On
10th April, 2015, the Central Government granted approval under section
118(10) of the Companies Act, 2013 to the Secretarial Standards (SS-1 and SS-2)
issued by the Institute of Company Secretaries of India. These Standards
dealing with the manner of conducting Board Meetings and General Meetings, respectively,
apply to all companies, with the exclusion of One Person Companies (OPC’s).
These
Secretarial Standards will come into force from 1st July, 2015
and will apply to all such board meetings and general meetings, in respect of
which notices are “issued” on or after 1st July, 2015. A brief
summary of the requirements stated in the Standards is as follows.
Secretarial
Standard-1 (SS-1): Meetings of the Board of Directors
Applicability: This
Standard is applicable to Board Meetings of all companies, excluding OPC’s.
Further, this also applies equally to all meetings of the various Committees of
the Board.
Convening of a Meeting: Any Director of a company may,
at any time, summon a Meeting of the Board, and the Company Secretary or where
there is no Company Secretary, any person authorised by the Board in this
behalf, on the requisition of a Director, shall convene a Meeting of the Board,
in consultation with the Chairman or in his absence, the Managing Director or
in his absence, the Whole-time Director, where there is any, unless otherwise
provided in the Articles.
Day,
Time, Place and Serial No.:
A meeting may be convened at any time and place, on any day, excluding a
National Holiday. Further, every meeting shall have a serial number. A meeting
held for want of quorum shall also not be held on a National Holiday.
Notice:
Notice (and
Agenda along with Notes on Agenda) of a Meeting in writing of every Meeting
shall be given to every Director by hand or by speed post or by registered post
or by courier or by fax or by e-mail or by any other electronic means. Where a Director specifies a particular
means of delivery of Notice, the Notice shall be given to him by such means. Proof
of sending Notice and its delivery shall be maintained by the company.
Notice convening a Meeting shall be given at least seven
days before the date of the Meeting, unless the Articles prescribe a longer
period. 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.
Notice
shall be issued by the Company Secretary or where there is no Company
Secretary, any Director or any other person authorised by the Board for the
purpose. The Notice shall specify the serial number, day, date, time and
full address of the venue of the Meeting.
The
Notice shall be given even if Meetings are held on pre-determined dates or at pre-determined
intervals.
In
case the facility of participation through Electronic Mode is being made
available, the Notice shall inform the Directors about the availability of such
facility, and provide them necessary information to avail such facility. Where such facility is provided, the
Notice shall seek advance confirmation from the Directors as to whether they
will participate through Electronic Mode in the Meeting. The Notice shall also
contain the contact number or e-mail address(es) of the Chairman or the Company
Secretary or any other person authorized by the Board, to whom the Director
shall confirm in this regard.
Each
item of business requiring approval at the Meeting shall be supported by a note
setting out the details of the proposal, relevant material facts that enable
the Directors to understand the meaning, scope and implications of the proposal
and the nature of concern or interest, if any, of any Director in the proposal,
which the Director had earlier disclosed.
Shorter
Notice for Urgent Business:
To transact urgent business, the Notice, Agenda and Notes on Agenda may be
given at shorter period of time than stated above, if at least one Independent
Director, if any, shall be 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 any. In case 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, unless such decisions were approved
at the Meeting itself by a majority of Directors of the company.
The fact that the Meeting is being held at a shorter Notice shall
be stated in the Notice.
Attendance
through Electronic Mode:
Any Director may participate through Electronic Mode in a Meeting, if the
company provides such facility, unless the Act or any other law specifically does
not allow such participation through Electronic Mode in respect of any item of
business.
Directors
shall not participate through Electronic Mode in the discussion on certain
restricted items, unless expressly permitted by the Chairman. Such restricted
items of business include approval of the annual financial statement, Board’s
report, prospectus and matters relating to amalgamation, merger, demerger,
acquisition and takeover. 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, unless expressly permitted by
the Chairman.
Quorum:
The Quorum for
a Meeting of the Board 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. 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.
Quorum
shall be present throughout the meeting. It shall be present not only at the
time of commencement of the meeting but also while transacting the business.
