CS Jaymeen Patel

CS Jaymeen PatelNeed of Secretarial Standards:

Due to following reason, need of Secretarial Standard becomes more inevitable:

– Issues where the law is not clear;

– Issues where the law is subject to multiple interpretations;

– Issues where multiple/divergent practices exist though the law is clear

Secretarial Standards are to integrate, harmonise, standardize and streamline such practices followed by the Company.

Impact of Secretarial Standards:

The adoption of the Secretarial Standards by the corporate sector will have a substantial impact on the quality of secretarial practices being followed by the companies, making them comparable with the best practices in the world. It will also ensure observance of uniform practices across Board, while strengthening the Board processes, protecting individual directors, preventing oppression & mismanagement, building up investor confidence and better monitoring of compliances, thereby achieving the common goal of better corporate governance.

As per Sub Section 10 of Section 118 of Companies Act 2013 every Company shall comply with the Secretarial Standards in respect of those matters on which ICSI has issued Secretarial Standards, and has also been approved by the Central government of India.

As of now out of 10 secretarial Standard issued by ICSI only SS–1 and SS–2 is made mandatory rest are still recommendatory.

Secretarial Standard – 1: Meetings of the Board of Directors

Approval Central Government vide letter no. 1/3/2014/CL/I dated 10th April, 2015
Effective Date 1st July, 2015.
Applicability To all Companies Incorporated under the Act except One Person Company.The provision of the Act prevails over Secretarial Standard.
National Holiday 26th January, 15th August, 2nd October and such other day as may be declared as National Holiday by the Central Government.
Authority to Convene a Meeting By any Director or Company Secretary or any person authorized by the Board, in consultation with:Preference to Chairman then MD and then WTD.

Every meeting to be serially numbered.

Convening of Meeting at any time and place, on any day, excluding a National Holiday.
Mode of Participation Physical or Electronic, if company provides such facility (Notice to specify about such facility).Electronic meeting is not allowed for, unless expressly permitted by the Chairman for :

(1) Approval of Annual Accounts; (2) Board’s Report; (3) Prospectus;

(4) Matters relating to Amalgamation, Merger, Demerger, Acquisition and Takeover.

Notice Notice shall be issued by the Company Secretary or if no Company Secretary, any Director or any other person authorised by the Board.Notice is to be served physically or electronically at the address provided by the Director to the Company or at such address as it appears in DIN.

To be given atleast 7 days before the date of the Meeting. In case of physical mode, 2 more days needs to be added for service of document. Articles may prescribe such longer period for service of Notice.

The Notice, Agenda and Notes on Agenda shall be sent to the Original Director as well as to the Alternate Director.

Agenda Agenda and Notes should be provided at atleast 7 days before the date of the Meeting either physically or electronically. In case of physical mode by way of post or courier, 2 more days to be added for service of document.
Item other than Agenda Item Other than Agenda Item should be considered with the permission of the Chairman AND with the consent of majority of Directors present at the meeting which should include atleast one Independent Director, if any.
Frequency of Meetings Meeting should be conducted atleast once in every calendar quarter subject to maximum time gap of 120 days between two consecutive meetings.
Quorum It shall be 1/3rd of total strength or 2 Directors, whichever is higher. Any fraction in above 1/3rd strength should be rounded off to next one.

Minimum quorum should be present (i.e. either 1/3rd or 2) for each item to be transacted. Quorum should be present throughout the meeting.

 

Directors participating through Electronic Mode in a Meeting shall be counted for the purpose of Quorum.

 

For want of quorum, if the meeting gets adjourned, it stand to be adjourned to the same day, time and place in next week and in case that day is National Holiday, then the next day to such National Holiday is to be considered. The meeting stands cancel in case on adjourned day also the quorum is not present.

Attendance Every Director, Invitee, Conveyor or any other person attending the meeting should sign the attendance register if he/she presents in person.

In case of electronic presence, Chairman or Company Secretary shall record his/her presence.

 

Entries made to the attendance register should be authenticated by the Company Secretary, if any or the Chairman by appending his/her signature.

 

This register needs to be preserved for a minimum of 8 years.

