTICE:
To transact urgent business, the Notice, Agenda and Notes on Agenda may be given at shorter period of time than stated above,
Notes of Agenda of Items of Business Which are in the Nature of UNPUBLISHED PRICE SENSITIVE INFORMATION
C. FREQUENCY OF MEETING:
Meetings of the Board of Directors:
(Except Small Company, One Person Company and Dormant):
Note: In case of Newly Incorporate Company “First Meeting” should be held within 30 days of Incorporation of Company.
Meetings of the Independent Directors:
Where a company is required to appoint Independent Directors under the Act, such Independent Directors shall meet at least once in a Calendar Year.
The Quorum for a Meeting of the Board shall be One-third of the total strength of the Board or Two Directors Whichever is HIGHER.
Important Points relating to Quorum:
Presence of Quorum:
If Director is interested in any matter:
Situations when director will be treated as interested:
If Company entered into or proposed to be entered into any contract or arrangement with:
Que: If Number of Directors reduced below the Quorum fixed by the Act, Then how to proceed?
The continuing Directors may act for the following purpose
Que: What will be the Quorum for the Meeting of Committee?
Que: If there is only two directors in a Meeting and One is interested in a Item of Business of Agenda then whether a single director can pass such resolution?
NO, if for any agenda of Item there is only one Available director then it will consider and improper Quorum and resolution will not pass at such meeting.
Que: Whether interested director will be counted for the purpose of Quorum.
YES, Interested will be counted for the quorum of Meeting but He will not be counted for the purpose of quorum only for “That Resolution”.
E. ATTENDANCE OF MEETING:
Particulars of Attendance register of Board Meeting:
In case of Committee Meeting “name of the Committee” also be mentioned.
Signing of Attendance Register:
In case of Directors participating through Electronic Mode:
Inspection of Attendance Register:
Following below mention person can inspect the Attendance Register:
## A Member of the Company can’t inspect the attendance register.
Entry in the Attendance registers authenticating by:
– Company Secretary or
– Where there is NO Company Secretary, by the Chairman by appending his signature to each page.
G. MEETING OF THE COMMITTEE:
H. Participation of Director Through Electronic Mode
Any Director may participate through Electronic Mode in a Meeting, if the company provides such facility. But certain items can’t be dealt at a meeting held though Video conferencing.
Matter which can’t be dealt at a meeting held though Video conferencing unless expressly permitted by the Chairman:
Notice of Board Meeting if Facility of participation through Electronic Mode is provided:
In case the facility of participation through Electronic Mode is being made available, the Notice shall inform the Directors about the availability of such facility, and provide them necessary information to avail such facility.
PRECAUTIONS BY CORPORATES:
|Company/ Professional should take care the followings while
preparing the Notice:
|Notice||Notice of Board Meeting shall be Serially Numbered|
|Proof of Notice||Companies should have in its record the proof of Notice of Board Meeting as its mandatory for company to have proof of sending of Notice and its delivery|
|Issue of Notice||An authorized person can issue notice of Board Meeting on behalf of the Company|
|Shorter Notice||If Board Meeting called on Shorter Notice, then at the Meeting such decision should be approved by the majority of director present and same should be take note in the Minutes of the Meeting|
|Draft Resolution||Draft of Resolution as per agenda required being present in the Meeting|
|Serial Numbered||Each item of business to be taken up at the Meeting shall be serially numbered|
|Any other Agenda||In case of discussion of any other matter in the Meeting Permission of Chairman (+) Majority of present directors required|
|Notice of Adjourned Meeting||Shall be given to all Directors including those who did not attend the Meeting on the originally convened date|
|Notice in case of Alternate Dir||The Notice, Agenda and Notes on Agenda shall be sent to the Original Director also at the address registered with the company, even if these have been sent to the Alternate Director.|
|Frequency of Board Meeting||Small Company, OPC and Dormant Company need to hold at least one meeting in each half of a Calendar Year. In other Cases at least 1 Meeting in each quarter of a Calendar year.|
|Gap Between Two Meeting||In case of Small Company, OPC and Dormant Company Minimum gap of 90 days.|
|Newly Incorporated||First Meeting of newly incorporated company should be held within 30 days of incorporation of Company.|
|Meeting of Independent Director||such Independent Directors shall meet at least once in a Calendar Year.|
|Presence of Quorum||Quorum shall be present throughout the Meeting. (Exp. If there is only two directors in a company and one is interested in any resolution then that item can’t be discuss at the meeting).|
|Participation through electronic mode||Directors participating through Electronic Mode in a Meeting shall be counted for the purpose of Quorum
|Attendance Register||Every company shall maintain separate attendance registers for the Meetings of the Board.|
|Inspection of Att. Register||A Member of the Company can’t inspect the attendance register|
(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at firstname.lastname@example.org)