Company is an artificial person created by law having common seal and perpetual succession. The Company is run and managed by Board of Directors and shareholders subscribe to the shares of the company. The affairs of the company are managed to fulfill the objects and vision, mission of promoters and directors of the company.
To manage the affairs of the company, Directors meet at the Board Meetings in person or through video conferencing mode as prescribed under the provisions of the Companies Act, 2013. The business is transacted at the meeting through passing of Board Resolutions either Ordinary or Special Resolutions.
It is necessary to maintain records and proceedings of the meetings of the Board of Directors in a summarized form and in a legal manner for future reference and as legal evidence in the court of law. Such a summarized form of records of board meetings is known as minutes of meeting. The purpose of this Article is to highlight importance of minutes and some guidelines for proper drafting of minutes of either board or general meetings.
Various types of meetings pursuant to the Companies Act, 2013 include Meeting of directors, shareholders, creditors, Independent directors, meeting of audit committee, management and remuneration committee and other committees prescribed under the companies Act, 2013 and rules made there under. Section 118 of the Companies Act, 2013 mandates maintenance of meetings.
Following points should be considered for proper minutes of meeting under Companies Act, 2013.
- Minutes of meeting need to be maintained by every kind of company including Private Limited, Public Limited, Listed, Unlisted company, Producer Company, Non Banking Finance Company, Government Company. One Person Company need not maintain minutes of meeting.
- Minutes should be maintained in such manner and format as prescribed under Section 118 of the Companies Act, 2013.
- Minutes should be printed on prescribed minutes book papers, should be consecutively numbered and should be properly bound in a Minutes Book prescribed under the Companies Act, 2013. The Place of signing the meeting and Date of signing minutes should be clearly mentioned in the minutes of the meeting.. The Minutes book should be maintained and kept with the Company Secretary of the company or such Director in lock and key in a safe custody at the Registered Office of the company or such place as prescribed by way of Board Resolution.
- The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat. All appointments made at any of the meetings aforesaid shall be included in the minutes of the meeting. Fair and correct summary means true and fair view of state of affairs of the company transacted at the meeting. Factual information to be included in the minutes like Director or shareholder who has dissented from passing of resolution should be mentioned. Any adverse or other remarks made by any director or shareholder should also be mentioned. The Directors or shareholder who abstained from voting should also be mentioned in the minutes of meeting. Proper disclosure of interest by directors should be mentioned in minutes. Care should be taken that all related party transaction are reflected in the minutes of the meeting which will be considered as legal evidence in case of dispute or justification with Government authorities in the event of inspection or investigation of the affairs of the company.
- Minutes of meeting should not contain any matter which is defamatory to any person or matter which is irrelevant to the proceedings of the meeting and affairs of the company.
- All important resolutions and decisions of the Board of Directors or shareholders should form part of he minutes of the meeting which is essence of minutes of meeting.
- 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 and any amendments thereto from time to time.
- Directors of the company, Company secretary, Secretarial Auditor, Statutory Auditor, Cost Auditor, Internal Auditor can inspect the minutes and cannot demand copies of minutes of meeting.. However, the members of the company are not entitled to inspect minutes. Extracts of the minutes of the meeting can be given only to the director of the company upon payment of prescribed fees. Government authorities and agencies are entitled to inspect minutes of meetings.
- Minutes of the meeting should be signed by Chairman of the meeting. The Chairman of the meeting should be appointed by way of a board resolution and entitled to sign such minutes as per such resolution.
- The minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within thirty daysof the conclusion of the meeting.
- If a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.
- If any default is made in complying with the provisions of Section 118 of the Companies Act, 2013 and rules made there under, in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.
- The Companies Act 2013 mandates companies to maintain the meeting minutes for at least eight years from the date of the meeting. Failure to do so can result in legal implications and penalties. The meeting minutes should be kept at the company’s registered office or any other place as decided by the board of directors. However it is suggested that the Minutes of all meeting should be treated as permanent documents and should be maintained as long as company exists.
- In case of Board meetings or general meetings held through video conferencing or any audio visual mode, the minutes should also be maintained as per Section 118 of the Companies Act, 2013 and the records of meeting through video conferencing mode or other audio visual mode should also be preserved properly for future reference and record.
Thus minutes of meetings of companies under Companies Act, 2013 is an important and valuable document and every company secretary whether in employment or in Practice should adhere to highest standards of rules and regulations in letter and spirit. Recent Case Law of Wind World (India) Limited throws light on the importance of minutes of meeting. Minutes of meeting strengthens the Corporate Governance level of companies and enhances goodwill of the company in the upcoming economy and a solid move towards Viksit Bharat 2047.
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Disclaimer: The Views expressed in this Article are based upon prevailing facts and Law to date and views expressed are purely personal in nature. Readers are advised to seek expert opinion before arriving at a decision. You may reach me at csdeepakamrutkar@gmail.com.Source : The Companies Act, 2013. Source of information: The Companies Act, 2013.
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