Secretarial Standards Refer To The Guidelines Established By The Institute Of Company Secretaries Of India, Established Under Section 3 Of The Company Secretaries Act, 1980, And Sanctioned By The Central Government. In Cases Where Legal Interpretation Is Ambiguous Or Requires Elucidation, These Standards Offer Clarity. However, It’s Essential To Note That While Secretarial Standards Provide Insights Into Specific Matters, They Do Not Serve As Replacements For The Original Laws.
Secretarial Standards Were Established To Standardize And Regularize Common Practices Occurring In A Company’s Daily Operations. Initially It Was Issued In The Year 2015 At Icsi, These Standards Faced Challenges With Adoption By Members, Practitioners, Stakeholders, And Businessmen. Technical Intricacies And Incongruent Requirements Necessitated A Revision To Address These Concerns.
To Address The Issues Identified Through Feedback And Suggestions, Guidance Notes Promptly Clarified That These Standards Do Not Supersede The Original Law And Will Not Prevail In Case Of Any Conflicts Between The Act And The Standards.
The Revised Standards Will Be Effective From 1st April 2024.
Major Changes Of The Standards Are Given Below:
Secretarial Standard-1 (Ss-1) Meetings Of The Board:
Ss-1 Provides Guidelines For The Convening And Conduct Of Board Meetings, Ensuring Transparency, Accountability, And Adherence To Legal And Regulatory Requirements. It Outlines Procedures For Issuing Notices, Maintaining Quorum, Recording Minutes, And Other Crucial Aspects Of Boardroom Proceedings. Compliance With Ss-1 Is Mandatory For All Companies Governed By The Companies Act, 2013.
Scope:
The Former Ss-1 Stipulated That It Would Apply To The Board Meetings Of All The Companies Incorporated Under The Act, Except For One-Person Companies With Only One Director On Their Board And A Company Licensed Under Section 8 Of The Companies Act, 2013. The Revised Standard Is Applicable To The Meetings Of Board Of Directors Of All Companies Incorporated Under The Act Except One Person Company (Opc) In Which There Is Only One Director On Its Board And A Company Registered Under Section 8 Of The Companies Act, 2013 Or Corresponding Provisions Of Any Previous Enactment Thereof.
This Means That Section 8 Companies Need Not Follow The Provisions Of Ss1.
Definition Of Secretarial Auditor:
“Secretarial Auditor” Means A Company Secretary In Practice Or A Firm Of Company Secretary (Ies) In Practice Appointed In Pursuance Of The Act To Conduct The Secretarial Audit Of The Company.
The Revised Standard Provide That Firm Of Company Secretaries In Practice Would Also Be Included In The Definition.
Sending Of Notice:
The Erstwhile Ss-1 Provided That The Proof Of Sending (A) Notice, (B) Agenda And (C) Notes On Agenda And Its Delivery Shall Be Maintained By The Company. The Revised Ss-1 Provides That Such Proof Has To Be Maintained For Such Period As Decided By The Board, Which Shall Not Be Less Than Three Years From The Date Of The Meeting.
Intimation Of Participation:
The Director May Also Declare His Intention To Participate Via Electronic Mode At The Beginning Of The Calendar Year, And This Declaration Shall Remain Valid For That Entire Calendar Year. However, Providing Such Intimation Does Not Prevent Him From Attending The Meeting In Person, Provided That He Gives Adequate Advance Notice To The Company.
Participation:
Any Director May Participate Through Electronic Mode In A Meeting Unless The Act Or Any Other Law Specifically Prohibits Such Participation Through Electronic Mode In Respect Of Any Item Of Business.
Directors Shall Not Participate Through Electronic Mode In The Discussion On Restricted Items Unless There Is A Quorum In A Meeting Through Physical Presence Of Directors.
Comment: Now The Directors Can Participate Through Electronic Mode For Restricted Items (Approval Of The Annual Financial Statement, Board’s Report, Prospectus And Matters Relating To Amalgamation, Merger, Demerger, Acquisition And Takeover) Of Business If There Is A Quorum Present In A Meeting Through Physical Presence Of Directors.
