Secretarial Standard on Meetings of the Board of Directors (SS-1)

Introduction

The Secretarial Standard on Meetings of the Board of Directors (SS-1) establishes a framework of principles for convening and conducting meetings of the Board of Directors of companies. The standard aims to ensure uniformity, transparency, and good governance practices across corporate entities. By adhering to SS-1, companies can maintain consistency in their board meetings, comply with statutory requirements, and promote a culture of accountability and responsibility among board members.

Historical Context

The introduction of Secretarial Standards in India can be traced back to the Companies Act, 2013, which mandated the formulation of such standards by the Institute of Company Secretaries of India (ICSI). These standards provide a detailed procedural guide, ensuring that company secretaries and board members adhere to best practices in governance. SS-1, specifically focusing on board meetings, addresses various aspects such as convening, conduct, and documentation of meetings.

Objectives

• Uniformity: To bring uniformity in the procedures followed for board meetings.
• Transparency: To ensure transparency in the conduct of meetings and decision-making processes.
• Compliance: To assist companies in complying with the legal requirements related to board meetings.
• Governance: To promote high standards of corporate governance.

Scope

SS-1 applies to the meetings of the Board of Directors of all companies incorporated under the Companies Act, 2013. However, there are specific exemptions to its application.

Exemptions

• One Person Company (OPC): Companies with only one director.
• Section 8 Companies: Companies registered under Section 8 of the Companies Act, 2013, subject to compliance with applicable provisions of the Act relating to Board meetings.

Applicability

The standard is applicable to both public and private companies, ensuring that all entities maintain a minimum standard for their board meetings. This inclusivity helps in fostering a uniform approach to governance across different types of companies.

Definitions

Term	Definition
Act	Companies Act, 2013 (Act No. 18 of 2013) or any previous enactment thereof, including any statutory modification or re-enactment and any Rules and Regulations framed thereunder.
Articles	Articles of Association of a company, as originally framed or altered over time.
Calendar Year	Period from 1st January to 31st December.
Chairman	Chairman of the Board or its Committee, or the Chairman appointed/elected for a Meeting.
Committee	Committee of Directors mandated by the Board under the Act.
Electronic Mode	Meetings through video conferencing or other audio-visual means.
Invitee	A person attending a Meeting by invitation, other than a Director and Company Secretary.
Maintenance	Keeping registers and records either in physical or electronic form.
Meeting	Duly convened, held, and conducted Meeting of the Board or any Committee thereof.
Minutes	Formal written record of the proceedings of a Meeting.
Minutes Book	Book maintained for recording Minutes, either in physical or electronic form.
National Holiday	Republic Day (26th January), Independence Day (15th August), Gandhi Jayanti (2nd October), and any other day declared as National Holiday by the Central Government.
Original Director	Director in whose place an Alternate Director is appointed.
Quorum	Minimum number of Directors necessary for holding a Meeting.
Secretarial Auditor	Company Secretary in Practice or a firm of Company Secretaries in Practice conducting the secretarial audit of the company.

Detailed Explanations

• Act: Refers to the comprehensive legal framework governing companies in India, including rules and amendments.
• Articles: Constitutes the internal regulations of a company, forming a binding contract between the company and its members.
• Calendar Year: Important for financial reporting and regulatory compliance timelines.
• Chairman: Plays a crucial role in leading the Board and ensuring effective governance.
• Committee: Facilitates focused oversight on specific areas like audit, remuneration, and risk management.
• Electronic Mode: Enables broader participation and convenience, crucial during situations like the COVID-19 pandemic.
• Invitee: Adds expertise and perspective, although they do not have voting rights.
• Maintenance: Ensures proper record-keeping and regulatory compliance.
• Meeting: Central to corporate governance, where major decisions are discussed and resolved.
• Minutes: Serves as an official record and legal proof of decisions taken.
• Minutes Book: Ensures organized and systematic documentation of meetings.
• National Holiday: Recognized public holidays where meetings are typically not scheduled.
• Original Director: Ensures continuity in board representation even when alternate directors are appointed.
• Quorum: Ensures sufficient representation for valid decision-making.
• Secretarial Auditor: Ensures independent verification of secretarial practices and compliance.

