Ready Reckoner -Secretarial Standard -2 (General Meeting)

CS Manohar Mishra

The major decision of Company is takenby the Shareholders and Directors of the Company. Therefore, it was essential that the decision making process should be in such a manner so that it serve the right purpose. Therefore, the Institute of Company Secretaries of India, in consultation with other advisory committee has framed a process known as Secretarial Standards to make a complete solution on the decision making process by the shareholders of the Company.

The Institute of Company Secretaries of India (ICSI) has constituted Secretarial Standards Board for identifying areas in which Secretarial Standards to be issued and formulating the Secretarial Standards to integrate, harmonises and standardized secretarial practices. Secretarial Standard is nothing but an attempt to build up the confidence amongst the various Stakeholders, it has various provisions so that the rights of various stakeholders get protected.

Applicability: Secretarial Standard-2 (SS-2) applies to:

a. All types of General Meeting (AGM/EGM) of all Companies held on or after 1st day of July, 2015;

b. General Meeting of Debenture-holders and creditors;

c. A Meeting of the Members or class of Members or debenture-holders or creditors of a company under the direction of the Court or the Company Law Board (CLB) or the National Company Law Tribunal (NCLT) or any other prescribed authority.

• The Standard is in conformity with the provisions of the Companies Act. However, if due to subsequent changes in the Act, a particular Standard or any part thereof becomes inconsistent with the Act, the provisions of the Act shall prevail.

Non Applicability: One Person Company (OPC) and class or classes of companies which are exempted by the Central Government. Consists of only one (1) director on the Board. The MCA vide its notification dated 5^th June, 2015 has exempted Private Limited Companies to comply with the provision of section 101 to 107 and 109 of the Companies Act, 2013. This exemption is subject to fulfilment of certain conditions.

Key Definition’s: Some of the important definitions introduced by SS-2 are as under:

1. Agency: means agency approved or recognised by the Ministry of Corporate Affairs and appointed by the Board for providing and supervising electronic platform for voting;

2. Chairman: means the Chairman of the Board or the Chairman appointed or elected for a Meeting;

3. National Holiday: It includes 26^th January i.e. Republic Day, 15^th August i.e. Independence Day, 2nd October i.e. Gandhi Jayanti and such other day as may be decided by the Central Government;

4. Remote e-voting: means voting by a member from a place other than the venue of a general meeting through an electronic voting system;

5. Secured Computer System: means computer hardware, software, and procedure that-

a. are reasonably secure; b) provide a reasonable level of reliability; and c) are reasonably suited to perform the intended functions and adhere to generally accepted security procedures.

6. Timestamp: It means the current time of an event that is recorded by an electronic device (secured computer system) to recognize the time when a file is printed or any data is added, removed, modified, sent or received by the receiver.

Example: Saturday 30th January, 2016, 6.00 P.M.

7. Voting by electronics means: includes ‘remote e-voting’ and voting at the general meeting through an electronic voting system which may be same as used for remote e-voting.

Key Highlights of various provisions introduced by SS-2

A. Convening of a General meeting

1. A General Meeting shall be convened by or on the authority of the Board.

2. The Board shall, every year, convene or authorise convening of a member’s Meeting called the Annual General Meeting to transact items of Ordinary Business as well as special business, if any.

3. The Board may also, whenever it deems fit, call an Extra-Ordinary General Meeting of the Company.

4. The General Meeting shall be called during business hours, i.e., between 9 a.m. and 6 p.m. on a day that is not a National Holiday.

5. Annual General Meeting shall be held either at the registered office of the Company or some other place within the city, town or village in which the registered office of the company is situated.

