Short Study on Board Minutes under Companies Act 2013

BOARD MINUTES

[Section 118 of the Companies Act, 2013 Read with Rule 3 of the Companies (Meetings of Board and its Power) Rules, 2014]

A Company from incorporation to closing of business is guided by the provisions of the Companies Act, 2013 and related rules, hence evidently, minutes are also governed by the Companies Act, 2013. These minutes are proof of happening of a specific event in a company and whenever, the documents of company are demanded by any department, the very first is generally minutes of the Company.

And one such recording of all the meeting of the company is drafted and called as Minutes.

What are Minutes?

Minutes, also known as minutes of meeting, protocols or, informally, notes, are the instant written record of a meeting or hearing.

• Minutes contains a fair and correct summary of the proceedings of the Meeting and should normally convey why, how and what conclusions or decisions were arrived at in relation to each business transacted at the Meeting.
• It need not be an exact transcript of the proceedings.
• Every company is required to keep Minutes of all Meetings.
• Minutes kept in accordance with the provisions of the Act evidence the proceedings recorded therein. Minutes help in understanding the deliberations and decisions taken at the Meeting.

The provision of Section 118 of the Companies Act, 2013 governs the preparation of the Board Meeting Minutes of company and it also mandates a company to observe Secretarial Standard -1 issued by The Institute of Company Secretaries of India for preparation of minutes of a company. Note: One-person Company (OPC) and Section 8 Company are not required to observe secretarial Standard-1 issued by The Institute of Company Secretaries of India.

Extract of Section 118 of Companies Act, 2013

Minutes of Proceedings of General Meeting, Meeting of Board of Directors and Other Meeting and Resolutions Passed by Postal Ballot [Notified Date of Section: 01/04/2014]

• Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered.
• The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.
• All appointments made at any of the meetings aforesaid shall be included in the minutes of the meeting.
• In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall also contain:

1. 1. The names of the directors present at the meeting; and
   2. In the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring with the resolution.

• There shall not be included in the minutes, any matter which, in the opinion of the Chairman of the meeting:

1. 1. Is or could reasonably be regarded as defamatory of any person; or
   2. Is irrelevant or immaterial to the proceedings; or
   3. Is detrimental to the interests of the company.

• The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in sub-section (5).
• The minutes kept in accordance with the provisions of this section shall be evidence of the proceedings recorded therein.
• Where the minutes have been kept in accordance with sub-section (1) then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid.
• No document purporting to be a report of the proceedings of any general meeting of a company shall be circulated or advertised at the expense of the company, unless it includes the matters required by this section to be contained in the minutes of the proceedings of such meeting.
• Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.
• If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.
• If a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.

APPLICABILITY:- 1. PRIVATE COMPANY 2. ONE PERSON COMPANY (OPC) 3. PUBLIC COMPANY 4. SECTION 8 COMPANY 5. NIDHI COMPANY 6. FOREIGN COMPANY

The Minutes gives a detailed discussion as to:

• Maintenance of Minutes;
• Contents of Minutes;
• Recording of Minutes;
• Drafting & Entry in the Minute Book;
• Signing and dating of minutes;
• Inspection of minutes;
• Preservation of minutes;
• Consequences of Non-Compliance.

Minutes are prepared for each and every kind of meeting including: – Corporate Social Responsibility Meetings Board Meeting Shareholder’s Meeting Stakeholders Meetings Nomination and Remuneration Meetings Audit Committee Meetings Any other meeting

Minutes of Board Meetings under the New Compliance Regime – Secretarial Standard 1

The Institute of Company Secretaries of India has issued the Secretarial Standards (SS1 on Meeting of the Board of Directors and SS2 on General Meetings) which were approved by the Central Government.

The adherence by the Company to these Standards is mandatory, as per the provisions of Section 118(10) of the Companies Act, 2013.

Secretarial Standards came in force w.e.f. 01st July, 2015 and apply to all the Meetings of the Board of Directors of all the Companies except One Person Companies wherein only One director in the Board. These Standards have overhauled the entire process of the Board Meeting.

