CS Deepika Dutt
The SS-1, Secretarial Standard on meetings of the board of directors being effective from 01st July, 2015, were voluntarily adopted by big corporate as a good secretarial practices. But now SS-1 after coming into force made a big challenge for the private companies and unlisted public companies in the practice of preparation of notice of the board/committee meetings and its minutes thereon, along with attendance register and other records.
As per section 118(10) of the Companies Act, 2013, “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, and approved as such by the Central Government”. Further, if any Company does not comply with the secretarial standard there is a penalty provision for the Company and every officer in default. 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. Further, as per section 205(1)(c) of the Companies Act, 2013, it is the duty of Company Secretary to comply with the secretarial standard.
In actual scenario, private companies and unlisted public companies does not follow good practice while maintaining minutes of board meetings and other related documents. But, since the Companies Act, 2013 itself provides for Secretarial standard, a good practice for maintenance of minutes, notices, agendas, attendance registers will be followed by private companies too.
The crux of SS-1 for notice & agenda of board meetings, attendance register and minutes is as follows:-
A. Notice & Agenda of the meeting:-
1. Numbering of board meeting – This practice was not followed by most of the companies except listed companies.
2. Notice shall contain contact number or e-mail address of Company Secretary, if any or Chairman or any other authorized person to whom director shall confirm their presence in the ensuing board meeting.
3. Maintenance of proof of sending and delivery of notices, agenda and notes to agenda and preservation for eight financial years and can be destroyed after 8 financial year by board’s approval – This provision is nowhere present in the Companies Act, 2013.
4. 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. Therefore, companies should send notice of board meeting at least 7+2=9 days before the date of board meeting. While, the companies act, 2013 provides for only 7 days notice of board meeting.
5. SS-1 specifically mentions the mode of sending of notice-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.
B. Attendance Register:-
1. Attendance register pages should be serially numbered and it should be signed by every director, company secretary and invitee(s) attending the meeting. Also, entries in attendance register should be authenticated by the Company Secretary, if any or chairman of the meeting by signing each page of the register.
2. The Company Secretary in Practice appointed by the company or the Secretarial Auditor or the Statutory Auditor of the Company can inspect the attendance register. While, members can’t inspect the attendance register of the board meeting or committee meeting.
3. It should be preserved for eight financial years and can be destroyed after 8 financial years with board’s approval.
1. 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.
2. Separate book for board meetings and committee meetings should be maintained.
3. Minutes shall be written in third person and past tense. Resolutions shall however be written in present tense.
4. Wherever any approval of the Board is taken on the basis of certain papers laid before the Board, proper identification shall be made by initialing of such papers by the Company Secretary or the Chairman and a reference thereto shall be made in the Minutes.
5. Specific Contents of minutes-
i. Record of election, if any, of the Chairman of the Meeting.
ii. Record of presence of Quorum.
iii. The names of Directors who sought and were granted leave of absence.
iv. The mode of attendance of every Director whether physically or through Electronic Mode.
v. In case of a Director participating through Electronic Mode, his particulars, the location from where and the Agenda items in which he participated.
vi. The name of Company Secretary who is in attendance and Invitees, if any, for specific items and mode of their attendance if through Electronic Mode.
vii. Noting of the Minutes of the preceding Meeting.
viii. Noting the Minutes of the Meetings of the Committees.
ix. The text of the Resolution(s) passed by circulation since the last Meeting, including dissent or abstention, if any.
x. The fact that an Interested Director was not present during the discussion and did not vote.
xi. The views of the Directors particularly the Independent Director, if specifically insisted upon by such Directors, provided these, in the opinion of the Chairman, are not defamatory of any person, not irrelevant or immaterial to the proceedings or not detrimental to the interests of the company.
xii. If any Director has participated only for a part of the Meeting, the Agenda items in which he did not participate.
xiii. The fact of the dissent and the name of the Director who dissented from the Resolution or abstained from voting thereon.
xiv. Ratification by Independent Director or majority of Directors, as the case may be, in case of Meetings held at a shorter Notice and the transacting of any item other than those included in the Agenda.
xv. The time of commencement and conclusion of the Meeting.
xvi. The fact of the dissent and the name of the Director who dissented from the Resolution or abstained from voting thereon.
xvii. Ratification by Independent Director or majority of Directors, as the case may be, in case of Meetings held at a shorter Notice and the transacting of any item other than those included in the Agenda.
xviii. The time of commencement and conclusion of the Meeting.
xix. Where any earlier Resolution (s) or decision is superseded or modified, Minutes shall contain a reference to such earlier Resolution (s) or decision.
6. Circulation of draft minutes within 15 days from the date of conclusion of the meeting of the board or committee to all the directors or committee members for their comment.
7. Proof of sending draft Minutes and its delivery shall be maintained by the company.
8. The Directors, whether present at the Meeting or not, shall communicate their comments, if any, in writing on the draft Minutes within seven days from the date of circulation thereof, so that the Minutes are finalised and entered in the Minutes Book within the specified time limit of thirty days.
9. 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.
10. In case a Meeting is adjourned, the Minutes in respect of the original Meeting as well as the adjourned Meeting shall be entered in the Minutes Book within thirty days from the date of the respective Meetings.
11. The date of entry of the Minutes in the Minutes Book shall be recorded by the Company Secretary, if any or by any other person duly authorised by the Board or by the Chairman.
12. Any alteration in the Minutes as entered shall be made only by way of express approval of the Board at its subsequent Meeting in which such Minutes are sought to be altered.
13. Minutes of the previous Meeting may be signed either by the Chairman of such Meeting at any time before the next Meeting is held or by the Chairman of the next Meeting at the next Meeting.
14. The Chairman shall initial each page of the Minutes, sign the last page and append to such signature the date on which and the place where he has signed the Minutes. Any blank space in a page between the conclusion of the Minutes and signature of the Chairman shall be scored out
16. 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 days after these are signed.
17. A Director is entitled to inspect the Minutes of a Meeting held before the period of his Directorship.
18. A Director is entitled to inspect the Minutes of the Meetings held during the period of his Directorship, even after he ceases to be a Director.
19. The Company Secretary in Practice appointed by the company, the Secretarial Auditor, the Statutory Auditor, the Cost Auditor or the Internal Auditor of the company can inspect the Minutes as he may consider necessary for the performance of his duties.
20. A Director is entitled to receive, a copy of the Minutes of a Meeting held before the period of his Directorship.
21. A Director is entitled to receive a copy of the signed Minutes of a Meeting held during the period of his Directorship, even if he ceases to be a Director.
22. The Annual Report and Annual Return of a company shall disclose the number and dates of Meetings of the Board and Committees held during the financial year indicating the number of Meetings attended by each Director.
No doubt, SS-1 will enable better secretarial practices in unlisted public companies and private companies too but it will also be quite tough for the closely held companies. Since, closely held companies are managed by the family members or relatives, the practice of keeping record of dispatch of notices, agenda and minutes for comments of the directors and other provisions of the secretarial standard will be cumbersome. Although, application of SS-1 by closely held companies are next to impossible but it’s up to the professionals guiding the companies, whether to adhere by these standards or just take it for granted.
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