The Secretarial Standard 1 seeks to prescribe a set of principles for convening and conduct of Board Meetings. The principles enunciated in this Standard are equally applicable to the meetings of Committees, unless otherwise stated herein or in the Act. The Directors owe a duty to the shareholders and should exercise care, skill and diligence in the discharge of their functions and in the exercise of the powers vested in them. All the powers vested to the Directors are exercised collectively.
Briefly, the Secretarial Standard 1 provides for the following, amongst others:
|Effective Date||1st July, 2015.|
|Applicability||To all Companies Incorporated under the Act except One Person Company. It also applies to various Committee(s) of the Board.
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 Managing Director and then Wholetime Director.
|Mode of Meeting||Physical or Electronic, if company provides such facility.
Electronic meeting (either of Board or of Committee) is not allowed for, unless expressly permitted by the Chairman for :
Approval of Annual Financial Statement;
Matters relating to Amalgamation, Merger, Demerger, Acquisition and Takeover.
|Notice||Notice is to serve by way of any physical or electronic mode at the address (physical address or electronic 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.
|Agenda||Agenda and Notes to Agenda should be provided at atleast 7 days before the date of the Meeting either in physical mode or electronic mode. In case of physical mode by way of post or courier, 2 more days needs to be added for service of document.
In case of UPSI, it may be given at a shorter period of time, with the consent of a majority of Director which should include atleast one Independent Director, if any.
UPSI means as defined under Insider Trading Regulations, 2015.
|Shorter Notice Consent||General Consent for issuing notice on Shorter period should be taken either in first Board Meeting in each financial year or consent should be taken before meeting and recorded in the Minutes.|
|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.
Exception is available for OPC, Small Company and Dormant Company which can conduct one meeting of Board of Directors in every calendar half year with not less than 90 days of time gap between two consecutive meetings.
|Quorum||It shall be 1/3rd of total strength or 2 Directors, whichever is higher. Any fraction in calculating above 1/3rd strength should be rounded off to next one.
Minimum quorum should be present (ie. either 1/3rd or 2) for each item to be transacted. Quorum should be present throughout the meeting.
For want of quorum, if the meeting gets adjourned, its 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.
This is also applicable to Committee Meeting.
|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.
|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 (maximum limit). In case the Director didn’t respond in any form, it shall be presumed that the Director has abstained from voting.
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.
If majority of Directors entitled to vote has not approved or not voted in favour of the resolution, the resolution considered as not passed.
|Minutes||The Company should follow uniform maintenance of minutes and any change in such form should be authorized by the 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 Board’s decision shall be recorded in the form of resolution if it is statutorily or otherwise required. The Board can record the decision in narrative form in other cases.
The draft minutes should be circulated to all the members of the Board or Committee 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.
The signed minutes should be circulated to the Board or Committee within 7 days of signing the Minutes.
The Statutory Auditor, Cost Auditor, Secretarial Auditor or any other person appointed by the Board for statutory purpose can inspect the Minutes of the Meeting.
The minutes of the Meeting should be preserved permanently.
By, ACS Deep Vaghela
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