Procedure For Conducting Board Meetings as Per SS-1


Procedure For Conducting Board Meetings as Per SS-1


(a) Notice and Agenda – The company secretary ("CS") or a director or any authorized person has to circulate written notice and agenda with the notes to agenda to all directors, including alternate, by hand, post or e-mail at least seven days prior to a meeting. This minimum period gets extended by another two days if the company sends it by post. And, if it does, it must necessarily maintain proof of dispatch. Notice should also contain serial number, day, date, time and full address of venue of the meeting. Further, where the meeting may be conducted by video-conference, the notice should provide a contact number or e-mail address and the directors must confirm their participation (through electronic mode) in advance. Any additional agenda item can be taken up in the meeting, if the chairman and majority of directors permit. Further, if the company holds a meeting at shorter notice for urgent matters, notice should expressly state this. The minutes in both the cases should be ratified by majority of directors.

(b) Quorum – The quorum for a meeting is 1/3rd of total number of directors or two, whichever is higher, unless articles change this requirement. Directors participating through video conferencing are counted for quorum and also the interested directors4 after disclosure of their interest. If there is no quorum, the meeting must be adjourned. Such adjourned meeting must be held at the same time, place and day in the next week. If there is no quorum at the adjourned meeting, it will stand cancelled. Further, quorum needs to be present throughout the meeting. A director may take leave of absence from a meeting but failure to attend a single meeting in twelve months, notwithstanding grant of leave of absence, is a ground for disqualification.

(c) Chairman – The chairman of the company is usually the chairman of the board as well. If there is no chairman or when the chairman is absent, the directors have to elect a chairman amongst themselves. If chairman is interested in any matter, he will have to appoint another director to act in his place for that specific matter. He has a casting vote in case of equality of votes, if not prohibited by articles.

(d) Participation through electronic mode – The Act permits directors to attend BM through video-conferencing or any other audio-visual means. The Act imposes restriction on approval of certain items through electronic means such as approval of annual financial statements, board's report and matters relating to amalgamation, merger, demerger, acquisition and takeover. However, SS-1 removes this restriction if express permission of the chairman is obtained. A roll call has to be taken at the commencement and the closure of the meeting to ensure the presence of quorum all through the meeting.

(e) Attendance register– The Act does not prescribe the manner of maintaining attendance register. SS-1 mandates maintenance of separate register which should contain the serial number, date, place, time of meeting, names and signatures of the directors, CS and invitees present. The pages must be serially numbered and bound periodically depending on its size, if it is in loose-leaf form. It should be authenticated and preserved for at least eight financial years by the CS or any authorized director, if there is no CS. In case of participation of directors through video conferencing, mere noting of their names in the register stating that they were present through video conferencing would be as good as their signatures.

(f) Resolution by circulation – The Act permits circular resolutions which should be noted at the next BM. However, if 1/3rd directors require any resolution to be passed at a physical meeting then it cannot be passed by circulation. SS-1 has supplemented the provisions for passing circular resolutions in paragraph 6. The chairman of the board or managing director ("MD") or whole-time director or any other director, other than an interested director should decide that a particular resolution will be passed by circulation or not. The draft resolution is to be circulated to all directors by hand, post or e-mail with a note stating the details, nature of interest of the interested directors, method of giving consent and other material facts. If the company sends it by post, it must necessarily maintain proof of dispatch. The company can fix any date as the last date for receiving directors' assent or dissent which cannot be beyond seven days from the date of circulation and interested directors cannot vote. The effective date of resolution would be the last date for giving consent or the date on which consent of two-third directors is received, whichever is earlier.

The Act specifically prohibits about 13 matters which cannot be passed by circular resolution and must necessarily be passed at a physical meeting. Amongst others, these include making calls for unpaid money on shares; authorizing buy-back; issuing securities including debentures in or outside India; borrowing monies etc. SS-1 has augmented this list by adding seven more items which include considering the compliance certificate to ensure compliance with all applicable laws; approving remuneration of MD, whole-time director, manager; according approval for related party transactions outside the ordinary course of business or not on an arm's-length basis etc.
(g) Minutes – Companies are required to maintain minute books. Paragraph 7 has added certain timelines for finalization of minutes. It is now mandatory to circulate draft minutes (by hand, post or electronically) to all directors for their comments within fifteen days from conclusion of the meeting. The directors must communicate their comments within seven days from the date of circulation. Chairman should sign the minutes once they are finalized. The CS or any authorized director if there is no CS, must certify the signed minutes and circulate it to all directors within fifteen days of signature. The chairman of the same meeting or the next meeting has to initial each page and sign the last page of the minutes. The minutes should be entered in the minute book within thirty days of the meeting and no alteration is allowed thereafter.

SS-1 has supplemented some more provisions for maintenance of minutes such as (i) meetings, resolutions and minute sheets should be serially numbered; (ii) loose-leaf minute sheets should be bound and kept in the safe custody of CS at the registered office or at any other place with board's approval; (iii) minutes must contain company's name, serial number, type, day, date, venue and time at the beginning and conclusion of the meeting; (iv) chairman's name will come first followed by the names of other directors in alphabetical order; (v)unambiguous language and fair and correct  summary of the notings' and resolutions passed.

Further, SS-1 has widened the scope of the maintenance of minutes. Companies can maintain them electronically, but will have to comply with the provisions of time stamp which means that the real time of an event is recorded by a secure computer system. It adds the time to a file which helps in keeping track of the timings when data is added, removed, sent or received. Electronic minutes will have to be digitally signed by chairman.
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