Guidance Note

on

Meetings of the

Board of Directors

OCTOBER 2017

Price : Rs. 300/- (Exluding postage)

© THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

Al rights reserved. No part of this Publication may be translated or copied in

any form or by any means without the prior written permission of The

Institute of Company Secretaries of India.

Published by :

THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

ICSI House, 22, Institutional Area, Lodi Road,

New Delhi 110 003

Phones : 011-4534 1000, 4150 4444 • Fax +91-11-2462 6727

E-mail info@icsi.edu • Website www.icsi.edu

Printed at : Chandu Press/250/October 2017

(i )

PREFACE TO REVISED EDITION

Section 118 (10) of the Companies Act, 2013 requires every company to observe

Secretarial Standards with respect to General and Board Meetings specified by

the Institute of Company Secretaries of India (ICSI) and approved as such by the

Central Government. The Secretarial Standards on Meetings of the Board of

Directors (SS-1) and Secretarial Standards on General Meetings (SS-2) issued by

the Institute of Company Secretaries of India (ICSI) under Section 118(10) of the

Companies Act, 2013 are effective w.e.f. 1st July, 2015.

Since then the SS-1 and SS-2 have been revised by the ICSI and approved by

the Central Government under Section 118(10) of the Companies Act, 2013,

which are applicable w.e.f. 1st October, 2017.

To facilitate the compliance and smooth implementation of revised Secretarial

Standard on Meetings of the Board of Directors (SS-1), this revised Guidance

Note elucidate the basis for setting the particular Standard, explain the procedural

& practical aspects thereof and gives il ustrative examples. This Guidance Notes

also integrate the responses to various issues/queries raised by the

stakeholders. In this Guidance Note, the applicable provisions of SEBI (Listing

Obligations and Disclosure Requirements) Regulations, 2015 are given in special

(three layers) boxes at the respective places. These do not form part of the

Secretarial Standard and included herein for the purpose of Guidance only.

I place on record my sincere thanks to CS Pavan Kumar Vijay, Chairman and all

the Members of Secretarial Standards Board during the year 2017-18 (list

enclosed) in finalisation of this revised Guidance Note on Meetings of the

Board of Directors.

I commend the dedicated efforts put in by CS Anamika Chaudhary, Deputy

Director and CS Rakesh Kumar, Executive (Academics) in preparing this revised

Guidance Note on Meetings of the Board of Directors, under the leadership of

CS Banu Dandona, Joint Director and overall guidance of CS Dinesh Chandra

Arora, Secretary, ICSI.

(i i)

I am confident that this Guidance Note wil be of practical value to all stakeholders in ensuring the compliance and implementation of revised SS-1

in true letter and spirit.

Improvement is a continuous process and equally applicable to this Guidance

Note. I would personal y be grateful to the readers to offer their suggestions/

comments for further refinement of this publication.

Place: New Delhi

CS (Dr.) Shyam Agrawal

Date: 09.10.2017

President

The Institute of Company Secretaries of India

(iv)

Secretarial Standards Board

(2017-18)

Chairman

Pavan Kumar Vijay, Past President, ICSI

Member (s)

Anil Kumar Murarka, Past President, ICSI

Amit Gupta, Practising Company Secretary, Lucknow

B. Shanmugasundaram, AGM (Secretarial)- Sundram Fasteners Ltd.

Dipti Mehta (Ms.), Practising Company Secretary, Mumbai

Geetika Anand (Ms.), CS & Compliance Officer, Aditya Birla Fashion and Retail Ltd.

J.N. Gupta, Founder & MD, Stakeholders Empowerment Services

Milind B. Kasodekar, Practising Company Secretary, Pune

N. Hariharan, Vice President (Secretarial) & CS, Larsen & Toubro Ltd.

Narayan Shankar, Executive Vice President & CS, Mahindra & Mahindra Ltd.

Parvatheesam Kanchinadham, Company Secretary, Tata Steel Ltd.

R. Ravi, Past President, ICSI

Rajiv Bajaj, Council Member-ICSI

Raju Ranganathan, Former CS & ED (Law), Indian Oil Corporation Ltd.

Rajendra Singhi, Senior Deputy Company Secretary, ITC Ltd.

S.C. Vaudeva, Practising Chartered Accountant, Delhi

S.H. Rajadhyaksha, Consultant,Tata Capital Financial Services Ltd.

S. Sudhakar, Vice President - Corporate Secretarial, Reliance Industries Ltd.

Savithri Parekh (Ms.), Chief Legal & CS, Pidilite Industries Ltd.

