11 Board Minutes Statutory & Secretarial Standard’s Provisions

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PROLOGUE

Minutes of meetings (board, general or any other) are

important documentary evidence of proceedings of

any meeting which convey the actions taken, decisions

made, deliberations held and proceedings happened at

such meetings. These convey the sense of the meeting

and is the only evidence of what transpired at any

meeting to which it relates. This article is an attempt to

highlight the focus areas of Secretarial Standard-1 on

Board Meetings.

MANDATE FOR SECRETARIAL

STANDARDS IN THE COMPANIES ACT,2013Section 118 (10) of the Companies Act, 2013 provides as follows

– “Every company shall observe Secretarial Standards with

respect to general an Board meetings specied by the Institute of

Company Secretaries of India constituted under section 3 of the

Company Secretaries Act, 1980 and approved as such by Central Government.”

Further, section 205 of the Companies Act, 2013 prescribe

Board Minutes: Statutory & Secretarial

Standard’s ProvisionsThe practices postulated by ICSI in SS-1 are bound to have far reaching consequences inenhancing transparency, ensuring good governance and standardizing corporate practicesacross the corporate spectrum. It is imperative upon all corporates, directors, auditors,company secretaries and other stakeholders to propagate adoption and complianceof Secretarial Standards which will only add to quality of governance amongst Indiancorporates.

Dr. Sanjiv Agarwal, FCSManaging Partner

Agarwal Sanjiv & CompanyChartered Accountants

Jaipur

[email protected]

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functions of a company secretary and these include :

(a) to report to the Board about compliance with the provisions of

this Act, the rules made thereunder and other laws applicable

to the company ;

(b) to ensure that the company complies with the applicable

Secretarial Standards;

(c) to discharge such other duties as may be prescribed.

The Explanation to the section provides that for the purpose of this

section, the expression ‘secretarial standards’ means secretarial

standards issued 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.

APPLICABLE SECRETARIAL STANDARDSIn terms of section 118 (10), Secretarial Standards are required

to be specied by the Institute of Company Secretaries of India

(ICSI) and approved by the Central Government.

As per section 205, Secretarial Standards refer to standards issued

by the ICSI and approved by the Central Government. Since

both these provisions talk about Secretarial Standards , ICSI has

formulated the two Secretarial Standards, viz,

SS-1 Meetings of the Board of Directors

SS-2 General Meetings

Both SS-1 and SS-2 have been duly approved by Central

Government and notied by the ICSI on 23 April, 2015 as issued /

specied standards under section 118 of the Companies Act, 2013

These standards shall be applicable in entirety w.e.f. 1 July, 2015

for mandatory compliance by all the companies except the one

person company (OPC) and such other class of companies as the

Central Government may exempt by way of notication.

MINUTES : STATUTORY PROVISIONSSection 118 of the Companies Act, 2013 comprehensiveprovides for minutes of proceedings of general meetings, meetin

of board of directors, other meetings and resolutions passed

postal ballot. Section 118 corresponds to provisions contained

sections 193,194, 195 and 197 of erstwhile Companies Act, 19

It inter alia , provides that every company shall prepare, sign a

keep minutes of proceedings of every general meeting, includ

the meeting called by the requisitions and all proceedings

meeting of any class of share holders or creditors of Boards

Directors or Committee of the Board and also resolution pass

by postal ballot within thirty days of the conclusion of every su

meeting concerned. Incase of meeting of Board of Directors

of a Committee of Board, the minutes shall contain the nam

of the directors present and also name of dissenting directora director who has not concurred the resolution. The chairm

shall exercise his absolute discretion in respect of inclusion

non-inclusion of the matters which is regarded as defamato

of any person, irrelevant or detrimental to company’s interest

the minutes. The minutes shall be evidence of the proceedin

recorded in a meeting . This section also seeks to provide th

every company shall observe secretarial standards with resp

to general and Board meeting. It also provides penalty for t

company who contravenes the provisions as well as the pers

who is found guilty of tampering with the minutes of the meetin

Thus, the requirements of section 118 can be summarized

follows –

• All companies are required to cause minutes of proceedin

of meetings (includes one person company)

• Meetings for which minutes are required to be caused ar- General meetings of members (includes annual gene

meetings, extra ordinary general meetings, cla

meetings)

- General meetings of other security holders

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- General meetings of creditors

- Meetings of board of directors

- Meeting of any committee of board of directors

- Resolutions passed by postal ballot .

