Secretarial Standards are policies that define a typical structure and process for carrying out particular tasks within an organisation. Secretarial Standards covering a variety of subjects, such as Board of Directors and General Meeting meetings, the upkeep of registers and records, and the selection and compensation of directors, have been published by the ICSI.
Secretarial Standards are the standards issued by the INSTITUTE OF COMPANY SECRETARIES OF INDIA (ICSI) constituted under the section 3 of the Company Secretaries Act 1980. Secretarial Standards provide clear view of the laws when the laws are not clear.
These are approved by the Central Government. Secretarial Standards provide clarity to the laws which does not imply that these are alternatives to the original law.
The Institute of Company Secretaries of India (ICSI) Constituted the SECRETARIAL STANDARDS BOARD (SSB) in year 2000 with a view to formulate secretarial standards because before the introduction of Secretarial standards there are numerous practices have been followed by organisations and in event to unify the procedures the ICSI have taken initiative and Formulate SSB.
These standards are applicable to companies that are required to comply with the Companies Act, 2013, and the rules made thereunder. As per Section 118(10) of the Companies Act, 2013, every company is required to observe the secretarial standards with respect to general and board meetings specified by the ICSI.
Therefore, companies that fall under the purview of the Companies Act, 2013, and the rules made thereunder are required to comply with the secretarial standards issued by ICSI. This is essential for ensuring good corporate governance and complying with legal requirements. Non-compliance with these standards can result in penalties or other legal consequences.
ICSI has provided a few exemptions for certain classes of companies. For instance, the Secretarial Standard on Meetings of the Board of Directors (SS-1) and the Secretarial Standard on General Meetings (SS-2) do not apply to one-person companies (OPCs) and small companies as defined in the Companies Act, 2013.
However, it is important to note that even if a company is exempted from certain Secretarial Standards, it should still follow the best practices laid down in the standards to ensure good corporate governance and compliance.
NUMBER OF SECRETARIAL STANDARDS
The Secretarial Standards issued by the ICSI cover a wide range of areas related to the functioning of a company. These include:
1. Meetings of the Board of Directors: The Secretarial Standards provide guidelines on the conduct of meetings of the Board of Directors, including the preparation and circulation of agenda, recording of minutes, and the maintenance of attendance registers.
2. General Meetings: The Secretarial Standards provide guidelines on the conduct of general meetings, including the preparation and circulation of notice, recording of minutes, and the maintenance of attendance registers.
3. Registers and Records: The Secretarial Standards provide guidelines on the maintenance of various registers and records that are required to be maintained under the Companies Act, 2013.
4. Appointment and Remuneration of Directors: The Secretarial Standards provide guidelines on the appointment and remuneration of directors, including the preparation of necessary documentation and compliance with statutory requirements.
5. Related Party Transactions: The Secretarial Standards provide guidelines on the disclosure and approval of related party transactions.
6. Share Capital and Debentures: The Secretarial Standards provide guidelines on the issue, allotment, and transfer of shares and debentures.
7. Dividend: The Secretarial Standards provide guidelines on the declaration and payment of dividend.
In addition to the above, the ICSI also issues guidance notes and clarification bulletins to address specific issues that may arise in the implementation of the Secretarial Standards.
CONSEQUENCES IF NOT FOLLOWED
If a company secretary fails to follow the secretarial standards issued by ICSI, there may be several consequences, including:
1. Legal Liability: The company secretary may be held legally liable for any errors or omissions in their work, which may result in financial losses for the company or legal action against the company.
2. Professional misconduct: Failure to follow the secretarial standards can lead to professional misconduct charges against the company secretary. This can result in disciplinary action by the ICSI, which can include suspension or revocation of their membership.
3. Reputation damage: If the company secretary fails to follow the secretarial standards, it can damage their reputation and credibility within the industry. This can make it difficult for them to find new clients or job opportunities in the future.
4. Ethical issues: Failure to follow the secretarial standards can also raise ethical concerns, as the company secretary may be compromising the interests of the company and its stakeholders.
Overall, following the secretarial standards issued by ICSI is crucial for maintaining the quality and integrity of the profession and avoiding any negative consequences.
In conclusion, the Secretarial Standards issued by the ICSI play an important role in promoting good governance practices in companies. By providing a uniform approach to the documentation and procedures followed by Company Secretaries, the standards help to enhance transparency and accountability in the functioning of companies. It is, therefore, essential for Company Secretaries to familiarise themselves with the Secretarial Standards and ensure that they are followed in letter and spirit in their organisations.