SECRETARIAL STANDARD ON MEETINGS OF THE BOARD OF DIRECTORS

SECRETARIAL STANDARD ON

       MEETINGS OF THE BOARD OF DIRECTORS

CONTENT OF ARTICLES

A.  Background

B.   Provisions for Minutes of Meeting

C.  Some Important Definitions.

D.  Time & Place of Meeting

E.    Notice, Agenda & Notes of Meeting

F.    Notes.

G.  Calling of Meeting on Shorter Notice.

H. Frequency of Meeting.

I.      Quorum

J.      Attendance of Meeting

K.   Chairman

L.    Meeting of Committee.

M. Participation in Meeting through electronic mode

BACKGROUNGD:

The Ministry of Corporate Affair (MCA) has issued circular Dated: 10^th April, 2015 vide Letter No. 1/E/2014/CA/I and same has been notified in official Gazette on 23rd April, 2015. Secretarial standard are applicable on Companies from 1^st July, 2015.

After elaborate deliberations, the Institute of Company Secretaries of India (ICSI) has prepared these standards, which have been approved by the Corporate Affairs Ministry. Compliance with the strict rules -- that would help strengthen corporate governance practices and help curb corporate misdoings -- would be ensured by company secretaries.

This Standard prescribes a set of principles for convening and conducting Meetings of the Board of Directors and matters related thereto.

ICSI President Atul H Mehta today said these rules would lead to "higher standard of corporate governance". 

According to ICSI, these standards would help boost investor confidence, particularly fund managers and overseas investors. 

THESE STANDARDS, WHICH HAVE BEEN NOTIFIED, WOULD BE EFFECTIVE FROM JULY 1, 2015

          Applicability & Non Applicability:

SOME IMPORTANT DEFINITIONS:

CHAIRMAN	Chairman of the Board or its Committee, as the case may be, or The Chairman appointed or elected for a Meeting.
CALENDAR YEAR	Calendar year as per Gregorian calendar i.e. a period of one year which begins on 1st January and ends on 31st December
MAINTENANCE	Keeping of registers and records either in physical or electronic form, as may be permitted under any law for the time being in force, and includes the making of appropriate entries therein, the authentication of such entries and the preservation of such physical or electronic records
MINUTES	A formal written record, in physical or electronic form, of the proceedings of a Meeting
MINUTES BOOK	A Book maintained in physical or in electronic form for the purpose of recording of Minutes.
NATIONAL HOLIDAY	Republic Day i.e. 26th January, Independence Day i.e. 15th August,  Gandhi Jayanti i.e. 2nd October and Such other day as may be declared as National Holiday by the Central Government.

Important Note:

v  Calendar Year is 1^st January and ends on 31^st December

v  Registers and Records are permitted to maintain in “ELECTRONIC FORM”.

v  Minutes and Minutes Book are permitted to maintain in “ELECTRONIC FORM”.

v  National Holidays are defined.

Time, Place, Mode and Serial Number of Meeting:

·   Every Meeting shall have a serial number.

·  A Meeting may be convened at any time and place, on any day, excluding a National Holiday.

 PRECAUTIONS:

v  Companies now required to serially Numbered there Minutes of Board Meeting. If possible Companies should start serially numbered its Minutes from the First Board Meeting of Company.

v  Meeting can’t be called only on National holiday except this at any time at any place Company cal call Meeting of Board of Directors.

v  Adjourned Meeting also can’t hold on National Holiday.

A.    Notice, Agenda and Notes of Agenda:

Notice, Agenda and Notes of Agenda in writing of every Meeting shall be given to EV ERY DIRECTOR by following ways:

·         By hand or By Speed Post or by Registered Post or

·         By Courier or By facsimile or By Email or by any other electronic mode.

Address for the Notice, Agenda and Notes of Agenda:

·         Postal address or e-mail address, registered by the Director with the company; or

·         In the Absence of such details or any change thereto, on the addresses appearing in the Director Identification Number (DIN) registration of the Director.

·         If director specify the way of delivery of Notice, Agenda and Notes of Agenda, same shall be given to him by such means.