Subhash C. Setia, Company Secretary, DLF Limited

Shujath Bin Ali, General Counsel & CS, Parexel International- India

Vineet K. Chaudhary, Council Member-ICSI

Representative Members

C. S. Govindarajan

Representative of MCA

C. D. Srinivasan

Representative of RBI

Pradeeep Ramakrishanan

Representative of SEBI

Girish Joshi Representative of BSE

(v)

S. Madhavan

Representative of NSE

G.P. Madaan

Representative of ASSOCHAM

B. Murli

Representative of FICCI

Ajay Vaidya

Representative of CI

Pawan Kumar Rustagi

Representative of PHD Chamber of

Commerce & Industry

K. Sripriya (Ms.)

Representative of ICAI

Amit Anand Apte

Representative of ICAI (CMA)

(vi)

PREFACE

Secretarial Standards are a codified set of good governance practices which

seek to integrate, harmonize and standardise the diverse secretarial practices

followed by companies with respect to conduct of Meetings and play

indispensable role in enhancing the corporate culture and governance across

the organisations. Secretarial Standards help in improved governance and

compliance, confidence building in minds of investors which ultimately lead to

flow of capital in India and achieving the government’s objective of Make in

India.

The Secretarial Standard on Meetings of the Board of Directors (SS-1) has been

introduced under the legal umbrella of Companies Act, 2013 which is first of its

kind in the world. Section 118(10) of the Companies Act, 2013 makes it mandatory

for companies to comply with the Secretarial Standards.

It is a recognition and also an onerous responsibility on the profession of

Company Secretaries and the ICSI, as the Company Secretaries in employment

as wel as in practice are entrusted to ensure the compliance with the applicable

Secretarial Standards.

To facilitate the compliance of Secretarial Standard on Meetings of the Board of

Directors (SS-1) by the Corporates, their Board, Management and Professionals,

the Institute has brought out this Guidance Note. It elucidates, wherever

necessary, the basis for setting the particular Standard, explains its ingredients

and gives il ustrative examples. This Guidance Note also addresses the various

issues/queries/concerns raised by the stakeholders after the issuance of

Secretarial Standards.

I place on record my sincere thanks to CS Pavan K. Vijay, Chairman and all the

Members of the Secretarial Standards Board (SSB) during the year 2015-16 (list

enclosed) for their tireless efforts in preparation and finalisation of this Guidance

Note on Meetings of the Board of Directors.

I also place on record my sincere gratitude to CS N J N Vazifdar, CS Ashok

Chhabra and CS S V Subramanian, former Chairmen of SSB and al members of

SSB til date for their efforts in preparation of Secretarial Standards. My sincere

(vi )

thanks also to Members of SSB during the year 2014-15 (list enclosed) when

the Guidance Note on Meetings of Board of Directors was conceptualised and

preliminary draft of Guidance Note was prepared.

I commend the dedicated efforts put in by Secretariat of SSB under the leadership

of CS Alka Kapoor, Joint Secretary and under the overal guidance of CS Sutanu

Sinha, Chief Executive & Officiating Secretary.

I urge upon the Corporates and my professional col eagues to fol ow the

practices as enunciated in the Secretarial Standard on Meetings of the Board of

Directors in the light of this Guidance Note issued by the ICSI so as to promulgate

good Corporate Governance.

Improvement is a continuous process and therefore, suggestions of the readers

to improve this publication are most welcome.

Place: New Delhi

CS Atul H Mehta

Date: 17.12.2015

President, ICSI

(vi i)

Secretarial Standards Board

(2015-2016)

Chairman

Pavan K. Vijay, Past President, ICSI

Member(s)

Anil Murarka, Past President, ICSI

Ahalada Rao V, Council Member, ICSI

Dipti Mehta (Ms.), Practising Company Secretary, Mumbai

Geetika Anand (Ms.), CS & Compliance Officer, Pantaloons Fashion & Retail Ltd.

Lalit Jain, former Senior Vice-President & Company Secretary, Jubilant Life

Sciences Ltd. and Practising Company Secretary, Delhi

Lalit Kumar, Partner, J. Sagar Associates

L. Jayaraman, Practising Company Secretary, Hyderabad

Milind B Kasodekar, Practising Company Secretary, Pune

Ranjeet Kumar Pandey, Council Member, ICSI

Ravichandran K S (Dr.), Practising Company Secretary, Coimbatore

Sanjay Grover, Practising Company Secretary, Delhi

Savithri Parekh (Ms.), Chief Legal & CS, Pidilite Industries Ltd.

