Secretarial Standard-1 on Board Meetings Simplified (SS-1)

Secretarial Standard-1

As the Provisions of Company Law are becoming more stringent and the ROCs have increased their vigil, it is very important to comply with Secretarial Standards in the proceedings of the meeting and in matters incidental thereto. Secretarial Standards-1 act as guide to conduct the Board Meeting as per the provisions of Company Act, 2013. Here in this article, Author have tried to simplify the provisions of Secretarial Standard-1 to the extent possible.

Applicability:

• Applicable to all Companies except OPC and Section 8 Companies.

Convening a meeting:

• Any director of a company may at any time summon a meeting of the Board, and the CS or in his absence any person authorised by the board in this behalf, shall convene a Board Meeting in consultation with Chairman, or in his absence Managing Director(MD), or in his absence Whole Time Director (WTD).
• Chairman may adjourn the meeting for any reason at any stage of the meeting, except in the case of a meeting where quorum is present and the adjournment is objected by the majority of directors present at the meeting.

Day, Time, Mode, Place, Serial number of meeting:

• Every Board Meeting shall have a serial number.
• Board Meeting may be convened at any time and place on any day.
• Board Meeting (BM) may be held at the Registered office of the Company or at any other place. BM if conducted through Electronic mode, shall be deemed to be held at the Registered office of the company.
• A director may participate in the meeting through electronic mode. However there are certain exceptions to it which means that for dealing with the following items of business directors cannot participate through electronic mode: (a) approval of the annual financial statement, Board’s report, prospectus and matters relating to amalgamation, merger, demerger, acquisition and takeover.

In the wake of Covid-19 pandemic, Central Government has given exemption for dealing with the above specified matters though e-mode as well.

Similarly, participation in the discussion through Electronic Mode shall not be allowed in Meetings of the Audit Committee for consideration of annual financial statement including consolidated financial statement, if any, to be approved by the Board.

Notice:

• Notice of every BM shall be given to all the directors by hand or by speed post or by registered post or by facsimile or by e-mail at the postal or email address registered with company. If no such details are available then notice shall be sent at that address which is appearing in the DIN registration of the director.
• If the director has specified any specific mode of delivery of notice, then notice shall be delivered to him through that mode. However if meeting is called at shorter notice than company may give notice through any mode as it deems fit.
• Proof of delivery shall be maintained by the company for atleast 3 years.
• Notice shall be issued by CS or in his absence by any director or person authorised by the board.
• Notice of the meeting shall clearly state the date, place, time and venue of meeting.
• Notice shall specify all the details related to electronic participation, if allowed. Any director intending to participate in the meeting through e-mode, shall intimate the Chairman or CS sufficiently in advance. Director may give such intimation at the beginning of the calendar year, which shall be valid for that Calendar year. In the absence of any advance communication as above, it shall be assumed that he shall attend the meeting physically.
• Notice shall contain the contact number or e-mail address of the Chairman or the Company Secretary or any other person authorised in this behalf.
• Even if the meetings are held on pre-determined dates, notice shall be given.
• Notice of the Meeting shall be given at least 7 days before the date of the Meeting. Articles may prescribe a longer time. If company sends the notice by speed post or by registered post, additional two days shall be added for the service of Notice.
• Notice of an adjourned Meeting shall be given to all Directors including those who did not attend the original meeting. If the date of adjourned meeting is not decided at the original meeting, notice of 7 days shall be given for such adjourned meeting.
• The Agenda, setting out the business to be transacted at the meeting, and Notes on Agenda shall also be attached with the notice.
• The Notice, Agenda and Notes on Agenda shall be sent to the Original Director also at the address registered with the company, even if these have been sent to the Alternate Director.
• Notes on items of business which are in the nature of Unpublished Price Sensitive Information may be given at a shorter period of time than stated above, with the consent of a majority of the Directors, which shall include atleast one Independent Director, if any, and consent of the board for this may be taken in the first Meeting of the Board held in each financial year and also whenever there is any change in Directors.
• Where approval by means of a Resolution is required, the draft of such resolution shall be either set out in the note or placed at the Meeting
• Any item not included in the Agenda may be taken up for consideration with the permission of the Chairman and with the consent of a majority of the Directors present in the meeting. The decision taken in respect of such item shall be final only after it is approved by the majority of directors of the company at the meeting or it is ratified by the majority of directors of the company.

Here the expression “majority of directors of the company at the meeting” is used, and not “majority of directors present at the meeting”.