Responsibility to Issue of Notice, Agenda and Notes of Agenda:

·         Notice, Agenda and Notes of Agenda shall be issued by the Company Secretary or

·         Where there is no Company Secretary, any Director or any other person authorized by the Board for the purpose.

·         Proof of sending Notice and its delivery shall be maintained by the Company

Specification of Notice, Agenda and Notes of Agenda:

The Notice, Agenda and Notes of Agenda shall specify the Serial Number, Day, Date, Time and Full Address of the venue of the Meeting.

Time Period for Issue of Notice, Agenda and Notes of Agenda:

v  Notice, Agenda and Notes of Agenda convening a Meeting shall be given at least SEVEN clear days before the date of the Meeting, unless the Articles prescribe a longer period.

v  In case the company sends the Notice, Agenda and Notes of Agenda by Speed Post or by registered post or by courier, An Additional Two Days Shall be Added for the service of Notice.

Notice of Adjourned Meeting:

To Whom: Shall be given to all Directors including those who did not attend the Meeting on the originally convened date and

Date of Adjourned Meeting: 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.

Notice, Agenda and Notes of Agenda to Alternate Director:

The Notice, Agenda and Notes on Agenda shall be sent to the Original Director also at the address registered with the company, even if these have been sent to the Alternate Director.

B.    NOTES:

Each item of business requiring approval at the Meeting shall be supported by a note

Note of Agenda shall include the following:

ü  Details of the proposal.

ü  Relevant material facts that enable the Directors to understand the meaning.

ü  Scope and implications of the proposal.

ü  The nature of concern or interest, if any, of any Director in the proposal, which the Director

had earlier disclosed.

***Where approval by means of a Resolution is required, the draft of such Resolution shall be either set out in the note or placed at the Meeting.

SUPPLIMENTARY NOTES OF AGEND:

Circulation of Supplementary Notes:

-          May be circulated at the Meeting; or

-          May be circulate prior to the Meeting

But shall be taken up with the permission of chairman (+) with the consent of Majority of Directors present in the Meeting. (Majority of directors include at least one Independent director, if any)

***DISCUSSION ON ANY OTHER MATTER IN MEETING:

Any item not included in the Agenda may be taken up for consideration with the permission of the Chairman (+) with the consent of a majority of the Directors present in the Meeting, which shall include at least one Independent Director, if any.

In case of Absence of Independent Director:

The Minutes shall be final only after at least one Independent Director, if any, ratifies the decision taken in respect of such item.

In case of Company doesn’t have Independent Director:

The Minutes shall be final only on ratification of the decision taken in respect of such item by a majority of the Directors of the company, unless such item was approved at the Meeting itself by a majority of Directors of the company.

Example: If Majority of Directors are present in the Meeting and same has been approved by them then no ratification required.

CALLING OF MEETING ON SHORTER NOTICE:

To transact urgent business, the Notice, Agenda and Notes on Agenda may be given at shorter period of time than stated above,

ü  if at least one Independent Director, if any, shall be present at such Meeting.

ü  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.

ü  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

Notes of Agenda of Items of Business Which are in the Nature of UNPUBLISHED PRICE SENSITIVE INFORMATION

ü  Notes of Agenda: May be given at a shorter period of time than stated above, with the consent of a majority of the Directors, which shall include at least one Independent Director, if any.

ü  General Consent: Company can take consent of Director in the first Meeting of the Board held in each financial year regarding shorter notice of Notes on items of Agenda which are in the nature of Unpublished Price Sensitive Information

ü  Consent Before placing of Such Item: If general consent not taken then the requisite

ü  Consent shall be taken before the concerned items are taken up for consideration at the Meeting.

ü  Noting in the Minutes: The fact of consent having been taken shall be recorded in the Minutes.

C.     FREQUENCY OF MEETING:

Meetings of the Board of Directors:

(Except Small Company, One Person Company and Dormant):

·         The Board shall meet at least once in every calendar quarter.

·         Maximum interval between two board meetings 120 days.

·         At least 4 (four) Board Meetings in a calendar year.

Note: In case of Newly Incorporate Company “First Meeting” should be held within  

               30 days of Incorporation of Company.