6. General Meeting (Extraordinary General Meeting) may be held at any place within India.

B. Notice of General Meeting

• Mode of Sending Notice:Notice in writing of Every Meeting along with Agenda and Notes on Agenda shall be given to every Members of the Company, Directors, Auditors, Secretarial Auditors, to the Debenture Trustees, if any, and wherever applicable or so required, to other specified persons by hand or by ordinary post or by speed post or by registered post or by courier or facsimile or by email or by any other electronic means.In case of Members, Notice shall be given at the address registered with the Company.
• In case of Death of Member: Where the Company has received intimation of death of a Member, the Notice of Meeting shall be sent as under: a) where securities are held singly, to the Nominee of the single holder; b) Where securities are held by more than one person jointly and any joint holders dies, to the surviving first joint holder; c) where securities are held by more than one person jointly and all the joint holders die, to the Nominee appointed by all the joint holders.
• Contents of Notice: Notice shall contain Day, Date and Time of Meeting, complete particulars of the venue of the Meeting including Route Map and prominent land mark for easy location. In case of companies having a website, the Route Map shall be hosted along with the Notice on the website. Notice shall be accompanied, by an attendance slip and a proxy form with clear instructions for filing, stamping, signing and/or depositing the proxy form.
• Time period of sending Notice: Notice and accompanying documents shall be given at least 21 clear days before the date of the meeting. In case it is sent through post or by courier, an additional 2 days shall be added. It may be given at a shorter period of time if consent in writing is given thereto, by physical or electronic means, by not less than ninety-five per cent (95%) of the Members entitled to vote at such Meeting.

C: Business to be transacted at the Meeting

No business shall be transacted at a Meeting if Notice in accordance with the Secretarial Standard-2 has not been given. No item of business other than those specified and permitted under the Company Act or any previous enactment thereof, or any statutory modification thereto or re-enactment thereof and includes any Rules and Regulations framed thereunder (Act) shall be taken up at the Meeting.

D: Frequency of Meeting

Every company shall, in each Calendar Year hold a General Meeting called the Annual General Meeting (AGM) within six months of the close of the Financial Year, with an interval of not more than fifteen months between two successive Annual General Meeting. First AGM shall be held within nine months from the close of the first financial year of the Company.

E. Quorum

♠ Quorum shall be present throughout the Meeting.

♠ It shall be present not only at the time of commencement of the Meeting but also while transacting business.

♠ Unless the Articles provide for a longer number, the Quorum for a General Meeting shall be:

a) In case of a public company-

• Five Members personally present if the number of Members as on the date of Meeting is not more than one thousand;
• Fifteen Members personally present if the number of Members as on the date of Meeting is more than one thousand but equal to five thousand;
• Thirty Members personally present if the number of Members as on the date of Meeting is more than one five thousand.

b) In case of a Private Company, two Members personally present.

♠ Proxy shall be excluded for determining the Quorum.

♠ A duly authorised representative of a body corporate or the representative of the President of India or the Governor of a State is deemed to be a Member personally present at the Meeting and shall enjoy all the rights of a Member present in person.

♠ One person can be authorised representative of more than one body corporate.

♠ If any Director is unable to attend the Meeting, the Chairman shall explain such absence at the Meeting.

♠ The Company Secretary shall assist the Chairman in conducting the Meeting.

F. Proxy

• A Proxy need not be a Member.
• A Member entitled to attend and vote is entitled to appoint a proxy.
• A Proxy can act on behalf of Members not exceeding fifty and holding in aggregate not more than ten percent of the total share capital of the Company carrying voting rights.
• An instrument appointing a Proxy shall be either in the Form specified in the Articles or in the Form set out in the Ac.
• An authorised representative of a body corporate or of the President of India or of the Governor of a State, holding shares in a company, may appoint a Proxy under his signature.
• Undated proxy form shall not be considered valid.
• Proxies shall be deposited with the Company either in person or through post not later than forty-eight hours before the Meeting.
• When a Member appoints a Proxy and both the Member and Proxy attend the Meeting, the Proxy stands automatically revoked.
• All Proxies received by the Company shall be recorded chronologically in a register kept for that purpose.

G. Voting

• Every Resolution shall be proposed by a Member and Seconded by another Member.
• Every Equity listed company other than those whose equity shares are listed on SME Exchange or Institutional Trading Platform (ITP) and other companies having not less than one thousand shareholders shall provide e-voting facility to their Members to exercise their voting rights.
• Every company, which has provided e-voting facility to its Members, shall also put every Resolution to vote through a ballot process at the Meeting.
• A Proxy can’t vote on a show of hands.
• The Chairman shall order a poll upon receipt of a valid demand for poll either before or on the declaration of the result of the voting on any Resolution on show of hands.
• While a Proxy can’t speak at the Meeting, he has the right to demand or join in the demand for a poll.
• A Member who is a related party is not entitled to vote on a Resolution relating to approval of any contract or arrangement in which such Member is a related party.
• Every company providing e-voting facility shall offer such facility to all Members, irrespective of whether they hold shares in physical form or in dematerialised form.
• The facility for Remote e-voting shall remain open for not less than three days. The voting period shall close at 5 p.m. on the day preceding the date of the General Meeting.
• The Board shall :

a) Appoint one or more scrutinisers for e-voting or the ballot process;

b) Appoint an agency;

c) Decide the cut-off date;

d) Authorise the Chairman or in his absence, any other Director to receive the scrutiniser’s register, report on e-voting and other related papers with requisite details.

