In this post, I will discuss Secretarial Standards related to Notice of a board meeting under SS – 1 issued by Institute of Company Secretaries of India.
Notice in writing of every Meeting shall be given to every Director
- by hand or
- by speed post or
- by registered post or
- by courier or
- by facsimile or
- by e-mail or
- by any other electronic means. [Paragraph 1.3.1 of SS – 1]
In SS – 1, Electronic means is not defined by it is defined in Paragraph 1.2.2 of SS – 2. Please refer there for definition. I will post my remark on definition when I will write a post on those standards.
This is well enough to include any other electronic means but limit is next paragraph.
The Notice shall be sent to
- the postal address or
- e-mail address,
- registered by the Director with the company or
- in the absence of such details or any change thereto, any of such addresses appearing in the Director Identification Number (DIN) registration of the Director. [Background Paragraph 1 after Paragraph 1.3.1 of SS – 1]
This paragraph effectively rule out facsimile or any other electronic means because notice should be send to postal address or to an e – mail address only.
Where a Director specifies a particular means of delivery of Notice, the Notice shall be given to him by such means. [Background Paragraph 2 after Paragraph 1.3.1 of SS – 1]
This is simple presumption that director may provide only such means which confirm above requirement.
Proof of sending Notice and its delivery shall be maintained by the company. [Background Paragraph 3 after Paragraph 1.3.1 of SS – 1]
I agree with proof of sending. What is logic of proof of delivery? If someone, changes the address without informing the company or ministry, how a proof of delivery will be obtained. Is proof of delivery include proof of non – delivery also? I do not think, it will result in less litigation or ease of doing business.
Notice shall be issued by the Company Secretary or where there is no Company Secretary, any Director or any other person authorised by the Board for the purpose. [Paragraph 1.3.2 of SS – 1]
Issue of notice means a company secretary shall sign notice. I understand, when meeting is being convened by company secretary, this is logical required. Please refer paragraph 1.1.1 of these standards, when a director exercising his authority to convene a meeting, it does not seem logical that notice shall be issued by company secretary.
The Notice shall specify the serial number, day, date, time and full address of the venue of the Meeting. [Paragraph 1.3.3 of SS – 1]
In case the facility of participation through Electronic Mode is being made available , the Notice shall inform the Directors about the availability of such facility, and provide them necessary information to avail such facility. [Paragraph 1.3.4 of SS – 1]
This is clear enough, I think.
Where such facility is provided, the Notice shall seek advance confirmation from the Directors as to whether they will participate through Electronic Mode in the Meeting. [Background Paragraph 1 after Paragraph 1.3.4 of SS – 1]
The Notice shall also contain the contact number or e-mail address (es) of the Chairman or the Company Secretary or any other person authorized by the Board, to whom the Director shall confirm in this regard. In the absence of an advance communication or confirmation from the Director as above, it shall be assumed that he will attend the Meeting physically. [Background Paragraph 2 after Paragraph 1.3.4 of SS – 1]
Is there any time limit for communication of exercise this option or it will be decided by mutual consent and be open for litigation?
The Notice of a Meeting shall be given even if Meetings are held on pre-determined dates or at pre-determined intervals. [Paragraph 1.3.5 of SS – 1]
Notice convening a Meeting shall be given at least seven days before the date of the Meeting, unless the Articles prescribe a longer period. [Paragraph 1.3.6 of SS – 1]
In case the company sends the Notice by speed post or by registered post or by courier, an additional two days shall be added for the service of Notice. [Background Paragraph 1 after Paragraph 1.3.6 of SS – 1]
This may said that notice shall be send before seven clear days. In case, notice is being send through electronic mean it will be 7 days before meeting and in case of notice being send to postal address then it will be 7+2 days before meeting notice. If meeting is on 15th of a month, postal notice shall be send on or before 8th of that month and electronic notice shall be send on or before 6th of the month.
Notice of an adjourned Meeting shall be given to all Directors including those who did not attend the Meeting on the originally convened date and unless the date of adjourned Meeting is decided at the Meeting, Notice thereof shall also be given not less than seven days before the Meeting. [Background Paragraph 2 after Paragraph 1.3.6 of SS – 1]
Just a simple query, even if the date of adjourned meeting is decided at the meeting, how and in which manner director not present in original meeting came to know about new date of meeting? I propose a notice in such case also but it may be a shorter period for notice.