Meetings of the Independent Directors:

Where a company is required to appoint Independent Directors under the Act, such Independent Directors shall meet at least once in a Calendar Year.

D.    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.

Important Points relating to Quorum:

·         Fraction: Any fraction contained in the above one-third shall be rounded off to the next one.

·         Higher Quorum in AOA: Where the Quorum requirement provided in the Articles is higher than one-third of the total strength; the company shall conform to such higher requirement.

·         Total Strength: Total strength for this purpose, shall not include Directors whose places are vacant.

·         Interested Director 2/3: 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.

·         If No quorum in Adjourned Meeting: If there is no Quorum at the adjourned Meeting also, the Meeting shall stand cancelled.

Presence of Quorum:

·         Quorum shall be present throughout the Meeting. (Quorum shall be present not only at the time of commencement of the Meeting but also while transacting business).

·         Directors participating through Electronic Mode in a Meeting shall be counted for the purpose of Quorum.

If Director is interested in any matter:

·         If a Director is interested in any resolution then such director shall not be counted for Quorum in respect of such resolution.

·         Such director shall not be present whether physically or through Electronic Mode, during discussions and voting on such item.

Situations when director will be treated as interested:

If Company entered into or proposed to be entered into any contract or arrangement with:

·         the Director himself or his relative; or

·         with anybody corporate, if such Director, along with other Directors holds more than 20% of the paid-up share capital of that body corporate, or he is a promoter, or manager or chief executive officer of that body corporate;

·         firm or other entity, if such Director or his relative is a partner, owner or Member, as the case may be, of that firm or other entity

Que: If Number of Directors reduced below the Quorum fixed by the Act, Then how to proceed?

The continuing Directors may act for the following purpose

-          increasing the number of Directors to that fixed for the Quorum or

-          of summoning a general meeting of the company, and for no other purpose.

Que: What will be the Quorum for the Meeting of Committee?

-          For the Quorum of Committee all the members of any such Committee should be present.

-          unless otherwise stipulated in the Act or any other law or the Articles or by the Board

Que: If there is only two directors in a Meeting and One is interested in a Item of Business

               of Agenda then whether a single director can pass such resolution?

NO, if for any agenda of Item there is only one Available director then it will consider and improper Quorum and resolution will not pass at such meeting.

 Que: Whether interested director will be counted for the purpose of Quorum.

YES, Interested will be counted for the quorum of Meeting but He will not be counted for the purpose of quorum only for “That Resolution”.

E.     ATTENDANCE OF MEETING:

Attendance registers:

·         Every company shall maintain separate attendance registers for the Meetings of the Board.

·         Every company shall maintain separate attendance registers for the Meetings of the Committee.

·         The pages of the respective attendance registers shall be serially numbered.

·        If an attendance register is maintained in loose-leaf form, it shall be bound periodically.

Particulars of Attendance register of Board Meeting:

·         Serial number and date of the Meeting;

·         Place of the Meeting; time of the Meeting;

·         Names of the Directors and signature of each Director present;

·         Name and signature of the Company Secretary who is in attendance and

·         Also of persons attending the Meeting by invitation.

In case of Committee Meeting “name of the Committee” also be mentioned.

Signing of Attendance Register:

·         Every Director, Company Secretary who is in attendance and

·         Every Invitee who attends a Meeting of the Board or Committee thereof shall sign the attendance register at that Meeting.

·         Director participating through electronic mode: The attendance register shall be deemed to have been signed by the Directors participating through Electronic Mode, if their attendance is recorded by the Chairman or the Company Secretary in the Attendance Register and the Minutes of the Meeting

In case of Directors participating through Electronic Mode:

·         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.

Note:

·         The attendance register shall be maintained at the Registered Office of the company or such other place as may be approved by the Board.

Inspection of Attendance Register:

Following below mention person can inspect the Attendance Register:

·         Directors.