• Based on the scrutiniser’s report received on Remote e-voting and voting at the Meeting, the Chairman or any other Director so authorised shall countersign the scrutiniser’s report and declare the result of the voting forthwith the details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not.
• The scrutiniser’s register, report and other related papers received from the scrutiniser(s) shall be kept in the custody of the Company Secretary or any other person authorised by the Board for this purpose.

H. Minutes of Meeting

• Maintenance of Minute: Every company shall keep a distinct Minutes book for Meeting of the Members of the Company, creditors and others as may be required under the Act. Minutes shall be recorded in books maintained for that purpose. It can be maintained in physical or in electronic form with Timestamp. Each pages of the Minute Book shall be consecutively numbered. Minute shall not be pasted or attached to the Minute Book, or tampered with in any manner. If maintained in loose- leaf form, shall be bound periodically depending on the size and volume. It shall be maintained at the Registered Office of the Company or such other place as may be approved by the Board.

• Contents of Minute: Minute shall state, at the beginning the Meeting, name of the Company, day, date, venue and time of commencement and conclusion of the Meeting. In case a meeting is adjourned, the Minute shall be entered in respect of the original as well as the adjourned Meeting. It shall contain the name of the Directors and Company Secretary present at the Meeting. The name of the Directors shall be itemized in alphabetical order or in any logical manner, but in either case starting with the name of the person in chair.

• Recording of Minute: Minute shall contain a fair and correct summary of the proceeding of the Meeting. The Company Secretary, if any, shall record the proceeding of the meeting. In case the Company does not have a Company Secretary then it shall be recorded by any other person duly authorized by the Board or by the Chairman. The Chairman shall ensure that the proceedings of the meeting are correctly entered. Minute shall be written in clear, concise, third person and past tense. Resolution shall however be written in present tense.

• Entry in the Minute Book: Minute of the original or adjourned meeting, if any, shall be entered in the Minute Book within 30 days from the date of the respective meeting. The date of entry in the Minute Book shall be recorded by the Company Secretary of the Company, in case the Company does not have a Company Secretary, it shall be recorded by any other person duly authorized by the Board or by the Chairman.

• Signing and dating of Minute: Minutes of a General Meeting shall be signed and dated by the Chairman of the Meeting or in the event of death or inability of that Chairman, by any Director who was present in the Meeting and duly authorised by the Board for the purpose, within thirty (30) days of the General Meeting. The Chairman shall initial each page of the Minutes Book, sign the last page and append to such signature the date and the place where he has signed the Minutes. If Minutes are maintained in electronic form, the Chairman shall sign the Minutes digitally.

• Inspection and Extracts of Minutes: Directors and Members are entitled to inspect the Minutes of all General Meeting including Resolutions passed by postal ballot during business hours of the Company, without charge, subject to such reasonable restriction as the Company may, by its Articles or in General Meeting, impose so, however, that not less than two hours in each business day are allowed for inspection. Extracts of the Minutes shall be given only after the Minutes have been signed. However, any Resolution passed at a Meeting may be issued even pending signing of the Minutes, provided the same is certified by the Chairman or any Director or the Company Secretary.

• Preservation of Minutes and other Records: Minutes of all Meeting shall be preserved permanently in physical or in electronic form with Timestamp. Office copies of Notices, Scrutiniser’s report, and other and other related papers shall be preserved in good order in physical or in electronic form for as long as they remain current or for eight financial years, whichever is later and may be destroyed thereafter with the approval of the Board.

• Safe Custody of Minute Book: Minute Book shall be kept in the safe custody of the Company Secretary. In case there is no Company Secretary, it shall be kept in the custody of any director duly authorized by the Board.

Author: CS Manohar Mishra-Associate Member of the ICSI& a Commerce Graduate from Calcutta University, he can be contacted at csmanoharmishra@gmail.com