The highlights of the provisions relating to the preparation and recording of the minutes of the Meetings of the Board of Directors and committees thereof are narrated herein below:-

Maintenance of Minutes of the Board/Committee Meetings : 

Every company shall keep Minutes of all Board and Committee Meetings in a Minutes Book. Minutes kept in accordance with the provisions of the Act evidence the proceedings recorded therein. Minutes help in understanding the deliberations and decisions taken at the Meeting.

• A distinct Minutes Book shall be maintained for Meetings of the Board and each of its Committees;
• A company may maintain its Minutes in physical or in electronic form. Every company shall however follow a uniform and consistent form of maintaining the Minutes. Any deviation in such form of maintenance shall be authorized by the Board;
• The pages of the Minutes Books shall be consecutively numbered;
• In the event any page or part thereof in the Minutes Book is left blank, it shall be scored out and initialed by the Chairman who signs the Minutes;
• Minutes shall not be pasted or attached to the Minutes Book, or tampered with in any manner;
• Minutes of the Board Meetings, if maintained in loose-leaf form, shall be bound periodically depending on the size and volume and coinciding with one or more financial years of the company;
• There shall be a proper locking device to ensure security and proper control to prevent removal or manipulation of the loose leaves;
• Minutes of the Board Meeting shall be kept at the Registered Office of the company or at such other place as may be approved by the Board and should be under the custody of Company Secretary if any, or any other person as authorized by Board.

Contents of Minutes:

Minutes consist of below contents:

♥ General Contents:-

1. The serial number;
2. Type of the Meeting;
3. Name of the Company;
4. Day, date, venue and time of commencement of the Meeting;
5. Names of the Directors present physically;
6. Names of the Directors present in electronic Mode;
7. Names of the Company Secretary who is in Meeting;
8. Names of the invitees, if any, including invitees for specific items.

♥  Specific Content:-

1. Name of Director present and their mode of attendance, if through electronic mode;
2. Name of the Company Secretary present and invitees, if any, for specific items & mode of attendance;
3. Election of Chairman of Meeting;
4. Presence of Quorum;
5. Name of Directors for Grant of Leave of Absence;
6. Noting of the Minutes of the preceding Meeting;
7. Noting the Minutes of the Meetings of the Committee;
8. Noting of resolution passed by circulation;

Other items to be mention in Minutes;

1. Brief background of all proposals;
2. Summaries of the deliberations thereof;
3. In case of major decisions, the rationale thereof shall also be mentioned;
4. The time of commencement and conclusion of the meeting.

Recording of Minutes:

The recording is on the Company Secretary. The Company Secretary shall record the proceedings of the Meetings. Where there is no Company Secretary, any other person duly authorized by the Board or by the Chairman in this behalf shall record the proceedings.

The Chairman or the Company Secretary as the case may be shall ensure the below points:

• Proceedings of the meetings are correctly recorded;
• Absolute Discretion;
• Minutes shall be written in clear, concise and plain language;
• Minutes shall be written in third person;
• It should be an exact transcript of the proceedings of the meetings;
• There shall be also a reference in case an earlier resolution is superseded or modified;
• The minutes of the meetings of any committee shall be noted at a meeting of the Board held immediately following the date of entry of such minutes in the minute book.

1. Drafting & Entry in the Minutes Book:

Board Meeting or any committee meetings is held.

Then within fifteen (15) Days

Minutes should be drafted and circulated to the directors for their finalization.

Then within thirty (30) Days

Minutes should be signed and entered in the minute book or get time stamped in case of physical and electronic maintenance mode respectively in case of Board Meeting or any committee meetings.

Signing and Dating : 

• Minutes of the Meeting of the Board should be signed and dated by the Chairperson of the Meeting or the Chairperson of the next Meeting;
• Such Minutes may be signed by the Chairperson of the Meeting at any time before the next Meeting is held;
• Minutes of a General Meeting should be signed and dated by the Chairperson of the Meeting or in the event of death or inability of that Chairperson, by the Vice-Chairperson or any Director who was present in the Meeting and duly authorized by the Board for the purpose, within thirty days of the General Meeting;
• The Chairperson should initial each page of the Minutes, sign the last page and the date on which he has signed the Minutes should be mentioned by him.
• In case of electronically maintained Board meeting minutes, the chairman shall sign minutes digitally.