A
Director shall not be reckoned for Quorum in respect of an item in which he is
interested and he shall not be present, whether physically or through
Electronic Mode, during discussions and voting on such item.
The
presence of all the members of any Committee constituted by the Board is
necessary to form the Quorum for Meetings of such Committee unless otherwise
stipulated in the Act or any other law or the Articles or by the Board.
Attendance
Register: Every
company shall maintain separate attendance registers for the Meetings of the
Board and Meetings of the Committee. All pages of such registers should be
serially numbered and if maintained in loose leaf form, they must be bound at
regular intervals.
The
Attendance Register should contain the following information: Serial no. and date
of the meeting, place, time, names and signatures of directors (and other
invitees) present. It should be authenticated by the Company Secretary or the
Chairman.
In case
of Directors participating through Electronic Mode, the Chairman shall confirm
the attendance of such Directors. For this purpose, at the commencement of the
Meeting, the Chairman shall take a roll call. The Chairman or Company Secretary
shall request the Director participating through Electronic Mode to state his
full name and location from where he is participating and shall record the same
in the Minutes. The proceedings of such Meetings shall be recorded through any
electronic recording mechanism and the details of the venue, date and time
shall be mentioned.
Adjournment: The Chairman may, unless
dissented to or objected by the majority of Directors present at a Meeting at
which a Quorum is present, adjourn the Meeting for any reason, at any stage of
the Meeting.
Notice
of an adjourned Meeting shall be given to all Directors including those who did
not attend the Meeting on the originally convened date and unless the date of
adjourned Meeting is decided at the Meeting, Notice thereof shall also be given
not less than seven days before the Meeting.
Frequency of Meetings: The Board shall meet at least
once in every calendar quarter, with a maximum interval of one hundred and
twenty days between any two consecutive Meetings of the Board, such that at
least four Meetings are held in each Calendar Year.
Minutes
of the Meeting: 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.
Minutes
shall inter-alia
contain:
- Record of election of Chairman
- Record of presence of Quorum
- The names of Directors who sought and were granted leave of absence
- The mode of attendance of every Director
- In case of a Director participating through Electronic Mode, his particulars, the location from where and the Agenda items in which he participated.
- Noting of the Minutes of the preceding Meeting.
- The text of the Resolution(s) passed by circulation since the last Meeting, including dissent or abstention, if any.
- The fact that an Interested Director was not present during the discussion and did not vote.
- 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.
- If any Director has participated only for a part of the Meeting, the Agenda items in which he did not participate.
- 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.
- Time of commencement and conclusion of meeting
- Apart from the Resolution or the decision, Minutes shall mention the brief background of all proposals and summarise the deliberations thereof. In case of major decisions, the rationale thereof shall also be mentioned.
- Where any earlier Resolution (s) or decision is superseded or modified, Minutes shall contain a reference to such earlier Resolution (s) or decision.
Within
fifteen days from the date of the conclusion of the Meeting of the Board or the
Committee, 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 other recognised
electronic means to all the members of the Board or the Committee for their
comments. 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. If any Director
communicates his comments after the expiry of the said period of seven days,
the Chairman 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. The date of entry of the
Minutes in the Minutes Book shall be recorded by the Company Secretary.
Minutes
of all Meetings shall be preserved permanently in physical or in electronic
form with Timestamp. Minutes shall not be pasted or attached to the Minutes
Book.
Other
Matters: The Board
shall hold its first Meeting within thirty days of the date of incorporation of
the company.
Further,
it shall be sufficient if a One Person Company, Small Company or Dormant
Company holds one Meeting of the Board in each half of a calendar year and the
gap between the two Meetings of the Board is not less than ninety days.
Where
a company is required to appoint Independent Directors under the Act, such
Independent Directors shall meet at least once in a Calendar Year. The meeting shall be held to review the
performance of Non-Independent Directors and the Board as a whole; to review
the performance of the Chairman and 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.
If the
Chairman is interested in any item of business, he shall, with the consent of
the members present, entrust the conduct of the proceedings in respect of such
item to any Dis-interested Director and resume the Chair after that item of
business has been transacted. The Chairman shall also not be present at the
Meeting during discussions on such items.