S C Vasudeva, Practising Chartered Accountant, Delhi

S H Rajadhyaksha, Consultant, Tata Capital Financial Services Ltd.

S Chandrasekaran (Dr.), Practising Company Secretary, Delhi

Subhash C Setia, Company Secretary, DLF Limited

Subhasis Mitra, Group Company Secretary, CESC Ltd.

Representative Members

C D Srinivasan

Nominee, RBI

Girish Joshi

Nominee, BSE

G P Madaan

Nominee, ASSOCHAM

G. Sekar

Nominee, ICAI

Puneet Duggal

Nominee, MCA

Rajendra Singhi

Nominee, CI

V. R. Narasimhan (Dr.)

Nominee, NSE

(ix)

Secretarial Standards Board

(2014-2015)

Chairman

Pavan K. Vijay, Past President, ICSI

Member(s)

Anil Murarka, Past President, ICSI

Ahalada Rao V, Council Member, ICSI

Devendra Bhandari, Director, Stakeholders Empowerment Services

Jagannadha Rao C V, Company Secretary, KEC International Ltd.

Lakshmmi Subramanian, Practising Company Secretary, Chennai

Lalit Jain, former Sr. Vice-President & Company Secretary, Jubilant Life Sciences

Ltd. and Practising Company Secretary, Delhi

M S Sahoo, Former Secretary, ICSI & Member, Competition Commission of India

Milind B Kasodekar, Practising Company Secretary, Pune

Narayan Shankar, Company Secretary, Mahindra & Mahindra Limited

Ravichandran K S (Dr.), Practising Company Secretary, Coimbatore

Sanjay Grover, Practising Company Secretary, Delhi

Sanjiv Agarwal (Dr.), Managing Partner, Agarwal Sanjiv & Co, Chartered

Accountants, Jaipur

Savithri Parekh (Ms.), Chief Legal & CS, Pidilite Industries Ltd.

S C Vasudeva, Practising Chartered Accountant, Delhi

S H Rajadhyaksha, Consultant, Tata Capital Financial Services Ltd.

Subhasis Mitra, Group Company Secretary, CESC Ltd.

Suresh Krishnan, Vice-President (Internal Audit) & CS, Cholamandalam MS

General Insurance Co. Ltd.

Representative Members

Amit Tandon

Nominee, SEBI

G P Madaan

Nominee, ASSOCHAM

Mukesh Singh Kushwah

Nominee, ICAI

Rajendra Chopra

Nominee, FICCI

Rajendra Singhi

Nominee, CI

V. R. Narasimhan (Dr.)

Nominee, NSE

(x)

C O N T E N T S

Pg. No.

BACKGROUND

1

INTRODUCTION

3

APPLICABILTY OF SS-1

4

SCOPE OF THE GUIDANCE NOTE

7

DEFINITIONS

7

GUIDANCE ON THE PROVISIONS OF SS-1

9

1. Convening a Meeting

9

2. Frequency of Meetings

41

3. Quorum

44

4. Attendance at Meetings

52

5. Chairman

59

6. Passing of Resolution by Circulation

65

7. Minutes

75

8. Preservation of Minutes and other Records

99

9. Disclosures

101

ANNEXURES

Annexure I

Il ustrative list of items of business which shall not

102

be passed by circulation and shall be placed before

the Board at its Meeting

Annexure IA Powers of the Board to be exercised at Board Meetings

105

as prescribed under the Act

Annexure IB Il ustrative list of Items to be exercised at Board Meeting 107

as given in SS-1 in addition to those prescribed under

the Act

(xi)

Pg. No.

Annexure IC Powers to be exercised by unanimous consent

109

Annexure ID Powers to be exercised subject to passing of Special

110

Resolution at General Meeting or through Postal Bal ot

Annexure IE Powers to be exercised subject to approvals of the

112

General Meeting or the Central Government or the

National Company Law Tribunal or the requirements

of other Statutory Authorities and/or Regulators

Annexure IF Powers which may be Delegated by the Board

114

Annexure I

Specimen Notice of a Board Meeting

115

Annexure I I Il ustrative List of Items of Business for the Agenda

116

for the first Meeting of the Board of Directors

Annexure IV Il ustrative Agenda of a Meeting other than the first

117

Meeting of the Board of Directors

Annexure V Drafting of Agenda, Notes on Agenda and related

125

Matters – Practical Aspects

Annexure VI Resolution by Circulation

127

Annexure VI Specimen Minutes of the first Board Meeting

128

Annexure VII Specimen Minutes of a subsequent Board Meeting

137

Annexure IX Key functions and responsibilities of the Board of

142

Directors of Equity listed company

Annexure X Corporate governance requirements with respect to

145

subsidiary of Equity listed company

GLOSSARY

146

(xi )

