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Article

G. P. Madaan*

Sanjay Grover**, FCS

Founder & Ceo


Corporate Knowledge Foundation
New Delhi

Sanjay Grover & Associates


New Delhi

gpmadaan@ckfindia.org

sanjaygrover7@gmail.com

Secretarial Standards A Plethora of


Opportunities For Company Secretaries
The Secretarial Standards seek to harmonise, incorporate and standardize diverse
secretarial practices followed by companies throughout the country, which when uniformly
and consistently applied, would result in the establishment of sound Corporate Governance
principles.
A little neglect may breed great mischief for the want of a nail,
the shoe was lost; for the want of a shoe, the horse was lost; for
the want of a horse, the rider was lost; and for want of a rider, the
battle was lost. -- Benjamin Franklin

Governance principles. Without overstepping or modifying the law


laid down in the Act, the Secretarial Standards recommend good
Governance practices and seek to bring clarity wherever the law
is silent or leaves room for ambiguity.

ith gradual opening up of the global economy, trade,


investments and international financial market
liberalization, there is a growing recognition for
effective Corporate Governance framework as an
important instrument for sustained development of the
world economy.

The Secretarial Standards Board (SSB) of the ICSI has formulated


Secretarial Standard on Meetings of the Board of Directors (SS1) and Secretarial Standard on General Meetings (SS-2). These

In order to comply with the requirements of Section 118(10) of the


Companies Act, 2013, every company shall observe Secretarial
Standards (SS) specified by the Institute of Company Secretaries
of India (ICSI) and approved by the Central Government pertaining
to General and Board meetings. Insertion of this requirement in the
Act is a Landmark development for the profession of the Company
Secretaries and the ICSI as a whole.
The Secretarial Standards seek to harmonise, incorporate and
standardize diverse secretarial practices followed by companies
throughout the country, which when uniformly and consistently
applied, would result in the establishment of sound Corporate
*Co-Chairman -Assocham's National Council For M&A; Assocham's Nominee on Ssb of ICSI, 2015.
**Member SSB of ICSI, 2015 & immediate past Central Council Member, ICSI.

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May 2015

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Secretarial Standards A Plethora of Opportunities For Company Secretaries

Boardroom governance has been the


subject of intense debate throughout the
world and is coming into sharper focus
again here now with the Government,
through the Institute of Company
Secretaries of India, mandating corporate
houses to adopt certain practices in areas
where the provisions of the Companies Act
are either silent or are subject to multiple
interpretations.
Standards are not an alternative to the applicable laws, rules
and regulations but are supplementary to the existing laws, rules
and regulations under which the India Inc and others function.
These Standards prescribe a set of principles for convening and
conducting Board and General Meetings and matters related
thereto.
The Standards mentioned above play an extremely crucial role
for Corporates as they are essentially concerned with the process
by which companies are governed and managed. The Standards
enhance the concept of Corporate Governance that primarily
hinges on complete transparency, integrity and accountability of
the management with an increasingly greater focus on investor
protection and public interest. It is assumed that even the minutest
of compliance and good Governance would be ensured if the
companies follow the Standards effectively.

Compliance of Secretarial
Standards
Section 205(1) of the Companies Act, 2013 lays down the
functions of a COMPANY SECRETARY which inter alia include
ensuring compliance of the applicable Secretarial Standards by
a Company. Similarly, Form No. MR-3, pursuant to Section 204
(1) of the Companies Act, 2013 and Rule No. 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules,
2014, which is the format of the Secretarial Audit Report, requires
the Secretarial Auditor to examine compliance by the company
with the applicable clauses of the Secretarial Standards issued
by the ICSI and certify compliance or non-compliance thereof.
Secretarial Standards on Board and General Meetings clarify
in detail the procedure for conducting and convening Board
Meetings, Committee Meetings and General Meetings. Some of
the provisions prescribed under the Act may lead to ambiguity
on certain aspects or there are diverse practices followed in
different companies. Boardroom governance has been the