Secretarial Standard

 

1. Convening a Meeting

| Authority | Any Director may summon a Meeting of the Board. The Company Secretary or authorized person, upon requisition by a Director, shall convene the Meeting in consultation with the Chairman or, in his absence, the Managing Director or Whole-time Director, unless otherwise provided in the Articles.

| Adjournment | The Chairman may adjourn the Meeting at any stage with the consent of the majority of Directors present.

Detailed Discussion

• Authority to Convene Meetings: The flexibility given to any director to summon a meeting ensures that important matters can be addressed promptly without unnecessary delays. The role of the Company Secretary or the authorized person in coordinating with the Chairman or Managing Director ensures that the meeting is convened in an organized manner.
• Adjournment Procedures: Allowing the Chairman to adjourn the meeting with majority consent ensures that the board can manage its time effectively and handle unforeseen disruptions without compromising the decision-making process.

2. Day, Time, Place, Mode, and Serial Number of Meeting

| Serial Number | Every Meeting must have a serial number.

| Time & Place | Meetings can be convened at any time and place.

| Electronic Mode | Directors may participate through electronic means unless prohibited by law for certain items. Physical presence required for restricted items.

Detailed Discussion

• Serial Numbering: Helps in tracking and referencing meetings, ensuring a systematic record-keeping approach.
• Flexible Timing and Location: Provides the board with the flexibility to choose convenient times and places for meetings, accommodating the availability of all directors.
• Electronic Participation: Promotes inclusivity and convenience, allowing directors to participate remotely, enhancing board efficiency. However, it mandates physical presence for certain critical decisions to ensure robust discussion and deliberation.

3. Notice

| Notice | Must be in writing and sent by hand, speed post, registered post, facsimile, e-mail, or other electronic means.

| Address | Sent to postal or e-mail address registered with the company or appearing in DIN registration.

Detailed Discussion

• Written Notice: Ensures formal and documented communication, reducing the risk of miscommunication.
• Multiple Delivery Methods: Provides flexibility in choosing the most reliable and timely method of delivery.
• Registered Address: Ensures notices are sent to official and updated addresses, maintaining accuracy in communication.

4. Agenda

| Detailed Agenda | The agenda of the Meeting, setting out the business to be transacted, should be prepared and circulated along with the Notice.

Detailed Discussion

• Detailed Agenda: A well-prepared agenda facilitates structured and focused discussions during the meeting. It allows directors to prepare in advance and contributes to more effective decision-making.

5. Quorum

| Quorum Requirement | The Quorum for a Meeting of the Board shall be one-third of its total strength or two Directors, whichever is higher. Participation of the Directors by electronic mode shall also be counted for the purposes of Quorum.

Detailed Discussion

• Quorum Calculation: Ensures that meetings have sufficient representation to make valid decisions, reflecting the collective wisdom and judgment of the board.
• Electronic Participation in Quorum: Acknowledges the role of technology in modern governance, allowing directors to be counted for quorum even when participating remotely.

6. Attendance Register

| Attendance Register | Every company shall maintain separate attendance registers for the Meetings of the Board and Meetings of the Committee.

Detailed Discussion

• Separate Registers: Helps in maintaining organized records for board and committee meetings, ensuring clarity and ease of reference.
• Mandatory Attendance: Recording attendance ensures accountability and provides a basis for determining the presence of a quorum and the participation of directors in governance.

7. Minutes

| Minutes | Minutes should be recorded in the Minutes Book and signed by the Chairman. Minutes shall contain a fair and correct summary of the proceedings of the Meeting.

Detailed Discussion

• Accurate Record-Keeping: Minutes serve as the official record of board discussions and decisions, providing legal and historical documentation.
• Chairman's Signature: Adds authenticity and approval, ensuring the minutes accurately reflect the proceedings.