Note:

Once signed by the Chairman, shall not be altered. Hence, number of alterations can be made in minutes but this all should be done before get them signing from Chairman.

Inspection of Minutes :

Inspection of Minutes are to be done by:-

• DIRECTORS
• COMPANY SECRETARY IN PRACTICE
• SECRETARIAL AUDITOR
• STATUTORY AUDITOR
• COST AUDITOR
• INTERNAL AUDITOR

Note:

1. When a member requests in writing for a copy of any Minutes, which he is entitled to inspect, the company should furnish the same within seven working days of receipt of his request, subject to payment of such fee as may be specified in the Articles of the company.
2. In case a Member requests for the copy of the Minutes in electronic form, in respect of any previous General Meetings held during a period immediately preceding three financial years, the company should furnish the same without any fee.

Preservation of Minutes : 

• Minutes of all Meetings should be preserved permanently in physical or in electronic form with Timestamp;
• Office copies of Notices, Agenda, Notes on Agenda and other related papers should be preserved in good order in physical or electronic form for as long as they remain current or for ten years, whichever is later and may be destroyed thereafter with the approval of the Board.

Consequences of Non-Compliance :

• If no minutes are prepared, in respect of any Board Meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.
• Also note, if a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.

Rule 3 of the Companies (Meetings of Board and its Power) Rules, 2014

RULE 3 (11) (a)

• At the end of discussion on each agenda item, the Chairperson of the meeting shall announce the summary of the decision taken on such item along with names of the directors, if any, who dissented from the decision taken by majority.

RULE 3 (11) (b)

• The minutes shall disclose the particulars of the directors who attended the meeting through video conferencing or other audio visual means.

RULE 3 (12) (a)

• The draft minutes of the meeting shall be circulated among all the directors within fifteen days of the meeting either in writing or in electronic mode as may be decided by the Board.

RULE 3 (12) (b)

• Every director who attended the meeting, whether personally or through video conferencing or other audio visual means, shall confirm or give his comments in writing, about the accuracy of recording of the proceedings of that particular meeting in the draft minutes, within seven days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed.

RULE 3 (12) (c)

• After completion of the meeting, the minutes shall be entered in the minute book as specified under section 118 of the Act and signed by the Chairperson.

Other points to be remembered:

1. Details of Resolution Passed

The minutes of meeting should contain the text of the Resolution(s) passed by circulation since the last Meeting, including dissent or abstention, if any. If any Director on the Board dissents or abstains from voting on any of the Resolution passed by circulation, then such dissent or abstention should be recorded in the Minutes of Meeting.

2. Details of Dissent & Views of Independent Directors

The views of a Director or an Independent Director must be mentioned in the minutes of meeting, especially if insisted upon by a Director or any other person in the meeting.

Further, the fact of dissent and the name of the Director who dissented from the Resolution or abstained from voting on a resolution must be mentioned in the minutes of meeting. 

3. Related Party Transactions

In case of a private limited company, the Minutes of Meeting should record the fact that an interested Director after disclosure of his interest participated in the discussion and voted.

If a Director did not participate in the discussions and did not vote on item of business in which he was interested and in case of related party transaction, then such information must also be recorded in the minutes.

4. Miscellaneous Items

Consideration of any item other than those included in the Agenda with the consent of majority of the Directors present at the Meeting and ratification of the decision taken in respect of such item by a majority of Directors of the company Minutes should be mentioned in the minutes.

Here is a Sample presentation of the Minutes of the Meeting of Board:- 

SAMPLE MINUTES OF FIRST BOARD MEETING

Minutes of the first Board Meeting of ………………….. (Company Name), held on ………………….. (Day)………………….. (Date, Month and Year) at ………………….. (Venue) from ………………….. (Time of Commencement). 