·         The Company Secretary in Practice appointed by the company or

·         The Secretarial Auditor or

·       The Statutory Auditor of the company can also inspect the attendance register as he may consider necessary for the performance of his duties

## A Member of the Company can’t inspect the attendance register.

v  Authentication of the Entry in the Attendance Register:

Entry in the Attendance registers authenticating by:

·         Company Secretary or

·         Where there is NO Company Secretary, by the Chairman by appending his signature to each page.

v  Attendance Register required to be preserved for a period of Eight Financial Years.

v  Attendance register can be destroying with the approval of Board of Directors.

v  Attendance Register will be kept in custody of:

·         Company Secretary or

·         Where there is no Company Secretary, in the custody of any Director authorized by the Board for this purpose.

v  Leave of absence shall be granted to a Director only when a request for such leave has been received by the Company Secretary or by the Chairman.

v  The office of a Director shall become vacant in case the Director absents himself from all the Meetings of the Board held during a period of twelve months with or without seeking leave of absence of the Board.

F.     CHAIRMAN:

·         The Chairman of the company shall be the Chairman of the Board.

·         If the company does not have a Chairman, the Directors may elect one of themselves to be the Chairman of the Board.

G.    MEETING OF THE COMMITTEE:

·         A member of the Committee appointed by the Board or elected by the Committee as Chairman of the Committee, in accordance with the Act or any other law or the Articles, shall conduct the Meetings of the Committee.

·         If no Chairman has been so elected or if the elected Chairman is unable to attend the Meeting, the Committee shall elect one of its members present to chair and conduct the Meeting of the Committee, unless otherwise provided in the Articles

H.   Participation of Director Through Electronic Mode

Any Director may participate through Electronic Mode in a Meeting, if the company provides such facility. But certain items can’t be dealt at a meeting held though Video conferencing.

Matter which can’t be dealt at a meeting held though Video conferencing unless expressly permitted by the Chairman:

§  Approval of the annual financial statements;

§  Approval of the Board’s report;

§  Approval of the prospectus;

§  Audit Committee Meetings for consideration of accounts; and

§  Approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

Notice of Board Meeting if Facility of participation through Electronic Mode is provided:

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.

v  If Facility of participation through Electronic Mode provided the Notice shall seek advance confirmation from the Directors as to whether they will participate through Electronic Mode in the Meeting.

v In the absence of an advance communication or confirmation from the Director as above, it shall be assumed that he will attend the Meeting physically.

PRECAUTIONS BY CORPORATES:

Company/ Professional should take care the followings while  preparing the Notice:
Notice	Notice of Board Meeting shall be Serially Numbered
Proof of Notice	Companies should have in its record the proof of Notice of Board Meeting as its mandatory for company to have proof of sending of Notice and its delivery
Issue of Notice	An authorized person can issue notice of Board Meeting on behalf of the Company
Shorter Notice	If Board Meeting called on Shorter Notice, then at the Meeting such decision should be approved by the majority of director present and same should be take note in the Minutes of the Meeting
Draft Resolution	Draft of Resolution as per agenda required being present in the Meeting
Serial Numbered	Each item of business to be taken up at the Meeting shall be serially numbered
Any other Agenda	In case of discussion of any other matter in the Meeting Permission of Chairman (+) Majority of present directors required
Notice of Adjourned Meeting	Shall be given to all Directors including those who did not attend the Meeting on the originally convened date
Notice in case of Alternate Dir	The Notice, Agenda and Notes on Agenda shall be sent to the Original Director also at the address registered with the company, even if these have been sent to the Alternate Director.
Frequency of Board Meeting	Small Company, OPC and Dormant Company need to hold at least one meeting in each half of a Calendar Year. In other Cases at least 1 Meeting in each quarter of a Calendar year.
Gap Between Two Meeting	In case of Small Company, OPC and Dormant Company Minimum gap of 90 days.
Newly Incorporated	First Meeting of newly incorporated company should be held within 30 days of incorporation of Company.
Meeting of Independent Director	such Independent Directors shall meet at least once in a Calendar Year.
Presence of Quorum	Quorum shall be present throughout the Meeting. (Exp. If there is only two directors in a company and one is interested in any resolution then that item can’t be discuss at the meeting).
Participation through electronic mode	Directors participating through Electronic Mode in a Meeting shall be counted for the purpose of Quorum
Attendance Register	Every company shall maintain separate attendance registers for the Meetings of the Board.
Inspection of Att. Register	A Member of the Company can’t inspect the attendance register