[Opinion] Company Directors & CS Held Liable for Delayed Draft Minutes Circulation and Entries
- Blog|News|Company Law|
- 3 Min Read
- By Taxmann
- |
- Last Updated on 18 August, 2023
Latest from Taxmann
Prof R Balakrishnan – [2023] 153 taxmann.com 418 (Article)
1. Introduction
As per the explanation to sub-section (1) of section 205 of the Companies Act 2013, secretarial standards means the “secretarial standards” as issued by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 and approved by the Central Government. Sub-section (10) of section 118 of the Companies Act 2013 provides that every company shall observe secretarial standards with respect to general and board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act 1980 and approved as such by the Central Government. The secretarial standards provide clarity on the respective subjects and it does not mean that the secretarial standards are alternative to the original laws enacted by the parliament. One could conclude by saying that wherever the law is not clear it requires an explicit spirit of the law, the secretarial standard provides clarity on the respective subjects to the user. As per the provisions of the Companies Act 2013, adherence by a company to the Secretarial Standard is mandatory.
Pursuant to the provisions of section 118 of the Companies Act 2013, it is clear that the company needs to adhere to the secretarial standards as per the provisions of the Companies Act 2013. Further, the board report of the company shall include a statement on compliance with applicable secretarial standards as mandated in the secretarial standard -1 on meetings of the board of directors vide paragraph 9. In case, a certain portion of applicable secretarial standards is not adhered to, the same should be highlighted in the board report along with the reasons for not complying with the same. The board report may also include the other secretarial standards voluntarily adopted by the company and in case the voluntary adoption is partial the same need to be stated in the report.
2. Relevant provisions of the Companies Act 2013 and the relevant clauses of the secretarial standard-1 relating to this case
The following are relevant provisions of the Companies Act 2013 and the requirements of secretarial standards 1 relating to meetings of the board or directors.
| Companies Act 2013 Section 118 – Minutes of proceedings of general meeting, meeting of Board of Directors and other meetings and resolutions passed by postal ballot. |
|
| Section | Provision |
| 118 (1) | Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of the resolution by postal ballot in books kept for that purpose with their pages consecutively numbered. |
| 118(10) | Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government. |
| Secretarial Standard -1 (SS-1) (Issued by The Institute of Company Secretaries of India and approved by the Central Government under section 118(10) of the Companies Act, 2013) Secretarial Standard on Meeting of the Board of Directors |
|
| Clause | Requirement |
| 7 | Minutes |
| Every company shall keep Minutes of all Board and Committee Meetings in a Minutes Book. Minutes kept in accordance with the provisions of the Act evidence the proceedings recorded therein. Minutes help in understanding the deliberations and decisions taken at the Meeting. | |
| 7.4 | Finalization of Minutes |
| Within fifteen days from the date of the conclusion of the Meeting of the Board or the Committee, the draft Minutes thereof shall be circulated by hand or by speed post or by registered post or by courier or by e-mail or by any other recognised electronic means to all the members of the Board or the Committee, as on the date of the Meeting, for their comments | |
| 7.5 | Entry in the Minutes Book. |
| 7.5.1 | Minutes shall be entered in the Minutes Book within thirty days from the date of conclusion of the Meeting. |
| In case a Meeting is adjourned, the Minutes in respect of the original Meeting as well as the adjourned Meeting shall be entered in the Minutes Book within thirty days from the date of the respective Meetings. | |
| Companies Act 2013 | |
| Penal provision for any default/violation (if any) | |
| Section | Provision |
| 118(11) | If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees. |
Click Here To Read The Full Article
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