The Agenda, setting out the business to be transacted at the Meeting, and Notes on Agenda shall be given to the Directors at least seven days before the date of the Meeting, unless the Articles prescribe a longer period. [Paragraph 1.3.7 of SS – 1]
Agenda and Notes on Agenda shall be sent to all Directors by hand or by speed post or by registered post or by courier or by e-mail or by any other electronic means. These shall be sent to the postal address or email address or any other electronic address registered by the Director with the company or in the absence of such details or any change thereto, to any of such addresses appearing in the Director Identification Number (DIN) registration of the Directors. [Background Paragraph 1 after Paragraph 1.3.7 of SS – 1]
In case the company sends the Agenda and Notes on Agenda by speed post or by registered post or by courier, an additional two days shall be added for the service of Agenda and Notes on Agenda. [Background Paragraph 2 after Paragraph 1.3.7 of SS – 1]
Where a Director specifies a particular means of delivery of Agenda and Notes on Agenda, these papers shall be sent to him by such means. [Background Paragraph 3 after Paragraph 1.3.7 of SS – 1]
Proof of sending Agenda and Notes on Agenda and their delivery shall be maintained by the company. [Background Paragraph 3 after Paragraph 1.3.7 of SS – 1]
Is not it simple that Agenda or Notes on Agenda be sent along with notice or be send in same manner as notice?
The Notice, Agenda and Notes on Agenda shall be sent to the Original Director also at the address registered with the company, even if these have been sent to the Alternate Director. [Background Paragraph 4 after Paragraph 1.3.7 of SS – 1]
This is good requirement.
Notes on items of business which are in the nature of Unpublished Price Sensitive Information may be given at a shorter period of time than stated above, with the consent of a majority of the Directors, which shall include at least one Independent Director, if any. [Background Paragraph 5 after Paragraph 1.3.7 of SS – 1]
General consent for giving Notes on items of Agenda which are in the nature of Unpublished Price Sensitive Information at a shorter Notice may be taken in the first Meeting of the Board held in each financial year and also whenever there is any change in Directors. [Background Paragraph 7 after Paragraph 1.3.7 of SS – 1]
Where general consent as above has not been taken, the requisite consent shall be taken before the concerned items are taken up for consideration at the Meeting. The fact of consent having been taken shall be recorded in the Minutes. [Background Paragraph 8 after Paragraph 1.3.7 of SS – 1]
It will be more appropriate that consent for shorter notice should not be required but may be deemed as per standard.
Supplementary Notes on any of the Agenda Items may be circulated at or prior to the Meeting but shall be taken up with the permission of the Chairman and with the consent of a majority of the Directors present in the Meeting, which shall include at least one Independent Director, if any. [Background Paragraph 9 after Paragraph 1.3.7 of SS – 1]
Each item of business requiring approval at the Meeting shall be supported by a note setting out the details of the proposal, relevant material facts that enable the Directors to understand the meaning, scope and implications of the proposal and the nature of concern or interest, if any, of any Director in the proposal, which the Director had earlier disclosed. [Paragraph 1.3.8 of SS – 1]
Where approval by means of a Resolution is required, the draft of such Resolution shall be either set out in the note or placed at the Meeting. [Background Paragraph 1 after Paragraph 1.3.8 of SS – 1]
The items of business that are required by the Act or any other applicable law to be considered at a Meeting of the Board shall be placed before the Board at its Meeting. There are certain items which shall be placed before the Board at its first Meeting. [Background Paragraph 2 and 3 after Paragraph 1.3.8 of SS – 1
Each item of business to be taken up at the Meeting shall be serially numbered. [Paragraph 1.3.9 of SS – 1]
Numbering shall be in a manner which would enable ease of reference or cross-reference. [Background Paragraph 1 after Paragraph 1.3.9 of SS – 1]
Any item not included in the Agenda may be taken up for consideration with the permission of the Chairman and with the consent of a majority of the Directors present in the Meeting, which shall include at least one Independent Director, if any. [Paragraph 1.3.10 of SS – 1]
In case of absence of Independent Directors, if any, at such Meeting, the Minutes shall be final only after at least one Independent Director, if any, ratifies the decision taken in respect of such item. In case the company does not have an Independent Director, the Minutes shall be final only on ratification of the decision taken in respect of such item by a majority of the Directors of the company, unless such item was approved at the Meeting itself by a majority of Directors of the company. [Background Paragraph 1 after Paragraph 1.3.10 of SS – 1]
Is not it gives veto power to independent directors? The board room rule is majority decision. Is not it?
To transact urgent business, the Notice, Agenda and Notes on Agenda may be given at shorter period of time than stated above, if at least one Independent Director, if any, shall be present at such Meeting. If no Independent Director is present, decisions taken at such a Meeting shall be circulated to all the Directors and shall be final only on ratification thereof by at least one Independent Director, if any. In case the company does not have an Independent Director, the decisions shall be final only on ratification thereof by a majority of the Directors of the company, unless such decisions were approved at the Meeting itself by a majority of Directors of the company. [Paragraph 1.3.11 of SS – 1]
The fact that the Meeting is being held at a shorter Notice shall be stated in the Notice. [Background Paragraph 1 after Paragraph 1.3.11 of SS – 1]
Is not it gives veto power to independent directors? The board room rule is majority decision. Is not it?
This is all about Notice of board meetings given under SS – 1.
At the end of this post, I want to mention that some provisions I criticised here may be taken from the Act or relevant Rules and in such case may be treated my suggestion for relevant changes the Act or these Rules.
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