ICSI Updates dated 03rd April, 2020
Clarification/ Guidance on applicability of Secretarial
Standards on Meetings of the Board of Directors (SS-1) and General Meetings
(SS-2)
As you are aware, Section 118(10) of the Companies Act, 2013
provides for mandatory observance of SS1 and SS-2 by all companies.
Due to the COVID-19 outbreak and lockdown situation prevailing
in the Country, various provisions of the Companies Act, 2013 and rules made
thereunder have already been relaxed by the Ministry of Corporate Affairs (MCA)
for ease of compliance by the stakeholders.
Few queries have also been received from members on the
compliance of SS-1 and SS-2 in the current situation and clarifications sought
on various issues
In this context, we would like you to appreciate the
"SCOPE" of SS-1 and SS-2 which reads as under:
"This Standard is in
conformity with the provisions of the Act. However, if, due to subsequent
changes in the Act, a particular Standard or any part thereof becomes
inconsistent with the Act, the provisions of the Act shall prevail."
Ø Secretarial
Standard on Meetings of the Board of Directors ( SS-1)
Ø
a) 1.2.3 (2nd Para)- Directors shall not participate through
Electronic Mode in discussions on certain restricted items. Such restricted
items of business include approval of the annual financial statement, Board’s
report, prospectus and matters relating to amalgamation, merger, demerger,
acquisition and takeover. Similarly, participation in the discussion through
Electronic Mode shall not be allowed in meetings of the Audit Committee for
consideration of annual financial statement including consolidated financial
statement, if any, to be approved by the Board.
MCA
Relaxation:
Since
the MCA has already allowed the participation through VC in respect of the
restricted items as stated above, the consequent relaxation applies to Para
1.2.3 of SS 1 and this para should be construed accordingly.
b) 1.3.1 (3rd Para) - Where a Director specifies a particular
means of delivery of Notice, the Notice
shall be given to him by such means. However, in case of a Meeting conducted at
a shorter Notice, the company may choose an expedient mode of sending Notice.
Guidance by the ICSI:
The
requirement of providing Notice to a Director as per his preferred mode of
delivery is provided in the SS-1. This provision should be interpreted
accordingly to ensure compliance, wherever, physical delivery of documents is
not possible due to COVID 19 lockdown, the company may choose an expedient mode
of delivery in sending Notices, including through e-mail to the concerned
directors.
In
SS-1, wherever references have been made to physical mode of delivery of
documents, such as notice, agenda and minutes, etc, in the context of the
meeting of the board of directors or committee thereof or resolution proposed
to be passed by circulation, it shall be adequate and sufficient compliance, if
such documents are served through e-mail instead of physical mode of delivery. However,
the company should ensure adequate safeguards, including delivery and retaining
proof receipt of such e-mail communication.
c) 2.1- The company shall hold at least four Meetings of its
Board in each Calendar Year with a maximum interval of one hundred and twenty
days between any two consecutive Meetings.
MCA Relaxation:
The MCA has already relaxed the gap between two meetings, and
the consequent relaxation applies to para 2.1 of SS-1 and this para should be
interpreted accordingly
d) 2.2 Meetings of Committees - Committees shall meet as often
as necessary subject to the minimum number and frequency prescribed by any law
or any authority or as stipulated by the Board.
MCA Relaxation:
The MCA has already relaxed the provision with regard to the
time gap between two board meetings, consequentially the relaxation applies to
in respect of committee meetings.
e) 2.3 - Where a company is required to appoint Independent
Directors under the Act, such Independent Directors shall meet at least once in
a Calendar Year.
MCA Relaxation:
The MCA has already relaxed the provision in respect of meetings
of Independent Directors, and the consequent relaxation applies to para 2.3of
SS-1 and this para should be interpreted accordingly.
f) 7.3.3 - Wherever the decision of the Board is based on any
unsigned documents including reports or notes or presentations tabled or
presented at the Meeting, which were not part of the Notes on Agenda and are
referred to in the Minutes, shall be identified by initialing of such documents
by the Company Secretary or the Chairman.
Guidance by the ICSI:
Due
to the COVID 19, all the meetings are now invariably having to be conducted
through Video Conferencing and the agenda papers are being circulated by e-mails.
There may arise situations wherein certain documents have been referred to
during the course of the meeting of the board being held through video
conferencing and are being referred to in the minutes. Any such documents which
were not circulated with the agenda but placed at the meeting and referred to
in the minutes, should be identified by the company secretary by initialing
such documents after the normalcy is restored
g) 7.6.4
Within fifteen days of signing of the Minutes, a copy of the said signed
Minutes, certified by the Company Secretary or where there is no Company
Secretary by any Director authorized by the Board, shall be circulated to all
the Directors, as on the date of the Meeting and appointed thereafter, except
to those Directors who have waived their right to receive the same either in
writing or such waiver is recorded in the Minutes.
Guidance by the ICSI:
Due
to COVID 19 situation, all the meetings are now being conducted through Video
Conferencing and minutes thereof are being circulated over emails. The company
may not therefore be able to record/print the final minutes in the minutes
books maintained for this purpose and get the minutes signed physically by the
Chairman. In such cases the company may have to record and acknowledge/sign the
minutes digitally by the chairman. The copy of the minutes signed digitally can
be circulated to all the directors or alternatively directors may waive the
right to receive copy of such minutes, considering the prevailing
circumstances. In case, minutes cannot be signed digitally, the same can be
physically signed and copies of the signed minutes may be circulated to all the
directors once normalcy is restored.
Link of the Circular:
Disclaimer:
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
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