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: 10th 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 1st 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 1st January
and ends on 31st 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
|
Hello Divesh,
ReplyDeleteI have 2 queries,
1. For matters not to be dealt in Board Meeting via Video conferencing, will the attendance of 2 directors in person and the rest in VC, be sufficient/OK to approve the financials, directors report, etc. or the meeting should nt be conducted by VC at all?
2. For Directors attending the Board Meeting via Video Conferencing, any record as Attendance Registers to be maintained? or a noting in the Minutes is sufficient?
Ms. Kavita,
ReplyDeleteAs per clause 1 of Rule 4 of The Companies (Meetings of Board and its powers) Rules, 2014 (Given 5 matters shall not be dealt with in any meeting held through video conferencing or other audio visual means) Therefore, as per the interpretation of Rule for approve the financials, directors report, etc Board Meeting can't be held through video conference.
2. Yes attendance register required to maintain. as per 4.1.3 of SS-1- In case of Directors 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 Chairman or the Company Secretary in the Attendance Register and the Minutes of the Meeting
Thank you for allow me to comment in here
ReplyDeleteCasino online
Dear Divesh Sir, Request you to clarify the following --
ReplyDeleteIf there are 8 directors in a company and out of them,Only 1 director is DISINTERESTED FOR A RESOLUTION. Here at least 3 director is required to constitute a valid quorum as per the Act. In this case, as per Sec 174(2),the DISINTERESTED DIRECTOR will HAVE TO EITHER APPOINT 3 ADDITIONAL DIRECTORS OR PUT THAT RESOLUTION IN GM. Am i right?
2) If 2 DIRECTOR ARE DISINTERESTED,they will be quorum OR Minimum 3 directors will be quorum. Pls clarify?
3) The additional director in above case will hold office till next AGM .Am i right?
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