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May 2015

subject of intense debate throughout the world and is coming into


sharper focus again here now with the Government, through the
Institute of Company Secretaries of India, mandating corporate
houses to adopt certain practices in areas where the provisions
of the Companies Act are either silent or are subject to multiple
interpretations. Moreover, some Secretarial Standards provide for
some additional provisions that aim to systematize the differing
practices and are being lauded as good governance practices.
If the Company fails to comply with the prescribed provisions
of the Act, including the Secretarial Standards, penalties may
be levied for non-compliances and contraventions. Compliance
with the Secretarial Standards would help in reducing litigations
as most of the requirements of the Act relating to Meetings are
explained in detail in the Standards and compliance thereof is
likely to weed out chances of inadvertent non-compliances of the
provisions of the Act.

Role of Company Secretary


The Standards recognise the need of dynamism in the boardroom.
The Chairmen and the Directors are realising the need of special
skills and technical knowledge in this area and thus amplifies the
role of a COMPANY SECRETARY possessing these skills and
knowledge.
The responsibilities of the modern day company secretary
have evolved from that of a note taker at board meetings or
administrative servant of the Board to that which encompasses
a much broader role of acting as Board advisor and bestowed
with the responsibility for the organisations Corporate Governance.
The Board and the Chairman in particular are now reliant on
Company Secretaries to advise them not only on Directors
statutory duties, disclosure obligations and listing regulations but
also with respect to Corporate Governance requirements and
practices and effective board processes. This specialised role of
the modern COMPANY SECRETARY has emerged to position this
valuable professional as one of the key governance professionals

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Secretarial Standards A Plethora of Opportunities For Company Secretaries

The Standards have recognised the


importance of the role of a Company
Secretary in governance practices and
thus have mandated various duties and
responsibilities which he has to discharge
as a Governance professional.
within the organisation.
The COMPANY SECRETARY plays a leading role in good
governance by advising the Company, its Board and Board
Committees to function effectively and in accordance with their
terms of reference and best practices, the support goes beyond
scheduling meetings to proactively managing the agenda and
ensuring the presentation of high quality information in advance
of meetings. This enables the directors to contribute effectively in
board discussions and debates and enhances the capability of the
Board for good decision making.
Though the quantum and focus of the COMPANY SECRETARYs
responsibilities will differ depending on the type and scale of
a company, no matter what the organisation is, the role has
expanded beyond simply ensuring statutory compliance to a pivotal
one where the skills of the COMPANY SECRETARY can have a
direct impact on the effectiveness of the Board, organisation and
its decisions. Company secretaries can add real value to their
role and increase their impact by bringing commercial acumen,
strategic understanding and softer people skills in addition to their
already much-sought-after legal and governance knowledge.
The Standards have recognised the importance of the role of a
COMPANY SECRETARY in governance practices and thus have
mandated various duties and responsibilities which he has to
discharge as a Governance professional. Some of the recognitions
to the role of COMPANY SECRETARY under these Standards
have been summarised as under:

Along with the names and signatures of the directors, the


Attendance Register shall also contain name and signature
of the COMPANY SECRETARY.

Minutes of the Board meeting shall record the names of the


directors and the COMPANY SECRETARY as attendees.
Similarly, the Minutes of a General Meeting shall also record
the names of directors and the COMPANY SECRETARY
present at the meeting.

In case of a Board meeting, where one or more of the directors


of the company are participating in the meeting through Video
Conferencing or other Audio-visual mode, the Chairman and
the COMPANY SECRETARY shall safeguard the integrity of
the Meeting by ensuring sufficient security and identification
procedures.

Wherever any approval of the Board is taken on the basis


of certain papers laid before the Board, their scrutiny,
identification and authenticity has to be ensured by the
COMPANY SECRETARY or the Chairman. A reference of
such authentication shall also be made in the Minutes.

As Board Advisor

As per SS-1, any director may summon a meeting of


the directors and once summoned, it is the COMPANY
SECRETARY who shall convene the meeting in consultation
with the Chairman or Managing Director or Whole-time
Director.