GUIDANCE NOTE

ON

MEETINGS OF THE BOARD OF DIRECTORS

The “Secretarial Standard on Meetings of the Board of Directors” (SS-1), formulated

by the Secretarial Standards Board of the Institute of Company Secretaries of India

(ICSI) and issued by the Council of the ICSI, has been approved by the Central

Government. Adherence to SS-1 is mandatory in terms of sub-section (10) of

Section 118 of the Companies Act, 2013 (Act). The first version of SS-1 was applicable

to Meetings of the Board of Directors and its Committees, in respect of which

Notices were issued between 1st July, 2015 to 30th September, 2017.

The revised version of SS-1 applies to Meetings of the Board of Directors and its

Committees, in respect of which Notices are issued on or after 1st October, 2017.

SS-1 prescribes a set of principles for convening and conducting Meetings of the

Board of Directors and matters related thereto.

This Guidance Note sets out the explanations, procedures and practical aspects

in respect of the provisions contained in revised SS-1 (effective from 1st October,

2017) to facilitate compliance thereof by the stakeholders.

BACKGROUND

The Act empowers the Board to exercise all such powers, and to do al such acts

and things, as the company is authorised to exercise and do, except those powers

which can only be exercised or done by the company in a General Meeting. The

powers of the Board are however, subject to the provisions contained in that

behalf in the Act, other statutes, as wel as the Memorandum and Articles of

Association of the company or any regulations not inconsistent therewith and

duly made thereunder, including regulations made by the company in General

Meeting (Section 179 of the Act).

1

2

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Al the powers vested in Directors are exercisable by them col ectively, acting

together, unless such powers have been delegated to one or more Directors by

the Board. The Board may also delegate any of the powers exercisable by it to a

Committee of Directors. The Articles of Association of the company or members

of the company in a General Meeting may also authorise any of the Directors or

a Committee of Directors to exercise such powers as may be authorised by

means of a Resolution passed at a General Meeting.

Powers to be exercised at Board Meetings

The Board of Directors of a company shall exercise certain powers on behalf of

the company only by means of Resolutions passed at a Meeting of the Board and

not by a Resolution passed by circulation. A list of powers of the Board to be

exercised at the Board Meeting is given in Annexure IA.

Powers to be exercised by unanimous consent

Certain powers of the Board shal be exercised by Resolutions passed at Meetings,

with the consent of al the Directors present at the Meeting. A list of powers of the

Board to be exercised by Unanimous Consent is given in Annexure IC.

Powers to be exercised subject to passing of Special Resolution

Certain powers of the Board are exercisable by the Directors only with the consent

of the company by way of a Special Resolution passed in a General Meeting or

through Postal Bal ot. A list of powers to be exercised subject to passing of Special

Resolution is given in Annexure ID.

Powers to be exercised subject to other approvals

There are several powers in the realm of day-to-day management of the company

which the Board should exercise subject to the approval at the General Meeting

or by the Central Government or by the National Company Law Tribunal (NCLT) or

subject to the requirements of other Statutory Authorities and/or Regulators. An

il ustrative list of such powers is given in Annexure IE.

Delegation of Powers

The Board may, by a Resolution passed at a Meeting, delegate certain powers to

any Committee of Directors, the Managing Director, the Manager or any other

principal officer of the company or in the case of a branch office of the company,

the principal officer of the branch office, on such conditions as it may specify. [First

Proviso to sub-section (3) of Section 179 of the Act]

A list of such powers is given in Annexure IF.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

3

Subject to the provisions of the Articles of the company, the Board may delegate

any of its powers to Committees with or without such restrictions and limits as

may be imposed. For example, a company may incorporate a Regulation in its

Articles which reads as fol ows:

“(1) The Board may, subject to the provisions of the Act, delegate any of its

powers to Committees consisting of such member or members of its

body as it thinks fit.

(2) Any Committee so formed should, in the exercise of the powers so

delegated, conform to any regulations that may be imposed on it by

the Board”.

However, the Committee cannot further delegate any of its powers to a sub-

committee or to a member of the Committee, unless authorised to do so.

In addition, powers may also be delegated by the Board to one or more Director(s)

or to employees of the company or to others not in the employment of the

company (such as employees of the holding or subsidiary or group/associate

companies, etc.).