• To transact urgent businesses, BM may be called at a shorter notice if at least one Independent Director, if any, is present at such meeting. If no Independent Director is present, decisions taken at such a Meeting shall be circulated to all the Directors and shall be final only on ratification thereof by at least one Independent Director. If the company does not have an Independent Director, the decisions shall be final only on ratification thereof by a majority of the Directors of the company.
• The fact that the Meeting is being held at a shorter Notice shall be stated in the notice.

Frequency of Meetings:

• At least four Board Meetings, should be held in a calendar year, with maximum gap of 120 days between two consecutive meetings.
• A company shall hold its First Board meeting within 30 days of incorporation.
• OPC, Small Companies, Dormant Companies shall hold atleast 1 meeting in each half of the calendar year and the gap between two consecutive meetings shall not be less than 90 days.
• An adjourned Meeting being a continuation of the original Meeting, the interval period in such a case, shall be counted from the date of the original Meeting.

Meetings of Independent Directors:

• Independent Directors shall meet at least once in a Calendar Year.
• Agenda of meeting of Independent Directors shall include: (a) to review the performance of Non-Independent (b) Directors and the Board as a whole (c) to review the performance of the Chairman (d) to assess the quality, quantity and timeliness of flow of information between the company management and the Board and its members that is necessary for the Board to effectively and reasonably perform their duties.

Quorum:

• Shall be present throughout the Meeting.
• Interested Director shall neither be entitled to participate nor be reckoned for the purpose of quorum in respect of an item of business in which he is interested.
• If the item of business is a related party transaction, then such director, shall not be present at the Meeting, during discussions and voting on such item.
• Directors participating through Electronic Mode in a Meeting shall be counted for the purpose of Quorum unless specifically excluded.
• The Quorum shall be one-third of the total strength of the Board, or two Directors, whichever is higher. Any fraction contained in the above one-third shall be rounded off to the next one. Article may provide for higher quorum.
• If the number of Interested Directors exceeds or is equal to two-thirds of the total strength, the remaining Directors present at the Meeting, being not less than two, shall be the Quorum during such item.
• If a Meeting of the Board could not be held for want of Quorum, the Meeting shall automatically stand adjourned to the same day in the next week, at the same time and place or, if that day is a National Holiday, to the next succeeding day which is not a National Holiday, at the same time and place. If there is no Quorum at the adjourned Meeting also, the Meeting shall stand cancelled.
• If the number of total Directors is reduced below the Quorum fixed by the Act for a Meeting of the Board, the continuing Directors may call board meeting for the purpose of increasing the number of Directors to that fixed for the Quorum or for calling the general meeting of the company, and for no other purpose.

Attendance at meetings:

• Every company shall maintain attendance register for the meetings of the Board and Meetings of the Committee.
• pages of the attendance register shall be serially numbered
• If an attendance register is maintained in loose-leaf form, it shall be bound periodically, atleast once in every three years
• The attendance register shall contain the following particulars: serial number and date of the Meeting, place & time of the Meeting; names and signatures of the Directors, the CS and also of persons attending the Meeting by invitation.
• The attendance register shall be deemed to have been signed by the directors participating through Electronic Mode, if their attendance is recorded in the attendance register and authenticated by the CS or in his absence by chairman or any other director present at the meeting.
• Attendance register shall be maintained at the Registered Office of the company or such other place as may be approved by the Board.
• Attendance register is open for inspection by the Directors, CS, and Secretarial Auditor. Even after a person ceases to be a Director, he shall be entitled to inspect the attendance register of the Meetings held during the period of his Directorship.
• A Member of the company is not entitled to inspect the attendance register.
• Attendance register shall be preserved for a period of atleast eight financial years from the date of last entry made therein and may be destroyed thereafter with the approval of the Board.
• Attendance register shall be in the custody of the CS, or in his absence in the custody of any other person authorised by the Board.
• Leave of absence shall be granted to a Director only when a request for such leave has been communicated to the CS or to the Chairman or to any other person authorised by the Board
• The office of a Director shall become vacant in case the Director absents himself from all the Meetings of the Board held during a period of twelve months with or without seeking leave of absence of the Board. Here the period of 12 months shall be counted from the date of 1^st meeting in which he was absent.