The Notice of the Board Meeting shall contain the contact


number or e-mail address of the Chairman or the COMPANY
SECRETARY. This will facilitate other directors to communicate
effectively on matters connected with the meeting.

Though Schedule IV of the Act says that the Independent


Directors shall hold at least one meeting in a year without
the attendance of any member of the management.
However, Standards make it mandatory for the COMPANY
SECRETARY to facilitate convening and holding of such
meeting, if so desired by the Independent Directors.

While conducting Board meetings, It would be the duty of

As Strategic Manager

Given his recognition under the Standards, a COMPANY


SECRETARY has to attend and shall be
present at the Board Meetings. He shall
also act as secretary to the committees of
directors. While recording the attendance,
the COMPANY SECRETARY has been put
at par with other directors. All the directors
and the COMPANY SECRETARY shall be
marked as attendees in the Attendance
Register, while everyone else, present in
the meeting, shall be marked as Invitee in
the Attendance Register.

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Secretarial Standards A Plethora of Opportunities For Company Secretaries

the Chairman to check, with the assistance of COMPANY


SECRETARY, that the Meeting is duly convened and
constituted in accordance with the Act

Barring few exceptions, it has been observed that in case of


general meetings of companies, the COMPANY SECRETARY
is either not present on the dais or is seated in the back row
behind the directors. Standards have recognised the role of
company secretary at the general meeting and it has been
prescribed that the COMPANY SECRETARY shall be seated
with the Chairman and shall assist the chairman in conducting
the meeting.

As Governance Professional

In the past it has been observed that some of the directors


neither attend any Board Meeting nor apply for leave of
absence, but the minutes usually record that leave of absence
was granted to such directors. To curb such practices, the
Standards now provide that the request for leave for not
attending the meeting shall be granted to a director only if
the leave for the same has been communicated either to the
Chairman or to the COMPANY SECRETARY.
Most cases of Oppression and Mismanagement arise out of
non-maintenance of records by a company. Over the decades,
whenever complaints for oppression and management were
filed, the management would initiate the process of writing of
the statutory records and registers with retrospective effect.
To ensure proper and timely maintenance of all the records
pertaining to meetings of directors, it has now been prescribed
that a copy of the signed Minutes of the meeting, duly certified
by the COMPANY SECRETARY, shall be circulated to all
Directors within fifteen days after the minutes are signed. Such
compliance by Companies would now compel them to maintain
all the records and registers (more particularly attendance
register, minutes book, register of directors, directors' interest,
directors' shareholding etc etc.) prior to the signing of the
minutes of each meeting.
In case of a general meeting where voting by shareholders
through remote e-voting process is mandatory for specified
companies, a Scrutinizer needs to be appointed by a company.
This Scrutinizer may be a COMPANY SECRETARY in
Practice. Further, for the purpose of voting at the meeting of
such companies, another Scrutinizer needs to be appointed.
In this case either the same Scrutinizer, appointed for the
purpose of remote e-voting, may continue or the company
has to appoint another Scrutinizer who may again be another
COMPANY SECRETARY in Practice . Even in case of
resolutions to be passed through Postal Ballot, there is a
requirement of appointment of a Scrutinizer, ,which maybe a
COMPANY SECRETARY in Practice
A COMPANY SECRETARY can certify copies of the Minutes

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May 2015

or the extracts thereof as requisitioned by any Member.

As Secretarial Auditor

Though the Act gives the right of inspection of Attendance


Register and the Minutes Book, of the meetings of directors,
to the directors only, Standards empower the COMPANY
SECRETARY in Practice appointed by the company or the
Secretarial Auditor to inspect the Attendance Register and the
Minutes Book if he considersit necessary for the performance
of his duties.

The COMPANY SECRETARY in Practice and the Secretarial


Auditor can also inspect the Minutes of the general meeting
during the course of the audit or required for the performance
of his duties.