The authority to delegate any power to a Committee or any other person shal not

be in contravention of any of the provisions of the Act and of the Memorandum or

Articles of Association of the company or the requirements of any regulatory

body. The scope of the authority given may be limited by the Board and conditions

may also be attached thereto.

INTRODUCTION

The fundamental principles with respect to Board Meetings are laid down in the

Act. SS-1 facilitates compliance with these principles by endeavouring to provide

further clarity where there is ambiguity and establishing benchmark standards to

harmonise prevalent diverse practices. For the benefit of companies, SS-1 provides

necessary flexibility in many cases viz. with respect to calling Meeting at shorter

Notice, transacting any other business not contained in the agenda and passing

of Resolutions by circulation. Complying with SS-1 ensures a reliable Board process

which protects the interests of the company and its stakeholders. Incidental y, it

has been observed that the quantum and propensity for litigations or risk thereof

is directly proportional to the degree of non-adherence to proper procedures and

the non-availability of proper records, especially in the case of small and private

companies. The objective of SS-1 is to address such issues.

SS-1 requires Company Secretary(ies) to oversee the vital process of recording

4

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

and facilitating implementation of the decisions of the Board. Where there is no

Company Secretary in the company or in the absence of the Company Secretary,

any Director or other Key Managerial Personnel (KMP) or any other person

authorised by the Board for this purpose may discharge such of the functions of

the Company Secretary as given in SS-1.

SS-1 does not seek to substitute or supplant any existing laws. It strives to

supplement such laws for promoting better corporate governance.

Therefore, in addition to SS-1, the requirements laid down under any other

applicable laws, rules and regulations need to be complied with. However, in

case of variations in any provision of the applicable laws and SS-1, the stricter

provisions need to be complied with.

APPLICABILTY OF SS-1

In terms of sub-section (10) of Section 118 of the Act, every company is required to

observe SS-1.

SS-1 is thus applicable to the Meetings of the Board of al companies incorporated

under the Act, including private and small companies, except One Person

Companies (OPC) having only one Director on its Board and such other class or

classes of companies which are exempted by the Central Government through

Notification.

MCA Notification No. G.S.R. 466(E) dated 5th June, 2015 exempts companies

licensed under Section 8 of the Companies Act, 2013 from the applicability of

Section 118 of the Act, as a whole except that Minutes of Meetings of such a

company may be recorded within thirty days of the conclusion of every Meeting

where the Articles of Association provide for confirmation of Minutes by circulation.

As such, SS-1 is not applicable to companies licensed under Section 8 of the

Companies Act, 2013 or corresponding provisions of any previous enactment

thereof. Such companies may voluntarily comply with SS-1.

However, Section 8 companies need to comply with the applicable provisions of

the Act relating to Board Meetings.

Further, MCA vide its Notifications No. G.S.R. 584(E) dated 13th June, 2017 modified

the above cited Notification dated 5th June, 2015 to place a restriction that such

exemptions shal be applicable to a Section 8 company which have not committed

a default in filing its Financial Statements or Annual Return with the Registrar of

Companies.

In addition, by virtue of MCA Exemption Notifications No. G.S.R. 08(E) & G.S.R. 9(E),

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

5

dated 4th January, 2017, fol owing class of companies are exempted from the

applicability of Section 118(10) of Companies Act, 2013 i.e. the compliance of

Secretarial Standards:

• Specified IFSC public company: An unlisted public company which is

licensed to operate by the Reserve Bank of India or the Securities and

Exchange Board of India or the Insurance Regulatory and Development

Authority of India from the International Financial Services Centre located

in an approved multi services Special Economic Zone set-up under the

Special Economic Zones Act, 2005 read with the Special Economic

Zones Rules, 2006.

• Specified IFSC private company: A private company which is licensed

to operate by the Reserve Bank of India or the Securities and Exchange

Board of India or the Insurance Regulatory and Development Authority

of India from the International Financial Services Centre located in an

approved multi services Special Economic Zone set-up under the Special

Economic Zones Act, 2005 read with the Special Economic Zones Rules,

2006.

Applicability to companies governed under Special Acts

SS-1 is also applicable to Banking Companies, Insurance Companies, Companies

engaged in generation or supply of electricity, and Companies governed by any

Special Acts, if incorporated under the Act. However, if the provisions of these

Special Acts such as the Banking Regulation Act, 1949, the Insurance Act, 1938,

etc. applicable to these companies are inconsistent with SS-1, then the provisions

of such Special Acts shal prevail.