Unpublished Price Sensitive Information:
The ‘material Events As Per The Listing Agreement’ Has Been Removed From The Ambit Of “Unpublished Price Sensitive Information”.
Board Meetings:
It Shall Be Sufficient If A One Person Company, Small Company, Or Dormant Company Or A Private Company Which Is Recognised As (Start-Up) 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.
An Adjourned Meeting Being A Continuation Of The Original Meeting, The Interval Period In Such A Case, Shall Be Counted From The Date Of The Original Meeting.
Comment: Now The Privilege Of Holding Just Two Board Meetings In A Financial Year With A Minimum Gap Of 90 Days Is Also Available To Private Companies Recognized As (Startup).
For The Purpose Of This Standard, The Term “Start-Up” Means A Private Company Incorporated Under The Act And Recognized As Start-Up In Accordance With The Notification Issued By The Department For Promotion Of Industry And Internal Trade, Ministry Of Commerce And Industry, Government Of India.
Meeting Of Independent Director:
Where A Company Is Required To Appoint Independent Directors Under The Act, Such Independent Directors Shall Hold At Least One Meeting In A Financial Year Without Attendance Of Non-Independent Directors And Members Of Management.
Comment: The Word ‘calendar Year’ Has Been Replaced With The Word ‘financial Year’ In The Provision Of Meetings Of Independent Directors Held In A Year.
Quorum:
A Director Shall Neither Be Reckoned For Quorum Nor Shall Be Entitled To Participate In Respect Of An Item Of Business In Which He Is Interested. However, In Case Of A Private Company, A Director Shall Be Reckoned For Quorum And Entitled To Participate In Respect Of Such Item After Disclosure Of His Interest.
Comment: In Case Of Private Company, An Interested Director Shall Now Be Counted In Quorum And Entitled To Participate In The Meeting In Respect Of Items Of Business In Which He Is Interested, After Disclosure Of His Interest.
Directors Participating Through Electronic Mode In A Meeting Shall Be Counted For The Purpose Of Quorum, Except For Restricted Items In Which Quorum Shall Be Ascertained On The Basis Of Physical Presence Of Directors.
Comment: Directors Participating Through Electronic Mode Shall Now Be Counted For The Purpose Of Quorum In Every Case Except For Restricted Items Of Business In Which Quorum Shall Be Ascertained On The Basis Of Physical Presence Of Directors.
Chairman:
If The Chairman Is Interested In An Item Of Business, He Shall Entrust The Conduct Of The Proceedings In Respect Of Such Item To Any Non-Interested Director, With The Consent Of The Majority Of Directors Present, And Resume The Chair After That Item Of Business Has Been Transacted. However, In Case Of A Private Company, The Chairman May Continue To Chair, Be Reckoned For Quorum And Entitled To Participate In The Meeting In Respect Of Such Item After Disclosure Of His Interest.
Comment: The Chairman Of The Meeting In Case Of Private Company Shall Now Be Entitled To Participate In The Items Of Business In Which He Is Interested And Will Also Be Counted For The Purpose Of Quorum After Disclosure Of His Interest In That Item Of Business.
Conclusion
In Conclusion, The Schedule Of Amendments To Secretarial Standard – 1 Underscores The Commitment Of Regulatory Authorities And Industry Stakeholders To Uphold Robust Corporate Governance Standards In India. Companies Are Advised To Stay Abreast Of These Amendments, Implement Necessary Changes In Their Boardroom Practices, And Leverage Ss-1 As A Framework For Achieving Excellence In Governance.
As The Corporate Landscape Continues To Evolve, Adherence To Ss-1 And Its Amendments Remains Instrumental In Navigating Regulatory Complexities, Mitigating Risks, And Unlocking Value For Stakeholders In The Dynamic Business Environment Of India.
