Secretarial Standard 1: Board Meeting

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The Ministry of Corporate Affairs conferred its approval to Secretarial Standard-1 (relating to Board Meeting) and Secretarial Standard-2 (relating to General Meeting) issued by the Institute of Company Secretaries of India (ICSI). No other country of the world except India has yet adopted the Secretarial Standards (SS). The Board of Directors play an imperative role in the functioning, governing, progression of an organization. Therefore, it is required that it shall function in such a manner, it can satisfy the requisite of various stakeholders. As per section 118(10) of the Companies Act, 2013, every company has to follow Secretarial Standards issued by the ICSI. Company Secretary either in employment or in practice has to ensure that the Company or their clients has complied with the Secretarial Standards provisions. Therefore, we can say that massive responsibility is imparted on the Company Secretaries.

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The various provisions of Secretarial Standard-1 are enlisted below:

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Applicability: Secretarial Standard 1 (SS-1) applies to:

All meeting of the Board of Directorsof the Companies and committees of the Board thereof held on or after 1st day of July, 2015.

Non Applicability: One Person Company (OPC) consists of only one (1) director on the Board. The MCA vide its notification dated 5^th June, 2015 has exempted section 8 companies (companies as per section 8 of the Companies Act, 2013) to comply with the provision of section 118 except the recording of Minutes within 30 days of the meeting.

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

1. Calendar Year:Period of 12 months as per Gregorian calendar i.e. starting from 1st January and ends on 31st December;
2. Invitee:means any person other than Director and Company Secretary, who attends a meeting by invitation;
3. National Holiday: It includes 26^thJanuary i.e. Republic Day, 15^thAugust i.e. Independence Day, 2nd October i.e. Gandhi Jayanti and such other day as may be decided by the Central Government;
4. 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.

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Key Highlights of various provisions

A: Convening of a Board meeting

1. Any director and the Company Secretary, if any, of the Company may, at any time, summon a meeting of the Board on any day excluding a National Holiday. It means a Board Meeting can be held on Sunday also (if it’s not a National Holiday).
2. The Meeting should be called at any time, and it can be held outside India also.
3. Every meeting of the Board of Directors held on or after 01s July, 2015 shall be consecutively number and number can be similar to 07/BM/2015-16 (07 indicates number, BM indicates Board Meeting(BM) and 2015-16 indicates the year of the BM).

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B. Notice of Board/Committee Meeting

• Mode of Sending Notice:Notice in writing of Every Board/Committee Meeting along with Agenda and Notes on Agenda shall be given to every director by hand or by speed post or registered post or by the courier or facsimile or by email or by any other electronic means. It shall be sent to the postal or email address registered by the Director with the Company. Proof of sending of Notice and its delivery shall be maintained by the Company.
• Person Responsible for sending Notice: Notice shall be issued by the Company Secretary or where there is no, any Director or any other person duly authorized by the Board.
• Contents of Notice: Notice shall specify the serial Number, day, date, time and full address of the venue of the Meeting.
• Time period of sending Notice: Notice shall be given at least 7 days before the date of the meeting. In case it is sent through speed post or by registered post or by courier, an additional 2 days shall be added.
• Notice of Adjourned Meeting: Notice of adjourned Meeting shall be given to all Directors including those who did not attended the original Meeting at least 7 days before the date of Meeting unless the date of adjourned Meeting is decided at the Meeting.

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C: Notes on agenda of Business

Each item of business requiring approval at the meeting shall be supported by a note. Each item of business to be taken up shall be consecutively numbered. Any Notes shall contain the following;Details of the proposal;Relevant material fact;Scope and implication of the proposal; andNature of interest or concern, if any, of the Director in the proposal.

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D: Frequency of Board Meeting

The Board of Directors of every company except Small, One person and Dormant Company shall meet at least once in every calendar quarter, so that maximum gap between the two Board Meeting should not exceed 120days and so that 4 board meeting should have been held.

E. Quorum

The quorum of a Board Meeting shall be 1/3^rd of the total strength of the Board or 2 Directors whichever is higher. Any fraction contained in the calculation of quorum shall be rounded off to the next one. If the Number of Interested Director exceeds or is equal to two-thirds of the total strength, the remaining directors present at the Meeting, being not less than 2, shall be the Quorum. Quorum shall be present throughout the meeting. Interested director shall not present in the meeting either by physical or electronic mode, during discussion and shall not vote on such item.