Applicability to Meetings of the Committees

SS-1 is also applicable to the Meetings of Committee(s) of the Board constituted in

compliance with the requirements of the Act. At present, the Act provides for the

constitution of fol owing committees of the Board:

• Audit Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility (CSR) Committee

• Stakeholders Relationship Committee

In case any other committee of the Board is constituted voluntarily or pursuant to

any other statute or regulations etc., the company may comply with SS-1 with

respect to meetings of such committee(s) as a good governance practice.

6

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Applicability of provisions relating to Independent Directors

Al the provisions in SS-1 relating to Independent Directors are required to be

complied with by companies which are not statutorily required to appoint

“Independent Directors” but have done so voluntarily.

Effect of subsequent changes in the Act

SS-1 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 shal prevail from the date of change or such

date as the change to the Act specifies in this respect. Moreover if any stipulation

contained in SS-1 is derived from any provision of law or rule and if such provision

is declared inapplicable to any class of companies, such stipulation shall not

apply to such class of companies.

The Ministry of Corporate Affairs (MCA), Government of India, in exercise of its

powers conferred by clauses (a) and (b) of sub-section (1) of Section 462 and in

pursuance of sub-section (2) of the said Section of the Act has issued Notification

Nos. G.S.R. 463(E), G.S.R. 464(E), G.S.R. 465(E), G.S.R. 466(E) dated 5th June, 2015

[hereinafter referred to as MCA Notification(s)] directed that certain provisions of

the Act shal not apply or shall apply with such exceptions, modifications and

adaptations as specified in the MCA Notification(s) to Government companies,

Private companies, Nidhis and companies incorporated under Section 8 of the

Companies Act, 2013 (corresponding to Section 25 of the Companies Act, 1956),

respectively.

Further, MCA vide its Notification(s) dated 13th June, 2017 modified the above cited

Notification(s) dated 5th June, 2015 issued in respect of Government Companies,

Private Companies, and Section 8 Companies to place a restriction that such

exemptions shall be applicable to those companies which have not committed a

default in filing its Financial Statements or Annual Return with the Registrar of

Companies.

As stated earlier, by virtue of MCA Exemption Notifications No. G.S.R. 08(E) &

G.S.R. 9(E), dated 4th January, 2017, Specified IFSC public company and Specified

IFSC private company are also exempted from the applicability of Section 118(10)

of Companies Act, 2013 i.e. the compliance of Secretarial Standards.

Accordingly, if due to the MCA Notification(s) referred to hereinabove or

Notifications that may be issued in future, the provisions of SS-1 or any part

thereof become inconsistent with any of the provisions of the Act, such provisions

of the Act read with the MCA Notification(s) shal prevail.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

7

SCOPE OF THE GUIDANCE NOTE

This Guidance Note should be read in the context of SS-1.

This Guidance Note elucidates, wherever necessary, the basis for setting a

particular Standard, explains the procedural and practical aspects and gives

il ustrations. It also appropriately integrates the replies to various queries raised

by the stakeholders on the particular Standard after the issuance of SS-1.

In this Guidance Note:

– Paragraph numbers (including sub-paragraph numbers and their further

sub-divisions) refer to the corresponding paragraphs of SS-1

– Extracts from SS-1 have been set in Bold and Normal font as appearing

in SS-1 respectively

– The Guidance text and analysis is set in italics.

Annexures, as appearing in SS-1, are bifurcated, renamed and/or renumbered in

this Guidance Note to integrate it with other Annexures herein and for better

coherence.

This Guidance Note is prepared on the basis of the relevant provisions of the Act

as amended up to 31st August, 2017 and the rules, circulars, clarifications etc.

issued by the MCA until 31st August, 2017.

In this Guidance Note, the applicable provision of SEBI (Listing Obligations

and Disclosure Requirements) Regulations, 2015 are given in special (three

layers) boxes at the respective places. These do not form part of the

Secretarial Standard and included herein for the purpose of Guidance only.

DEFINITIONS

The fol owing terms are used in this Guidance Note with the meaning specified:

“Act” means the Companies Act, 2013 (Act No. 18 of 2013) or any previous

enactment thereof, or any statutory modification thereto or re-enactment thereof

and includes any Rules and Regulations framed thereunder.

“Articles” means the Articles of Association of a company, as original y framed or

as altered from time to time or applied in pursuance of any previous company

law or the Companies Act, 2013.

“Calendar Year” means calendar year as per the Gregorian calendar i.e. a period

of one year which begins on 1st January and ends on 31st December.

8

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

“Chairman” means the Chairman of the Board or its Committee, as the case may

be, or the Chairman appointed or elected for a Meeting.