• Minutes are to be kept within thirty days of the conclusion of

meeting or passing of resolutions

• Minutes are required to be prepared, signed and kept

in prescribed manner [Rule 25 -29 of the Companies

(management and Administration) Rules 2014]

• Minutes shall be kept in books with their pages consecutivelynumbered

• Minutes to contain fair and correct summary of proceedings

at meeting

• Minutes to specically include appointments made at the

meeting

• Minutes to be considered as evidence of the proceedings at

such meeting

• Chairman to have absolute discretion on what to include ornot to include in the minutes on any specied matter

• Minutes not to include any specified matter which in

Chairman’s opinion is / could be defamatory of any person,

is irrelevant or immaterial to the proceedings or is detrimental

to the interest of the company• Minutes of board or committee meetings to also contain name

of directors present at the meeting and for each resolution,

name(s) of director(s) dissenting from or not concurring with

the resolutions

• In respect of all such minutes kept in accordance with law/

(unless proved to the contrary), it will be deemed that said

meeting was duly called and held, proceedings have duly taken

place, resolutions passed and appointments of directors, key

managerial personnel and auditors/ secretarial auditor arevalid

• No company shall at its expense, circulate or advertise any

document purporting to be a report of proceedings of any

general meeting unless it includes the matters or informationto be contained in minutes as per section 118

• Companies are mandated to observe (comply with) Secretarial

Standards with respect to General Meetings and Board

Meetings (i.e. SS-1 and SS-2) issued by ICSI and approved

by Central Government

• There are penal provisions for non compliance by company

and ne and imprisonment for any person found guilty of

tampering with minutes of proceedings of meetings.

Following Rules of the Companies (Management and Administration)

Rules 2014 relate to minutes-

Minutes of proceedings of general meeting, meeting of Board ofDirectors and other meetings and resolutions passed by postal

ballot (Rule 25) - A distinct minute book shall be maintained for

each type of meeting namely, general meetings of the members,

meetings of the creditors , meetings of the Board; and meetings of

each of the committees of the Board. Resolutions passed by postal

ballot shall be recorded in the minute book of general meetin

as if it has been deemed to be passed in the general meeting

The minutes of proceedings of each meeting shall be ente

in the books maintained for that purpose along with the datesuch entry within thirty days of the conclusion of the meeting

case of every resolution passed by postal ballot, a brief report

the postal ballot conducted including the resolution proposed,

result of the voting thereon and the summary of the scrutinize

report shall be entered in the minutes book of general meetin

along with the date of such entry within thirty days from the d

of passing of resolution.

Each page of every such book shall be initialed or signed and

last page of the record of proceedings of each meeting or ea

report in such books shall be dated and signed – (i) in the case

minutes of proceedings of a meeting of the Board or of a commit

thereof, by the chairman of the said meeting or the chairman of


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next succeeding meeting (ii) in the case of minutes of proceedings

of a general meeting, by the chairman of the same meeting within

the aforesaid period of thirty days or in the event of the death or

inability of that chairman within that period, by a director duly

authorised by the Board for the purpose, and (iii) In case of everyresolution passed by postal ballot, by the chairman of the Board

within the aforesaid period of thirty days or in the event of there

being no chairman of the Board or the death or inability of that

chairman within that period, by a director duly authorized by the

Board for the purpose.

The minute books of general meetings, shall be kept at the

registered office of the company and shall be preserved

permanently and kept in the custody of the company secretary or

any director duly authorised by the board or at such other place

as may be approved by the Board.

The minutes books of the Board and committee meetings shall be

preserved permanently and kept in the custody of the companysecretary of the company or any director duly authorized by the

Board for the purpose and shall be kept in the registered ofce or

such place as Board may decide.

Copy of minutes book of general meeting (Rule 26) - Any member

shall be entitled to be furnished, within seven working days after

he has made a request in that behalf to the company, with a copy

of any minutes of any general meeting, on payment of such sum

as may be specied in the articles of association of the company,

but not exceeding a sum of ten rupees for each page or part of

any page. A member who has made a request for provision of soft

copy in respect of minutes of any previous general meetings heldduring a period immediately preceding three nancial years shall

be entitled to be furnished, with the same free of cost.

The minutes book can be maintained, both in physical form or in

electronic mode as prescribed.

MINUTES OF MEETINGS OF BOARD/BOARD COMMITTEES (SECRETARIALSTANDARD- I)Companies and professionals should note to comply with the

following specic requirements in relation to minutes of board /

committee meetings in compliance with SS-1 –

• Minutes book can be kept and maintained either in physicalform or in electronic form. In case of electronic form, it should

be maintained with ‘timestamp’

• Companies may adopt any mode and then follow it consistently

• Separate minute books should be maintained for meetings of

board of directors and its committees – For each committee

of board, separate book is desirable.• Minutes book pages are required to be consecutively

numbered, ie, serial number of page need not be broken ev

if the book is changed owing to size or volume or its period

binding.

If any page is left blank inadvertently, it should be scor

out/ cancelled and initialed by Chairman signing the minutNumbering of pages with same number is undesirable (eg page

9,10,10A, 11, ……..) and must be avoided. It may be good pract

to have minutes pages pre-numbered so that it could be avoid

• Loose leaf minutes, if so maintained should be got bou

periodically . In such cases, there ought to be a proper lock

device for loose leafs . Also minutes are not required to

pasted/ afxed or attached to minutes book.

• Minutes are ordinarily required to be kept at compan

registered ofce. However, if these are approved by board

be kept at some other place, it can be done. it shall be k

at any place in India only.