For example, If Mr. A was present in the Board meeting held on 10/05/2021 and the next board meeting was held on 25/05/2021, then the said period of 12 months shall begin from 25/05/2021 and if he fails to attend any meeting of the company held between 25/05/2021 to 24/05/2022 (i.e. 12 months) then his office shall become vacant.

Chairman:

• The Chairman of the company shall be the Chairman of the Board. If the company does not have a Chairman, the Directors may elect one of themselves to be the Chairman of the Board.
• The Chairman of the Board shall conduct the Meetings of the Board. If no such Chairman is elected or if the Chairman is unable to attend the Meeting, the Directors present at the Meeting shall elect one of themselves to chair.
• If the Chairman is interested in an item of business, he shall entrust the conduct of the proceedings in respect of such item to any Non-Interested Director with the consent of the majority of Directors present and resume the chair after that item of business has been transacted. However, in case of a private company, the Chairman may continue to chair and participate in the Meeting after disclosure of his interest.
• If the item of business is a related party transaction, the Chairman shall not be present at the Meeting, whether physically or through Electronic Mode, during discussions and voting on such item.
• In case of an equality of votes, the Chairman shall have a second or casting vote.

Passing of Resolution by Circulation:

• Business that requires urgent decisions can be approved by means of Resolutions passed by circulation. Resolutions passed by circulation are deemed to be passed at a duly convened Meeting of the Board and have equal authority.
• Where atleast one-third of the total number of Directors for the time being require the Resolution under circulation to be decided at a Meeting, the Chairman shall put the Resolution for consideration at a Meeting of the Board. Interested Directors shall not be excluded for the purpose of determining the above one-third of the total number of Directors
• A Resolution proposed to be passed by circulation shall be sent in draft, together with the necessary papers and the notes explaining all the details related to the proposal, to all the Directors including Interested Directors on the same day, by hand, or by speed post or by registered post or by courier, or by e-mail or by any other electronic means. Here courier is allowed but in the case of notice of normal Board Meeting, courier is not allowed.
• Maximum 7 days from the date of circulation, shall be given to directors to provide their opinion on the resolution circulated. (Additional 2 days shall be given if resolution is circulated through speed post, registered post or courier)
• Resolution is passed when it is approved by a majority of the Directors entitled to vote on the Resolution, except where atleast one-third of the total number of Directors for the time being require the Resolution under circulation to be decided at a Meeting.
• Interested Director shall not be entitled to vote.
• The Resolution, if passed, shall be deemed to have been passed on the earlier of:

a) the last date specified for signifying assent or dissent by the Directors or,

b) the date on which assent has been received from the required majority, provided that on that date the number of Directors, who have not yet responded on the resolution under circulation, along with the Directors who have expressed their desire that the resolution under circulation be decided at a Meeting of the Board, shall not be one third or more of the total number of Directors.

For example: If there are total 9 directors in a company, last date for specifying Assent or dissent on the resolution circulated is 05/06/2022 and the company has received the assent of 7 directors (majority) on 03/06/2022, then the date on which the resolution shall be deemed to be passed shall be  03/06/2022. However, if till 03/06/2022 the company has received the assent of 5 directors, 2 directors have requested to pass the resolution in the board meeting and the remaining 2 directors have not yet responded, although the company has received the assent of majority of directors (i.e. 5) till 03/06/2022 but still the resolution shall not be deemed to be passed because the total number of directors who have requested to pass the resolution in the board meeting along with the directors who have not yet responded is 4 which is equals to or more than 1/3^rd of the total number of directors(i.e. 3).

• Directors shall signify their assent or dissent by signing the Resolution to be passed by circulation or by e-mail or any other electronic means.
• Directors shall append the date on which they have signed the Resolution. In case a Director does not append a date, the date of receipt by the company of the signed Resolution shall be taken as the date of signing.
• In case the Director does not respond on or before the last date specified for signifying assent or dissent, it shall be presumed that the Director has abstained from voting
• If the approval of the majority of Directors entitled to vote is not received by the last date specified for receipt of such approval, the Resolution shall be considered as not passed.
• Resolutions passed by circulation shall be noted at a subsequent Meeting of the Board and the text thereof with dissent or abstention, if any, shall be recorded in the Minutes of such Meeting.
• Resolution passed by circulation shall be deemed to be passed at the board meeting, but the requirement of meeting at the specified interval shall still be applicable (i.e. 4 times in a calendar year).