“Committee” means a Committee of Directors mandatorily required to be

constituted by the Board under the Act.

“Electronic Mode” in relation to Meetings refers to Meetings through video

conferencing or other audio-visual means. “Video conferencing or other audio-

visual means” means audio-visual electronic communication facility employed

which enables al the persons participating in a Meeting to communicate

concurrently with each other without an intermediary and to participate effectively

in the Meeting.

“Invitee” means a person, other than a Director and Company Secretary, who

attends a particular Meeting by invitation.

“Maintenance” means keeping of registers and records either in physical or

electronic form, as may be permitted under any law for the time being in force,

and includes the making of appropriate entries therein, the authentication of

such entries and the preservation of such physical or electronic records.

“Meeting” means a duly convened, held and conducted Meeting of the Board or

any Committee thereof.

“Minutes” means a formal written record, in physical or electronic form, of the

proceedings of a Meeting.

“Minutes Book” means a Book maintained in physical or in electronic form for the

purpose of recording of Minutes.

“National Holiday” means Republic Day i.e. 26th January, Independence Day i.e.

15th August, Gandhi Jayanti i.e. 2nd October and such other day as may be declared

as National Holiday by the Central Government.

“Original Director” means a Director in whose place the Board has appointed any

other individual as an Alternate Director.

“Quorum” means the minimum number of Directors whose presence is necessary

for holding of a Meeting.

“Secretarial Auditor” means a Company Secretary in Practice or a firm of Company

Secretary(ies) in Practice appointed in pursuance of the Act to conduct the

secretarial audit of the company.

“Secured Computer System” means computer hardware, software, and procedure

that –

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

9

(a) are reasonably secure from unauthorized access and misuse;

(b) provide a reasonable level of reliability and correct operation;

(c) are reasonably suited to performing the intended functions; and

(d) adhere to generally accepted security procedures.

“Timestamp” means the current time of an event that is recorded by a Secured

Computer System and is used to describe a time that is printed to a file or other

location to help keep track of when data is added, removed, sent or received.

“Equity Listed Company” means a company which has any of its specified

securities i.e. equity shares and convertible securities listed on any

recognised stock exchange.

“Listing Regulations” means the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015, including any amendment thereto or

modification thereof.

Words and expressions used and not defined herein shal have the same meaning

respectively assigned to them under the Act and / or the Listing Regulations, as

may be applicable.

References herein to Sections, Regulations and Listing Regulations relate

respectively to Sections of the Act, Regulations of Table F of Schedule I to the Act

and Listing Regulations, unless stated otherwise.

Words importing the singular include the plural and words importing any gender

include every gender.

Meanings of some of the terms used in this Guidance Note are placed at the end

of this Guidance Note under the heading “Glossary”.

GUIDANCE ON THE PROVISIONS OF SS-1

1. Convening a Meeting

1.1 Authority

1.1.1 Any Director of a company may, at any time, summon a

Meeting of the Board, and the Company Secretary or where

there is no Company Secretary, any person authorised by

the Board in this behalf, on the requisition of a Director, shal

10

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

convene a Meeting of the Board, in consultation with the

Chairman or in his absence, the Managing Director or in his

absence, the Whole-time Director, where there is any, unless

otherwise provided in the Articles.

Any Director, including an Independent Director, of the company may, at any time,

summon a Meeting of the Board unless otherwise provided in the Articles. The

Model Articles under the Act states that a Director may, and the Manager or

Secretary on the requisition of a Director shall, at any time, summon a Meeting of

the Board [Regulation 67(i ) of Table F of Schedule I to the Act].

A Meeting cal ed by a person who is duly authorised to do so as per this paragraph

of SS-1 read with the Articles of Association of the company shall be deemed to

be valid.

As a best practice and a measure of good governance, the Director desirous of

summoning a Meeting for any purpose should send his requisition in writing to

convene such Meeting, along with the agenda proposed by him for discussion at

the Meeting, either to -

• the Chairman or in his absence, to the Managing Director or in his

absence, to the Whole-time Director, or

• the Company Secretary or in his absence, to any other person

authorised by the Board in this regard.

“any person authorised by the Board”, whether an officer of the company or any

person other than the officer of the company, should be clearly identifiable.

Once a requisition to convene a Meeting is received by the Chairman or in his

absence, by the Managing Director or in his absence, by the Whole-time Director,

the Chairman/Managing Director/Whole-time Director, as the case may be, may

either proceed to convene the Meeting himself or direct the Company Secretary

or in his absence, any other person authorised by the Board. The Company

Secretary or in his absence, any other person authorised by the Board, should

then proceed to convene the Meeting.