• Minutes shall contain the following information/ matters –

-Details about meeting such as name of company , senumber of meeting, date, day, time, venue address a

type of meeting.

- time of commencement and conclusion, both shall

mentioned.

- It shall also indicate whether it is an adjourned meet

or meeting was adjourned.

- Quorum and attendance of directors.

- Names of directors present in person and via electro

mode, company secretary in attendance and ot

invitees/attendees. If some are attending part

the meeting, it shall be disclosed. Names may be

alphabetical order or in any other consistent mannNominee director’s names may contain a mention

organization which they represent.- Election of chairman.

- Details/record of appointments made.

- Details of resolutions discussed/ moved and decisio

taken.

There are certain other contents required to be incorporated

minutes as mentioned in para 7.2.2. of the SS-1

• Minutes should incorporate the resolutions in detail cover

its background, deliberations held, voting, interest of directo

dissent, if any etc.• Ordinarily, company secretary shall cause recording of

minutes which ought to be fair and correct summary of t

proceedings. Where there is no company secretary, Board

Chairman can authorize any other person• Chairman has to ensure that proceedings are correc

recorded in minutes book and that is does not contain a

undesirable content

• While minutes need not be verbatim transcript of proceedin

it shall be written in clear, concise and plain language

• To record the proceedings properly, it is necessary t

documents or papers referred to in the minutes which w


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part of discussion should be initialed by Chairman or Secretary

for identication. Sometimes, earlier decisions or resolutions

are altered, modied or superseded. In such cases, a cross

reference of earlier meeting’s minutes is desirable.

• In case of committee meetings, their minutes shall also beprepared in similar manner and placed before the next board

meeting for noting / perusal / ratication, as the case may be.

This should be done for all such committee meetings' minutes

which are entered in minutes book and are held between two

board meetings

• On nalization of minutes and their entry in minutes book,

following may be noted for compliance-

- Draft minutes should be prepared within fteen days ofthe conclusion of meeting and need to be circulated to all

members of the board or committee for comments, if any.

- Such circulation of minutes may be done by hand,

mail, speed post, registered post or e-mail or any other

recognized mode of communication.

- In case any director has preferred a particular mode, for

him, such mode be used.

- Company should keep proof of dispatch of draft minutes.

- Draft minutes shall be sent to all directors, irrespective ofwhether he attended the meeting or not.

- Directors are expected to send their comments within

seven days from the date of circulation of draft minutes.

- Minutes are required to be entered in the minutes book

within 30 days of the meeting.

- Chairman shall consider all comments received within

stipulated time. In case of comments being sent/ reaching

company beyond seven days, it shall be Chairman’s

discretion to consider the same. Where no comments are

received, it will be deemed that concerned director has

approved the draft minutes.

- Any person who was director on the date of meeting,

whether he attended or not, shall be entitled to receive

draft minutes. This would include even those who ceased

to be director of the company after such meeting.

- While Chairman approves and sign the minutes, it is

obligated on the company secretary to enter the date

of entry of minutes in the minutes book. If there is nocompany secretary, it shall be done by any other person,

duly authorised to do so.

- No alteration in minutes is allowed after being enteredin the minutes book. Alterations, if any and necessary,

shall be approved by the board in any subsequent board

meeting only.

- Subject to above, minutes once signed by Chairman c

not be altered.

- Copy of signed minutes shall be circulated to all bo

members within fteen days of signing by Chairman.

- Chairman is required to initial each page of minutes

meeting, sign the last page of such minutes, mention pla

and put date below his signatures by his hand.

- Company secretary can certify the minutes befo

circulation.

- In case the minutes are kept electronically, minutes ne

to be digitally signed by the Chairman.

• Any director can inspect the minutes of board

committee meetings which shall include minutes

a meeting held in a period prior to his appointm

and meeting held in his tenure after he ceases toa director.

• Minutes book can also be inspected by statut

auditors, secretarial auditor and internal auditor

the company

• Inspection can be done, both under physical

electronic form

• Company secretary or any other duly authoris

officer of company should ensure that dur

inspection, minutes book is not tampered with by

inspecting person

• Minutes book can not be inspected by members

company

• Like inspection, directors are allowed to receive co

of signed minutes from the company• Extracts of minutes can be provided only af

minutes are duly entered in the minutes book

• Such extracts or copies can be provided in phys

or electronic form

• minutes of meetings are to be preserved permanen

This can be done either physically or in electro

form

• Company secretary shall keep safe custody

minutes book. If there is no secretary, a pers

duly authorised to do so will ensure safe custody

minutes book.

EPILOGUEThe practices postulated by ICSI in SS-1 are bound to have reaching consequences in enhancing transparency, ensuring go

governance and standardizing corporate practices across

corporate spectrum. It is imperative upon all corporates, directo

auditors, company secretaries and other stakeholders to propag

adoption and compliance of Secretarial Standards which will oadd to quality of governance amongst Indian corporates.


74May 2015

Documents

11 Board Minutes Statutory & Secretarial Standard’s Provisions