Minutes:

• Every company shall keep Minutes of all Board and Committee Meetings in a Minutes Book.
• A distinct Minutes Book shall be maintained for Meetings of the Board and each of its Committees.
• Minutes may be maintained in electronic form with Timestamp.
• Pages of the Minutes Books shall be consecutively numbered.
• A company shall follow a consistent form of maintaining the Minutes. Any deviation in such form of maintenance shall be authorised by the Board.
• Minutes shall not be pasted or attached to the Minutes Book, or tampered with in any manner.
• Minutes Books shall be kept at the Registered Office of the company or at such other place as may be approved by the Board.
• Minutes shall state, at the beginning the serial number and type of the Meeting, name of the company, day, date, venue and time of commencement and conclusion of the Meeting names of the Directors present physically or through E-Mode, the CS who is in attendance at the Meeting and Invitees, if any, In respect of a Meeting adjourned for want of Quorum, a statement to that effect by the Chairman or in his absence, by any other Director present at the Meeting, and a record of all appointments made at the Meeting.
• The list of directors present shall start with the name of Chairman.
• Where a Resolution was passed pursuant to the Chairman of the Meeting exercising his second or casting vote, the Minutes shall record such fact.
• CS or in his absence an authorized person shall record the proceedings of the Meetings.
• The Chairman has absolute discretion to exclude from the Minutes, matters which in his opinion are or could reasonably be regarded as defamatory of any person, irrelevant or immaterial to the proceedings or which are detrimental to the interests of the company.
• Minutes shall be written in third person and past tense. Resolutions shall however be written in present tense.
• Minutes of the preceding Board or Committee Meeting shall be noted at a Meeting of the Board held immediately following the date of entry of such Minutes in the Minutes Book.
• the draft Minutes thereof shall be circulated by hand or by speed post or by registered post or by courier or by e-mail or by any specific means prescribed by director, to all the members (whether present at the meeting or not) of the Board or the Committee, as on the date of the Meeting, for their comments, within 15 days from the date of the conclusion of the Meeting.
• The Directors, whether present at the Meeting or not, shall communicate their comments, if any, in writing on the draft Minutes within 7 days from the date of circulation thereof, so that the Minutes are finalised and entered in the Minutes Book within 30 days.
• If any Director communicates his comments after the expiry of the said period of seven days, the Chairman, if so authorised by the Board, shall have the discretion to consider such comments.
• In the event a Director does not comment on the draft Minutes, the draft Minutes shall be deemed to have been approved by such Director
• A Director, who ceases to be a Director after a Meeting of the Board is entitled to receive the draft Minutes of that particular Meeting and to offer comments thereon, irrespective of whether he attended such Meeting or not.
• Minutes shall be entered in the Minutes Book within thirty days from the date of conclusion of the Meeting/adjourned meeting.
• Minutes, once entered in the Minutes Book, shall not be altered except by way of approval of the Board at its subsequent Meeting at which the Minutes are noted by the Board and the fact of such alteration shall be recorded in the Minutes of such subsequent Meeting.
• Minutes of the previous Meeting may be signed either by the Chairman of such Meeting or by the Chairman of the next Meeting.
• Within 15 days of signing of the Minutes, a copy of the said signed Minutes, certified by the CS or in his absence by any authorised Director, shall be circulated to all the Directors, as on the date of the Meeting and appointed thereafter.

Draft minutes shall be circulated to only those directors who were directors as on the date of meeting but final signed minutes shall also be given to new directors.

• A Director is entitled to inspect the Minutes of a Meeting held before the period of his Directorship, even after he ceases to be a director.
• Member of the company is not entitled to inspect the Minutes of Meetings of the Board.
• Minutes of all Meetings shall be preserved permanently.
• Where a company has been merged or amalgamated with another company, Minutes of all Meetings of the transferor company shall be preserved permanently by the transferee company.
• Office copies of Notices, Agenda, Notes on Agenda and other related papers of the transferor company shall be preserved for as long as they remain current or for eight financial years, whichever is later.
• Minutes Books shall be in the custody of the CS.

Disclosures:

• The Report of the Board of Directors shall include a statement on compliances of applicable Secretarial Standards

Definition of Interested Director:

A Director shall be treated as interested in a contract or arrangement entered into or proposed to be entered into by the company:-

(a) with any body corporate, if such Director, along with other Directors holds more than two percent of the paid-up share capital of that body corporate, or he is a promoter, or manager or chief executive officer of that body corporate; or

(b) with a firm or other entity, if such Director is a partner, owner or Member, as the case may be, of that firm or other entity.