SECRETARIAL STANDARD ON GENERAL
MEETINGS – SS2
Overview:
Secretarial Standard on General Meeting issued by the
Council of the ICSI and approved by Central Government is to be mandatorily
adhered by all the Companies as per the Provision of Section 118 (10) of
Companies Act, 2013.
The Corporates are now required to follow stringent norms
such as providing detailed explanation on implications of particular
resolutions while conducting shareholder’s meetings.
Effective Date:
1st July, 2015.
Secretarial Standards should be followed by all Companies on
all General Meetings being held on 1st July, 2015 or thereafter as
the case may be.
Applicability:
All types of General Meetings (Members or Debenture-Holders
or Creditors or Meetings called by CLB, NCLT or prescribed authority) of all
Companies except OPC and class or classes of Companies exempted by the Central
Government through notification.
New Insertions/Critical Points to Be
Noted:
1. Secretarial Standard provides the facility of sending the
notice of general meeting through hand delivery or ordinary post for the
companies which does not provide e-voting facility and postal ballot option in
additions to other means as specified in “The Company (Management and
Administration) Rules, 2014”.
2.Mandatory hosting
of notice in the Website of the Company, if any available.
3. To
maintain the system of confirmation of the total number of recipients e-mailed
and a record of each recipient to whom the Notice has been sent and copy of
such record and any Notices of any failed transmissions and subsequent
resending shall be retained by or on behalf of the company as ‘‘proof of
sending’’.
4. Notice
shall contain complete particulars of the venue of the Meeting including route map and prominent land mark for easy
location. In case of companies having a website, the route map shall be
hosted along with the Notice on the website.
5. If
any proposed resolution contains any reference to 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.
6. 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.
7. Quorum shall be present not only at the time of
commencement of the Meeting but also while
transacting business.
8. One person can be an authorised representative of more
than one body corporate. In such a case, he/she 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.
9. Secretarial
Auditors or authorised representative (qualified) of Secretarial Auditors to
attend the meeting.
10. All Proxies received by the company shall be
recorded chronologically in a register kept for that purpose.
11. Every Resolution shall be proposed by a Member and
seconded by another Member.
12.
Every
company, which has provided e-voting facility to its Members, shall also put
every Resolution to vote through a ballot process at the Meeting. A Proxy can vote in the ballot process.
13.
Based on the
scrutiniser’s report received on Remote e-voting and voting at the
Meeting, the Chairman or any other Director so authorised shall countersign
the scrutiniser’s report and declare the result of the voting forthwith with
details of the number of votes cast for and against the Resolution, invalid
votes and whether the Resolution has been carried or not.
14. 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.
15. The qualifications, observations or comments or
other remarks if any, mentioned in the Secretarial Audit Report issued by the
Company Secretary in Practice, shall be read at the Annual General Meeting and
attention of Members present shall be drawn to the explanations / comments
given by the Board of Directors in their report.
16. No
gifts, gift coupons, or cash in lieu of gifts shall be distributed to Members at or in connection
with the Meeting.
17. A
company may maintain its Minutes in physical or in electronic form with
Timestamp. Every company shall, however, follow a uniform and consistent form
of maintaining the Minutes. Any deviation in such form of maintenance shall be
authorised by the Board.
18. Minutes shall state, at the beginning of the
Meeting, name of the company, day, date, venue and time of commencement and
conclusion of the Meeting.
19. Minutes
shall record the names of the Directors and the Company Secretary present at
the Meeting.
Specific
Contents to form part of the Minutes of General Meeting as per SS- 2:
1. Election
of Chairman, if any shall be recorded.
2. The fact that certain registers, documents, the
Auditor’s Report and Secretarial Audit Report, as prescribed under the Act were
available for inspection.
3. Presence of Quorum.
4. Number of Members present in the meeting including
the representative.
5. The number of proxies and the number of shares
represented by them.
6. The presence of the Chairmen of the Audit Committee,
Nomination and Remuneration Committee and Stakeholders Relationship Committee
or their authorised representatives.
7. The presence if any, of the Secretarial Auditor, the
Auditors, or their authorised representatives, the Court/Tribunal appointed
observers or scrutinisers.
8. Summary of the opening remarks of the Chairman.
9. Reading of
qualifications, observations or comments or other remarks on the financial
transactions or matters which have any adverse effect on the functioning of the
company, as mentioned in the report of the Auditors.
10. Reading of qualifications, observations or comments
or other remarks as mentioned in the report of the Secretarial Auditor.
11. Summary of the clarifications provided on various
Agenda Items.
12. In respect of each Resolution, the type of the
Resolution, the names of the persons who proposed and seconded and the majority
with which such Resolution was passed.
13. In the case of poll, the names of scrutinisers
appointed and the number of votes cast in favour and against the Resolution and
invalid votes.
14. If the Chairman vacates the Chair in respect of any
specific item, the fact that he did so and in his place some other Director or
Member took the Chair.
15. The
time of commencement and conclusion of the Meeting.
16. In respect of Resolutions passed by e-voting or
postal ballot, a brief report on the e-voting or postal ballot conducted
including the Resolution proposed, the result of the voting thereon and the
summary of the scrutiniser’s report shall be recorded in the Minutes Book and
signed by the Chairman or in the event of death or inability of the Chairman,
by any Director duly authorised by the Board for the purpose, within thirty
days from the date of passing of Resolution by e-voting or postal ballot.
Responsibility to Comply SS:
As
per section of 205 of the Act, the function of the Company Secretary (CS)
includes to ensure that the company complies with the applicable SS. This means
that it would be the duty of the CS to ensure that SS relating to general and
Board meetings or such other SS as may be specified by the ICSI, and approved
by the Central Government (‘CG’) are complied with. Nevertheless, there would
be many more SS which would be required to be complied with upon approval of
the CG in the time to come.
Point of Deliberation
Section 118 states that every company shall
observe SS. This means that irrespective of the criteria of capital, listing,
turnover, profit etc., all companies are required to observe SS. On the other
side, requirement of appointment of whole-time CS lies only with the
listed companies and every other company whose paid-up capital is Rs.5 crores
or more. The questions that now arose is that who would be responsible to
observe the SS in the companies those are not required to appoint whole-time
CS. There may be an argument that if the company is not required to
appoint CS then the requirement of observing SS would not arise as compliance
of SS is the function of CS. However, this argument would not sustain as
section 118 requires all the companies to observe SS.
Our view is that in case of Companies in which mandatory appointment of
Company Secretary is not required, in such a case, the Board may authorise any
competent personnel/authority of the Company to oversee the Compliance of
Secretarial Standards as of now, till such clarifications as may be received
from the Ministry of Corporate Affairs.
Conclusion:
The intention of the legislatures
to observe SS appears to be clear as it would oblige the companies to adopt
uniform practices in conducting Board & general meetings, matter pertaining
to placing agenda, finalisation of minutes etc. Further, miniscule
compliance and corporate governance is bound to increase tremendously once the
companies, irrespective of capital, turnover, profit etc., start complying with
the SS.
Compliance with the strict rules
would help strengthen the corporate governance practices and help curb
corporate misdoings would be ensured by the Company Secretaries.
These Secretarial Standards would
also help boost the investor confidence, particularly the fund’s managers and
overseas investors.
BY
CS K VINOTH
CS D HEM SENTHIL RAJ
csthenewera.blogspot.in