Present:

……………. (In the Chair)

…………….

……………. 

In attendance:

…………… 

Company Secretary:

…………… 

Chairman for the Meeting:

Mr.………….. ………..was elected as the Chairman for the Meeting.

Quorum:

The business before the Meeting was taken up after having established that the requisite Quorum was present.

 Leave of Absence:

Leave of absence was granted to Mr./ Ms. X who expressed his inability to attend the Meeting owing to his pre-occupation.

Certificate of Incorporation:

The Board was informed that the company has been incorporated on .……… and the Directors noted the Certificate of Incorporation No……………. of …….…, dated ……….. issued by the Registrar of Companies,…………………….

 Memorandum and Articles of Association:

A printed copy of the Memorandum and Articles of Association of the company as registered with the Registrar of Companies, ………….was placed before the Meeting and noted by the Board.

 Registered Office:

The Board noted that the Registered Office of the company will be at …………….., the intimation of which has already been given to the Registrar of Companies,……………….

 First Directors:

The Board noted that in terms of Article …………. of the Articles of Association of the company, Mr.………, Mr.….………and Mr.…………… are the first Directors of the company.

Appointment of First Auditors:

Reference was made to Mr. …………….’s note dated ……….. on the subject, as circulated.

The Chairman stated that pursuant to Section 139 of the Companies Act, 2013, First Auditors are to be appointed within thirty days from the registration of the company.  For this purpose, M/s. ……………….., Chartered Accountants,……………….., had been approached to act as the first Auditors of the company. A letter received from M/s. ………… conveying their consent was placed before the Directors. The Board, after discussion passed the following Resolution:

“RESOLVED THAT M/s. ……………, Chartered Accountants, …., ……, be and are hereby appointed pursuant to Section 139(6) of the Companies Act, 2013, as the first Auditors of the company at such remuneration as may be fixed by the Board in consultation with the Auditors to hold office from the date of this Meeting till the conclusion of the first Annual General Meeting of the company.”

“RESOLVED FURTHER THAT the Director/Company Secretary be and is hereby authorized to make the necessary filings with the Statutory Authorities”.

 Opening of Bank Account:

The Chairman informed the Board that it is proposed to open a current account in the name of the company with …………….Bank. The Board agreed with the same and passed the following Resolution:

“RESOLVED THAT a current account be opened in the name of ……… Limited with the ………. Bank, ………, and that the Bank be instructed to honour all cheques, bills of exchange, promissory notes or other orders which may be drawn by/ accepted/ made on behalf of the company and to act on any instructions so given relating to the account, whether the same be overdrawn or not, relating to the transactions of the company and that any two of the following Directors/officers of the company, jointly, namely:

……………………

……………………

Issue of Share Certificates:

Reference was made to Mr. …………….’s note dated ……….. on the subject, as circulated. The Chairman informed the Board that Mr.……., Mr……… and Mr. ………, who are subscribers to the Memorandum of Association of the company, had each agreed to take and have taken______ (__________) equity shares in the company. He further informed the Board that pursuant to Section 2(55) of the Companies Act, 2013, the names of the said subscribers to the Memorandum of Association have been entered in the Register of Members and that equity share certificates are required to be issued to them. The Board agreed with the same and passed the following Resolution:

“RESOLVED THAT Mr.………., Mr.………. and Mr. ……….., the subscribers to the Memorandum of Association of the company who had agreed to take and have taken__________ (__________) equity shares each of the company, be issued equity share certificates and that Mr.………. and Mr.…………….., Directors of the company, and Mr.……………, Company Secretary, be and are hereby authorized to sign the said certificates.”

 Next Board Meeting:

It was decided to hold the next Board Meeting at…………… a.m./ p.m. on………. (Day), ……….. (Date, Month and Year) at……….. (Venue).

Conclusion of the Meeting:

There being no other business, the Meeting concluded at …. (Time) with a vote of thanks to the Chair. 

Place: …………………..

Date: …………………… 

_____________________

Signature of Chairman