Secretarial Standards got the recognition by virtue of Section 118(10) of the Companies Act, 2013. As per Section 118(10) – Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.
Revised Secretarial Standards -1 has been issued by ICSI and approved by the Central Government under Section 118(10) of the Companies Act, 2013 on 02nd January 2024 and it shall be effective from 01st April 2024.
Major Reason behind Revising SS-1:
The Companies (Amendment) Act, 2017 amended various provisions of the Companies Act, 2013 (“the Act”) and MCA has issued various notifications. Hence the ICSI has tried to align the Secretarial Standards-1 with the Act and to bring uniformity with the Act.
Further, the ICSI substituted/altered those para of standards which are inconsistent with the Act, Rules made thereunder and Notifications issued by MCA and incorporated or reframed those para of standards which are consistent with the Act, Rules made thereunder and Notifications issued by MCA in order to make align with the Act.
Major highlights on Revised Secretarial Standards-1:
1. In the case of section 8 company – the standard shall not apply as a whole except that minutes may be recorded within thirty days of the conclusion of every meeting and further it has to comply with the applicable provisions of the Act relating to Board Meetings.
Specific exemptions are given to those Companies (Section 8 companies and Private companies), only if such company has not committed any default in filing its Financial Statements or Annual Return with the Registrar of Companies.
2. In case of restricted items, where there is a quorum in a meeting through the physical presence of Directors, any other director may participate through video conferencing or other audio-visual means in such meeting.
3. If the Director intimates his intention of participation through Electronic Mode at the beginning of the Calendar Year also, which shall be valid for such Calendar Year and such intimation shall not debar him from participation in the Meeting in person provided he gives such intimation sufficiently in advance to the company.
4. From the definition of ‘Unpublished Price Sensitive Information’ the last clause (vi) i.e. material events in accordance with the listing agreement has been eliminated just to align with the definition which had been amended by SEBI.
5. Relaxation provided to a private company that is recognized as a start-up. Further the word “Start-up” has also been defined by inserting 4th paragraph.
Effect: A private Company that is not a small company but if it is recognized as a start-up as per notification issued by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India then the provisions applicable to small companies for holding Board Meeting is also applicable to such start-up companies.
6. For meetings of Independent Directors the word Calendar has been substituted with financial to bring uniformity with the Amendment made in Schedule IV – (paragraph VII. Separate meetings).
7. As per Old SS-1, in the case of the Private Company, the interested Director was allowed to participate only and not counted for quorum. Now as per Revised SS-1, in the case of the Private Company, the interested Director also counted for quorum after disclosure of his interest.
8. For all the items other than restricted items, the Directors attending the meeting through Electronic Mode shall be counted for the purpose of Quorum.
9. In the case of a private company, in respect of interested items, the Chairperson is counted for the quorum but after disclosure of his interest. Earlier, the chairperson was only entitled to participate in respect of such interested items but after disclosure of his interest.
10. 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.
As para 6.2.2 is part and parcel of Para 6 only, which deals with the passing of resolution by Circulation, hence Date of circulation of the draft resolution is considered and not the date of the Meeting.
11. Since sub-section 4 of Section 164 which was applicable to the public company only but the Companies (Amendment) Act, 2017 amended Section 164(4), hence to align with the Act, the 9th bullet point of Specific Items under Annexure ‘A’ has been substituted and now which can be read as – Appointment of Director(s) in casual vacancy subject to the provisions in the Articles of the company to be subsequently approved in the immediate next general meeting.
Conclusion: The Revised Secretarial Standards-1 bring significant changes aimed at enhancing corporate governance practices and aligning them with the evolving regulatory landscape. By incorporating amendments to the Companies Act, 2013, and addressing key issues concerning quorum, participation, and record maintenance, these standards strive to promote transparency, accountability, and efficiency in corporate affairs.
Companies and company secretaries must acquaint themselves with these revised standards to ensure compliance and uphold best practices in corporate governance. Ultimately, the adherence to these standards not only fosters trust among stakeholders but also contributes to the sustainable growth and success of businesses in India’s dynamic corporate environment.
*****
Disclaimer: This article provides general information existing at the time of preparation and we take no responsibility to update it with the subsequent changes in the law. The article is intended as a news update and Affluence Advisory neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this article. It is recommended that professional advice be taken based on specific facts and circumstances. This article does not substitute the need to refer to the original pronouncement.
Author Bio