 

Every Director should attend atleast one meeting of the Board during the financial year. In case he/she remains absence in all meeting during the relevant year, the office of said Director shall become vacant.

Chairman The Chairman of the company shall be the Chairman of the Board. If the company does not have a Chairman, the Directors may elect one of themselves to be the Chairman of the Board. The Chairman of the Board shall conduct the Meetings of the Board.
Circular Resolution Draft of resolution which needs to be passed by way of circular should be sent to all the Directors either by Physical mode or Electronic mode with relevant supporting documents.

The Directors should provide their ascent or dissent within 7 days.

 

If 1/3rd of the Directors wish the item to be transacted at a Meeting, the matter should be taken up in the next meeting.

Minutes The Company should follow uniform maintenance of minutes and any change in such form should be authorized by the Board.

Books shall be consecutively numbered. It shall be kept at the Registered Office of the company or at such other place as may be approved by Board.

 

The minutes shall be maintained in physical or in electronic form with time and stamp.

The minutes should record the Directors who dissent or abstain from voting on such resolution.

 

The minutes should record the time of commencement and conclusion of the Meeting.

 

The draft minutes should be circulated to all the members of the Board within 15 days of meeting. The concerned Director should provide their comments within 7 days of such circulation and after expiry of said 7 days, any comments from Directors should be considered at the discretion of the Chairman.

Minutes to be entered in the minutes book within 30 days from the date of conclusion of Board Meeting.

 

The signed minutes should be circulated to the Board within 15 days of signing the Minutes.

 

The minutes of the Meeting should be preserved permanently.

 

Extracts of the Minutes shall be given only after the Minutes have been duly entered in the Minutes Book.

Secretarial Standard 2 – : General Meetings

Approval Central Government vide letter no. 1/3/2014/CL/I dated 10th April, 2015
Effective Date 1st July, 2015.
Applicability To all Companies Incorporated under the Act except One Person Company.The provision of the Act prevails over Secretarial Standard.
National Holiday 26th January, 15th August, 2nd October and such other day as may be declared as National Holiday by the Central Government.
Authority to Convene a Meeting A General Meeting should be convened on the authority of the Board.
Convening of Meeting at any time and place, on any day, excluding a National Holiday.
Business at Meeting Notice in writing should be given to every Member, to the Directors and Auditors of the company.

The Notice should specify the day, date, time and venue of the Meeting with complete address.

 

Notice and accompanying documents should be sent at least twenty-five days in advance of the Meeting.

 

If a Meeting cannot be held on the date originally fixed, the Board may reconvene the Meeting after giving not less than seven days notice.

Agenda The Notice should clearly specify the nature of the Meeting and the business to be transacted thereat. In respect of items of Special Business, each such item should be in the form of a Resolution and should be accompanied by an explanatory statement.
Item other than Agenda Item No items of business other than those specified in the Notice should be taken up for consideration at the Meeting.
Frequency of Meetings Every company should, in each year, hold a Meeting called the Annual General Meeting with an interval of not more than fifteen months between two successive Meetings.
Extra-Ordinary General Meeting Items of business of an urgent nature which need to be transacted before the next Annual General Meeting should be considered at an Extra-Ordinary General Meeting
Quorum A minimum two Members personally present and entitled to vote. Quorum should be present throughout the Meeting.

A Meeting must be constituted of at least two individuals present in person. Proxies excluded.

Presence of Director & Auditor The Directors of the company should attend all Annual General Meeting. If any Director is unable to attend the, the Chairman should explain such absence.

While the Auditors of the company are entitled to attend, should attend the Meeting if there are any reservations, qualifications or adverse remarks in the Auditor’s Report.

Chairman The Chairman of the Board should take the chair and conduct the Meeting.
Voting Every Resolution should be proposed by a Member and seconded by another Member entitled to vote thereon.
Minutes Minutes should contain a summary of the proceedings of the Meeting, recorded fairly, correctly, completely and in unambiguous terms.

The Minutes should be entered and signed within thirty days from the conclusion of the Meeting. No alteration allowed.

 

The Minutes of all Meetings should be preserved permanently.

(Author is a Company Secretary at KYB-Conmat Pvt. Ltd.) 

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