The Standards prescribe that any qualification, observation,


comment or other remark in the Secretarial Audit Report issued
by the COMPANY SECRETARY in Practice, shall be read at
the AGM and attention of Members present shall be drawn to
the explanations/comments given by the Board of Directors
in its Report on such qualification, observation, comment or
remark.

As Compliance Officer

Standards mandate that Notice of the Board Meeting shall be


issued by the COMPANY SECRETARY.

In case of a meeting of directors through video conferencing,


the attendance register shall be deemed to have been signed
by the directors participating through video conferencing,
if their attendance is recorded by the Chairman or the
COMPANY SECRETARY in the attendance register and the
Minutes of the Meeting.

Entries in the attendance register shall be authenticated by


the COMPANY SECRETARY by appending his signature to
each page.

As Custodian

The attendance register of the Board and Committee meetings


shall be kept in the custody of the COMPANY SECRETARY.

Standards prescribe that the Minutes Books of the meetings


of directors shall be kept in the custody of the COMPANY
SECRETARY.

The Minutes Book of the minutes of the General Meetings shall


also be kept in the custody of the COMPANY SECRETARY

For safe custody of Scrutinizers Report, it has been prescribed


that the Scrutinizers Report, Register and other papers shall

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Secretarial Standards A Plethora of Opportunities For Company Secretaries

be kept in the custody of the COMPANY SECRETARY.

Corporate Secretarial Services


Though otherwise also it is the duty of the COMPANY


SECRETARYto record the proceedings of the Meetings,
the Standards specifically cast this duty on the COMPANY
SECRETARY.

To ensure proper compliance of the time schedule and to


prove the genuineness of the meetings, discussions, decisions
taken, attendance at the meetings, the date of entry of the
Minutes in the Minutes Book of Board and general meetings
shall be recorded by the COMPANY SECRETARY.

The COMPANY SECRETARY shall record the proceedings


of the Meetings.

An expert beyond Law


To ensure compliance of all the laws applicable to


the company, in every Board Meeting the COMPANY
SECRETARY shall ensure, for consideration of the Board,
the placing of a Compliance Certificate to confirm compliance
with the provisions of all the laws applicable to the company.

The COMPANY SECRETARY shall also place before the

Board a list specifying the laws applicable specifically to the


company.
The notification of the Secretarial Standards has even further
strengthened the position of a COMPANY SECRETARY in the
corporate sector and the requirement of this skilled professional
well versed with the nitty-gritties of Corporate Laws. The clarity and
uniformity brought out by the Standards with reference to Board
and General Meetings will further help the Company secretary in
smooth functioning and overcoming any uncertainties.

Conclusion
The Standards have opened plenty of opportunities for the
company secretaries, whether in employment or in practice. As
SS-1 and SS-2 are mandatorily required to be adhered to by all
the companies, except OPCs, where there is only one director,
all the 13 lakh plus companies, incorporated in India, will now
have to follow uniform governance norms and practices and these
companies may be required to engage the services of company
secretaries for necessary compliances, maintenance of records
and registers and for proper conducting and convening of Meetings.
This will enhance the standards of governance in Indian corporate
sector and reduce unnecessary litigations, controversies and
malpractices to a greater extent, bringing about more transparency
and a healthier business environment from all persepectives. CS

REQUIRES CONSULTANTS
The ICSI requires Consultants, for a period of 6 to 12 months, subject to renewal, at its Lodi Road office
as per the following details :QUALIFICATION & EXPERIENCE : Members of the Institute possessing 1 to 3 years post qualification
experience in various aspects of Company Law.
COMPENSATION : The compensation offered shall be between Rs 25,000 to Rs. 40,000/- p.m
(Consolidated) on the basis of Qualification & Experience.
JOB CONTENTS : The consultants shall be responsible for preparation of Guidance Notes, Checklists,
Backgrounders, Publications and other Research Material on Companies Act, 2013 and other laws .
APPLICATION PROCEDURE : Interested persons fulfilling the above requirements may mail their biodata
to gaurav.mehta@icsi.edu latest by 25th May, 2015.
(P K Grover)
Joint Secretary (SG) HR

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May 2015

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