Vijaya Agarwala

Introduction-  In its undying spirit and persistent endeavour to ensure high corporate governance standards, the Ministry of Corporate Affairs (“MCA’’) vide letter no.1/3/2014/CL/I dated April 10, 2015 accorded its approval under section 118(10) of the Companies Act, 2013 (“Act”) to the following Secretarial Standards (“SS”) specified by the Institute of Company Secretaries of India namely –

(i)  SS-1: Meetings of the Board of Directors and

(ii) SS-2: General Meetings

The Secretarial Standards have been notified by the Institute of Company Secretaries of India in the Official Gazette and will take effect from July 1, 2015. Prior to the promulgation of the Companies Act, 2013, the secretarial standards were recommendatory in nature. However, with the historical moment of launching the SS by the MCA has marked a new era of healthy secretarial practices among professional. The objective of such standards has always been to make certain uniform corporate practice, procedures and dealings.

Further, the SS has bought about more clarity to certain silent and ambiguous provisions of the Act. Below we discuss such instances:

Particulars Provisions of Act SS -1 Remarks
1.       Definition of National Holiday “National Holiday” means and includes a day declared as National Holiday by the Central Government.(Explanation to Section 96) National Holiday includes Republic Day, Independence Day, Gandhi Jayanti and such other day as may be declared as National Holiday by the Central Government. These are the only three national holidays that have been declared by the Central Government till date.
2.       Definition of Timestamp No such provision “Timestamp” means the current time of an event that is recorded by aSecured Computer System and is used to describe the time that is printed to a file or other location to help keep track of when data is added, removed, sent or received. New concept
3.       Serial number of meeting No such express provision Every meeting of the Board and its committee shall be serially numbered. Although the same was voluntarily practiced by several companies, the SS now mandates it.
4.       Time limit for service notice of meeting At least 7 days before the date of the meeting Notice convening a Meeting shall be given at leastseven days before the date of the Meeting, unlessthe Articles prescribe a longer period In case the company sends the Notice by speed post or by registered post or by courier, an additional two days shall be added for the service of Notice.
5.       Authority to convene the meeting Act is silent Any Director of a company may, at any time, summon a Meeting of the Board, and the Company Secretary or where there is no Company Secretary, person authorised by the Board in this behalf, on the requisition of a Director, shall convene a Meeting of the Board, in consultation with the Chairman or in his absence, the Managing Director or in his absence, the Whole-time Director, where there is any, unless otherwise provided in the Articles. SS discreetly recognizes authorities who can call for a meeting.
6.       Quorum of committee meeting Silent The presence of all the members of any Committee constituted by the Board is necessary to form the Quorum for Meetings of such Committee unless otherwise stipulated in the Act or any other law or the Articles or by the Board. Neither the Act nor the equity listing agreement specifies any such quorum for committee meetings.
7.       Mode of service of notice of Board Meeting Notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means Notice in writing of every Meeting shall be given to every Director by hand or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means. All possible modes have been separately
8.       Agenda No specific time limit is prescribed The Agenda, setting out the business to be transacted at the Meeting, and Notes on Agenda shall be given to the Directors at least seven (7) days before the date of the Meeting unless the Articles prescribe a longer period. Circulation by way of post is required to be made 7 clear days before the date of the meeting.
9.       Notes on items of unpublished price sensitive information No such provision Notes on items of business which are in the nature of Unpublished Price Sensitive Information (UPSI) may be given at a shorter period of time than stated above, with the consent of a majority of the Directors, which shall include at least one Independent Director, if any. This is a new provision to ensure no wall crossing and passing of UPSI by the white collar.
10.   Tabled Items With the permission of the Chair. With the permission of the Chairman and with the consent of a majority of the Directors present in the Meeting, which shall include at least one Independent Director, if any Stricter provision: tabled items shall require consent of independent director (if any) and the majority of directors present.
11.   Quorum of committee meeting Silent The presence of all the members of any Committee constituted by the Board is necessary to form the Quorum for Meetings of such Committee unless otherwise stipulated in the Act or any other law or the Articles or by the Board. Neither the Act nor the equity listing agreement specifies any such quorum for committee meetings.
12.   Attendance Register Act is silent Every company to maintain such register for both Board and its committee meetings Register to be bind periodicallyEvery person attending such meeting shall sign the Register Although the attendance formed part of the minutes itself, now a separate attendance register needs to be maintained by the Company.
13.   Authority of passing of resolution by circular No such express provision The Chairman of the Board or in his absence, the Managing Director or in his absence, the Wholetime Director and where there is none, any Director other than an Interested Director, shall decide, before the draft Resolution is circulated to all the Directors, whether the approval of the Board for a particular business shall be obtained by means of a resolution by circulation. This is a new provision which identifies authorities for passing of resolution by circulation.
14.   Maintenance of minutes in electronic form Act recognizes such mode of maintenance. A company may maintain its Minutes in physical or in electronic form with Timestamp. Maintenance of e-minutes with timestamp is a new introduction.
15.   Finalisation of Minutes No specific time span has been stated Within 15 days from the date of the conclusion of a meeting, the draft Minutes shall be circulated to all the members of the Board or the Committee for their comments. 15 days time limit has been specified for circulation of draft minutes.
16.   Signing of e-minutes Silent Minutes maintained in e-form shall be signed digitally by the Chairman. This clarification wipes out all ambiguities.
17.   Circulation of signed minutes No such provision A copy of the signed Minutes certified by the Company Secretary or where there is no Company Secretary, by any Director authorised by the Board shall be circulated to all Directors within fifteen (15) days after these are signed. Circulation of signed minutes is a new requirement of law.

 Conclusion: The introduction of SS has certainly put to rest few debates on Board room governance. Further, companies in India have till now been following varied and diverse secretarial practices and hence, these SS shall now guarantee the harmonization and standardization of such practices. More so, since the SS shall be applicable to all the companies irrespective of their size, type and listing status. It is certainly a welcome move by the ICSI, as the role of a Company Secretary is enhanced and so are the responsibilities shouldered by them.

(Author Can be Reached at vijayaagarwala@gmail.com)

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0 responses to “Notified Secretarial Standards introduce new rules of Board room governance”

  1. Rishi says:

    Sir, can u provide us PDF copy of above mentioned letter.

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