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F. Meeting of Committees of Board

1. All the members of the Committee shall be to present in a meeting to constitute the quorum.
2. The Committee members can also have participation through Electronic mode.
3. There is no frequency to hold committee meetings.

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G. Attendance of Meetings

1. Every company shall keep separate attendance register of the Board and Committee meeting. The pages of attendance register shall be serially numbered. It shall contain the following:

Serial Number;Date of meeting;Name of the committee in case of committee meeting;Place of the meeting;Time of the meeting; Name and signature of the Director present and the Company Secretary who is in attendance and also of the person who attends the Meeting by invitation.

2. In case of Director attends a Meeting by Electronic Mode; the Chairman shall confirm the attendance of Such Directors by taking a roll call at the commencement of the Meeting. The Director shall state the full name and location form where he is participating. The attendance register of Director participating through electronic mode shall be deemed to be signed by him, if their attendance is recorded by the Chairman or the Company Secretary.
3. The attendance register shall be maintained at the Register office of the Company unless permitted by the Board to be maintained at any other place. It is open for the inspection by the director. The Company Secretary in practice or the Secretarial Auditor appointed by the Company can also inspect the attendance register for the performance of his duties. The Member of the Company can’t inspect the attendance register of the Board or Committee Meetings. The attendance register shall be preserved for a minimum period of 8 Financial Year and thereafter it can be destroyed with the approval of the Board. It shall be kept under the Custody of Company Secretary, if any.

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H. Chairman

1. The Chairman of the Company shall be the Chairman of the Board. In case the Company does not have a Chairman then the Existing Directors may elect one of themselves to be the Chairman of the Board.
2. A member of the Committee appointed by the Board or elected by the Committee as the Chairman of the Committee, shall conduct the Meeting of the Committee.

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I. Minutes of Meeting

• Maintenance of Minute: Every company shall keep a Separate/distinct Minutes Book of all Board and Committee Meeting. 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 and coinciding with one or more financial years of the Company. 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 serial number and type of the Meeting, name of the Company, day, date, venue and time of the 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 contains the name of the Directors present though physical or Electronic Mode, the Company Secretary who is in attendance at the meeting and invitees, if any, including for any specified items, if any. 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.
• Circulation of draft Minutes Book: Within 15 days from the date of the conclusion of the Meeting of the Board or Committee, the draft Minutes thereof shall be circulated by hand or by speed post or by registered post or by the courier or by email or by any other registered electronic means to all the members of the Board or Committee for their comment. If it is sent by speed post or by registered post or by courier, an additional two days may be added for delivery of the draft Minutes.
• Comments by Director on draft Minute: The director, whether present at the meeting or not, shall communicate their comments, if any, in writing within 7 days from the date of circulation. If any director communicates his comments after the expiry of 7 days , the chairman shall have the discretion to consider such comments. In case of no comments from the director, it shall be deemed to be approved by such director.
• 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 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.
• Record of Entry in the Minute Book: Minute once entered in the Minute Book, shall not be altered. Any alteration in the Minute Book shall be made only by way of express approval of the Board at its subsequent Meeting in which Minute are sought to be altered.
• Signing and dating of Minute: Minutes of the Board Meeting shall be signed and dated by the Chairman of the Meeting or by the Chairman of the next Meeting. Minute of the previous Meeting may be signed either by the Chairman of such meeting at any time before the next Meeting is called is held or by the Chairman of the next 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.
• Circulation & Inspection of Minutes: A copy of the signed Minutes certified by the Company Secretary or where there is no Company Secretary, by any of the Directors shall be circulated to all the Directors within 15 days after these are signed. A Director is entitled to inspect the Minutes of a Meeting held before the period of his Directorship in the Company and also entitled to inspect the Minutes of the Meeting held during his period as Directorship, even after he ceases to be Director. A Member of a company is not entitled to inspect the Minutes of the Meeting of the Board.
• Preservation of Minutes and other Records: Minutes of all Meeting (Board and Committee) shall be preserved permanently in physical or in electronic form with Timestamp. Office copies of Notices, Agenda and Notes on Agenda 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.

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Conclusion: Through the induction of Secretarial Standard-1, now there is a complete clarity on Calling of Board Meeting, Issuance of Notice along with the relevant notes and agenda, Conduction of Board Meeting, how the Directors can participate, what extra facilities’ they can get, what they have to disclose, within what time they will get the draft Minutes of the proceeding of the Meeting, what they have to do after receiving of the draft Minutes and within how much time they will get the certified copies of the Minutes.

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Post Credit: Anup Soni