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.
Secretarial
Standard-2 (SS-2): General Meetings
Applicability: This Standard is applicable to all
types of General Meetings of all companies, excluding OPC’s and class or classes of companies which
are exempted by the Central Government through notification. The principles enunciated in this
Standard for General Meetings of Members are applicable mutatis mutandis to Meetings of debenture-holders and
creditors.
This
Standard is in conformity with the provisions of the Act. However, if, due to
subsequent changes in the Act, a particular Standard or any part thereof
becomes inconsistent with the Act, the provisions of the Act shall prevail.
Convening
of a Meeting: A General Meeting shall be
convened by or on the authority of the Board. The Board may also, whenever it deems
fit, call an Extra-ordinary General Meeting of the company.
Notice:
Notice in
writing of every Meeting shall be given to every Member of the company. Such
Notice shall also be given to the Directors and Auditors of the company, to the
Secretarial Auditor, to Debenture Trustees, if any, and, wherever applicable or
so required, to other specified persons.
Notice
and accompanying documents shall be given at least twenty-one clear days
in advance of the Meeting. Further,
in case the company sends the Notice by post or courier, an additional two days
shall be provided for the service of Notice.
In case of companies having a website, the Notice shall be
hosted on the website.
No
items of business other than those specified in the Notice and those
specifically permitted under the Act shall be taken up at the Meeting. No
business shall be transacted at a Meeting if Notice in accordance with this
Standard has not been given.
Proxy: The Notice shall
prominently contain a statement that a Member entitled to attend and vote is
entitled to appoint a Proxy, or where that is allowed, one or more proxies, to
attend and vote instead of himself and that a Proxy need not be a Member. It shall also further be
accompanied by an attendance slip and a Proxy form with clear instructions for filling,
stamping, signing and/or depositing the Proxy form.
An
instrument of Proxy is valid only if it is properly stamped as per the
applicable law. Unstamped or inadequately stamped Proxies or Proxies upon which
the stamps have not been cancelled are invalid.
Proxies
shall be deposited with the company either in person or through post not later
than forty-eight hours before the commencement of the Meeting in relation to
which they are deposited and a Proxy shall be accepted even on a holiday if the
last date by which it could be accepted is a holiday.
Shorter
Notice: Notice
and accompanying documents may be given at a shorter period of time if consent
in writing is given thereto, by physical or electronic means, by not less than
ninety-five per cent of the Members entitled to vote at such Meeting.
Information
to be mentioned in Explanatory Statement: Notice shall clearly specify the nature of the Meeting and
the business to be transacted thereat. In respect of items of Special Business,
each such item shall be in the form of a Resolution and shall be accompanied by
an explanatory statement which shall set out all such facts as would enable a
Member to understand the meaning, scope and implications of the item of
business and to take a decision thereon. In respect of items of Ordinary Business,
Resolutions are not required to be stated in the Notice except where the
Auditors or Directors to be appointed are other than the retiring Auditors or
Directors, as the case may be.
The
nature of the concern or interest (financial or otherwise), if any, of the following
persons, in any special item of business or in a proposed Resolution, shall be
disclosed in the explanatory statement:
-
Directors and Managers
-
Other Key Managerial Personnel
-
Relatives of persons mentioned above
In case
any item of Special Business to be transacted at a Meeting of the company
relates to or affects any other company, the extent of shareholding interest in
that other company of every Promoter, Director, Manager, and of every other Key
Managerial Personnel of the first mentioned company shall, if the extent of such
shareholding is not less than two percent of the paid-up share capital of that
company, also be stated in the explanatory statement.
Where
reference is made to any document, contract, agreement, the Memorandum of
Association or Articles of Association, the relevant explanatory statement
shall state that such documents are available for inspection and such documents
shall be so made available for inspection in physical or in electronic form
during specified business hours at the Registered Office of the company and copies
thereof shall also be made available for inspection in physical or electronic
form at the Head Office as well as Corporate Office of the company, if any, if
such office is situated elsewhere, and also at the Meeting.