8. Passing of Resolution by Circulation

| Resolution by Circulation | No resolution shall be deemed to have been duly passed by the Board or by a Committee thereof by circulation unless the resolution has been circulated in draft, together with the necessary papers, if any, to all the Directors, or to all the members of the Committee, then in India, not being less in number than the quorum fixed for a Meeting of the Board or Committee, as the case may be, and to all other Directors or members of the Committee, at their usual address in India, and has been approved by such of the Directors as are then in India, or by a majority of such of them, as are entitled to vote on the resolution. |

Detailed Discussion

• Circulation Procedure: Ensures that all directors are informed and have the opportunity to participate in the decision-making process, even when a physical meeting is not feasible.
• Approval Requirements: Protects the integrity of board decisions by requiring a majority approval for resolutions passed by circulation.

Effective Date

The revised version of SS-1 is effective from 1st April, 2024, allowing companies sufficient time to adapt their processes and ensure compliance with the new standards.

Annexures

Annexure ‘A’ - Items Not to Be Passed by Circulation

Item	Description
Approval of Financial Statements and the Board’s Report	Essential for ensuring comprehensive discussion and approval of financial performance and disclosures.
Diversification of Business	Involves strategic decisions that require thorough deliberation and consensus.
Approval of Amalgamation, Merger, or Reconstruction	Complex transactions necessitating detailed evaluation and collective decision-making.
Sale, Lease, or Disposal of Substantial Part of the Undertaking	Significant impact on the company's operations and assets, demanding careful consideration.

Detailed Discussion

• Financial Statements and Board’s Report: These critical documents reflect the company’s financial health and performance, requiring detailed review and approval in a board meeting.
• Business Diversification: Strategic changes in business direction need thorough discussions to evaluate potential risks and opportunities.
• Amalgamation, Merger, or Reconstruction: Such significant changes in corporate structure demand detailed analysis and board consensus.
• Disposal of Substantial Assets: Decisions involving major assets must be carefully considered to safeguard the company’s interests and stakeholder value.

Annexure ‘B’ - Agenda for the First Board Meeting

Item	Description
Appointment of Chairman	Essential for establishing leadership and guiding the board’s activities.
Noting of Certificate of Incorporation	Formal acknowledgment of the company’s legal existence.
Taking Note of Memorandum and Articles of Association	Ensures all board members are aware of the foundational legal documents.
Noting the Situation of Registered Office	Critical for statutory compliance and communication.
Appointment of First Directors and Auditors	Establishes the initial governance framework and oversight mechanisms.
Adoption of Common Seal, if any	Formalizes the company’s official seal for documentation purposes.
Appointment of Bankers and Opening of Bank Accounts	Enables financial operations and management.
Authorization for Printing of Share Certificates	Facilitates issuance and management of shareholdings.
Approval of Preliminary Expenses and Agreements	Ensures all initial expenses and agreements are duly approved.
Appointment of Key Managerial Personnel, if applicable	Establishes the company’s management team for operational efficiency.

Detailed Discussion

• Chairman Appointment: Sets the tone for board leadership and governance practices.
• Certificate of Incorporation: Acknowledges the company’s formal establishment and compliance with regulatory  requirements.
• Memorandum and Articles of Association: Familiarizes board members with the company’s constitution and governance framework.
• Registered Office: Ensures all statutory communications are directed to the correct address.
• Directors and Auditors: Appointing the first directors and auditors is crucial for establishing governance and financial oversight.
• Common Seal: If adopted, the common seal is used for executing important documents, adding a layer of formality.
• Bankers and Bank Accounts: Opening bank accounts is essential for managing the company’s financial transactions.
• Share Certificates: Authorizing share certificates ensures proper documentation of share ownership.
• Preliminary Expenses and Agreements: Approving initial expenses and agreements ensures all startup costs are accounted for and authorized.
• Key Managerial Personnel: Appointing key management personnel is vital for effective company operations and compliance with statutory requirements.

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Article Compiled by:-

Mayank Garg

+91 9582627751

(LegalMantra.net Team)

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.

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