In all
cases relating to the appointment or re-appointment and/or fixation of
remuneration of Directors including Managing Director or Executive Director or
Whole - time Director or of Manager or variation of the terms of remuneration,
details of each such Director or Manager, including age, qualifications,
experience, terms and conditions of appointment or re-appointment along with
details of remuneration sought to be paid and the remuneration last drawn by
such person, if applicable, date of first appointment on the Board,
shareholding in the company, relationship with other Directors, Manager and
other Key Managerial Personnel of the company, the number of Meetings of the
Board attended during the year and other Directorships, Membership/ Chairmanship
of Committees of other Boards shall be given in the explanatory statement.
In case
of appointment of Independent Directors, the justification for choosing the
appointees for appointment as Independent Directors shall be disclosed and in
case of re-appointment of Independent Directors, performance evaluation report
of such Director or summary thereof shall be included in the explanatory
statement.
Time,
Place and Venue: Meetings
shall be called during business hours, i.e., between 9 a.m. and 6 p.m., on a
day that is not a National Holiday. Annual General Meetings shall be held
either at the registered office of the company or at some other place within
the city, town or village in which the registered office of the company is
situated, whereas other General Meetings may be held at any place within India.
Frequency
of Meetings: Every
company shall, in each Calendar Year, hold a General Meeting called the Annual
General Meeting.
Items
of business other than Ordinary Business may be considered at an Extra-Ordinary
General Meeting or by means of a postal ballot, if thought fit by the Board.
Quorum: Quorum shall be present
throughout the meeting. Unless
the Articles provide for a larger number, the Quorum for a General Meeting in
case of a private company shall be two members personally present. Proxies
shall be excluded for determining the quorum.
A
duly authorised representative of a body corporate or the representative of the
President of India or the Governor of a State is deemed to be a Member
personally present and enjoys all the rights of a Member present in person. One person can be an authorised
representative of more than one body corporate. In such a case, he is treated
as more than one Member present in person for the purpose of Quorum. However,
to constitute a Meeting, at least two individuals shall be present in person.
Presence
of Directors and Auditors:
If any Director is
unable to attend the Meeting, the Chairman shall explain such absence at the Meeting.
The
Auditors, unless exempted by the company, shall, either by themselves or
through their authorised representative, attend the General Meetings of the
company and shall have the right to be heard at such Meetings on that part of
the business which concerns them as Auditors.
Voting: Every Resolution shall be
proposed by a Member and seconded by another Member.
A
Member who is a related party is not entitled to vote on a Resolution relating
to approval of any contract or arrangement in which such Member is a related
party.
Unless
otherwise provided in the Articles, in the event of equality of votes, whether
on show of hands or electronically or on a poll, the Chairman of the Meeting
shall have a second or casting vote.
Every
company providing e-voting facility shall offer such facility to all Members,
irrespective of whether they hold shares in physical form or in dematerialised
form. The facility for Remote e-voting shall remain open for not less than
three days. The voting
period shall close at 5 p.m. on the day preceding the date of the General Meeting. (Other
provisions related to e-voting have been specifically stated in the Standard.)
Reading
of Reports: The qualifications,
observations or comments or other remarks on the financial transactions or
matters which have any adverse effect on the functioning of the company, if any,
mentioned in the Auditor’s Report shall be read at the Annual General Meeting
and attention of the Members present shall be drawn to the explanations /
comments given by the Board of Directors in their report.
Adjournment
of Meeting: A
duly convened Meeting shall not be adjourned unless circumstances so warrant.
The Chairman may adjourn a Meeting with the consent of the Members, at which a Quorum
is present, and shall adjourn a Meeting if so directed by the Members.
Minutes
of the Meeting:
Minutes shall inter-alia
contain:
- Record of election of Chairman
- The fact that certain registers, documents and reports were available for inspection
- Record of presence of Quorum
- Number of members present in person including representatives
- Number of proxies and the number of shares represented by them
- Presence of Auditors
- Reading of adverse remarks of Auditors and replies of the Directors
- Summary of clarifications for each Agenda item
- In respect of each resolution, the type of Resolution, the names of the persons who proposed and seconded and the majority with which such Resolution was passed.
- Time of commencement and conclusion of meeting