Once a requisition to convene a Meeting is received by the Company Secretary

or in his absence, by any other person authorised by the Board in this behalf, he

should forthwith place such requisition for the consideration of the Chairman or

in his absence, the Managing Director or in his absence, the Whole-time Director,

where there is one. Upon receipt of approval from the Chairman or the Managing

Director or the Whole-time Director, as the case may be, the Company Secretary

or any other person authorised by the Board in this behalf, should convene the

Meeting.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

11

Where the requisition to convene a Meeting is received by the Company Secretary

or in his absence by any other person authorised by the Board in this behalf, from

the Chairman himself or in his absence, from the Managing Director himself or in

his absence, from the Whole-time Director himself, as the case may be, the

Company Secretary or any other person authorised by the Board, should directly

proceed to convene the Meeting.

Where the company has neither a Chairman nor a Managing Director nor a

Whole-time Director, the Company Secretary or the person authorised by the

Board in this behalf, should directly proceed to convene the Meeting as

requisitioned by the Director.

Implications of the words “Unless otherwise provided in the Articles”

The words “unless otherwise provided in the Articles” appearing in paragraph

1.1.1 of SS-1 suggest that a company may have in its Articles, a provision that is

stricter than what is stated in this paragraph of SS-1. In such cases, that provision

in the Articles should be complied with.

For instance, if the Articles of a company state that only the Chairman is authorised

to convene a Meeting or to give instructions to the Manager or the Company

Secretary to do so, the Articles should be complied with.

Oral Requisition from a Director for convening a Meeting

In case an oral requisition is received from a Director for convening a Meeting

and a written requisition does not fol ow, such requisition should be put in writing

forthwith by the Company Secretary or the person authorised by the Board in this

behalf, and placed before the Chairman/Managing Director/Whole-time Director,

as the case may be, with a copy to the Director concerned who has requisitioned

such Meeting.

Course of action upon refusal by the Chairman/Managing Director/Whole-

time Director to convene the Meeting as requisitioned

Upon consultation by the Company Secretary or the person authorised by the

Board in this behalf, if the Chairman/Managing Director/Whole-time Director, as

the case may be, refuses to convene the Meeting as requisitioned, the Company

Secretary or the person authorised by the Board in this behalf, should act in

accordance with the provisions of the Articles in this regard.

In case the Articles are silent, the Company Secretary or the person authorised by

the Board in this behalf cannot convene a Meeting requisitioned by the Director

and he should communicate the same to the Director concerned.

In any case, the Director may, on his own, convene a Meeting.

12

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Authority of the Company Secretary to summon a Meeting

The Company Secretary cannot summon a Meeting on his own, unless authorised

by the Board of Directors or the Articles to do so.

In case any Meeting is required to be held under the Act or any other Statute and

the Chairman or any of the Directors do not proceed to summon such Meeting,

the Company Secretary should write to the Chairman and the Directors about

such statutory requirement, bringing to their notice the need to summon such

Meeting and requesting them to comply with the same. Such situations may

arise where the gap between two Board Meetings is likely to exceed one hundred

twenty days or where the Board fails to or refuses to summon the minimum

number of Board Meetings required to be held in a Calendar Year, as the case

may be.

Manner of conducting requisitioned Meeting

Where any Meeting of the Board is cal ed and held on the basis of a requisition by

a Director, the provisions of the Act and SS-1 relating to Notice, Agenda, Notes on

Agenda, length of Notice and manner of service of Notice and all other applicable

provisions have to be complied with.

While calling a Meeting, the Director concerned should, as far as possible, hold

the Meeting at the same place, if any, where Meetings of the Board are usually

held. It would be advisable that the Director who proceeds to convene a Meeting

on his own sends the Notice also to the Company Secretary, since it is the duty of

the Company Secretary to attend the Meeting.

It would be prudent for the Director(s) summoning / requisitioning the Meeting to

attend such Meeting.

Where a Director proceeds to issue a Notice to call a Meeting for the same issues

on the same date when a Meeting has already been called, there is no reason

why the said Director should not attend the original Meeting, and proceed to

convene a paral el Meeting at a different place. Such a step by the said Director

cannot be justified, and the Board Meeting convened by the said Director is

il egal; and hence, declared to be nul and void [Sanjiv Kothari vs. Vasant Kumar

Chordia (2005) 66 CLA 45 (CLB)].

When a Notice of a Meeting has already been issued, if a Director wishes to bring

up any particular item for discussion, he may, instead of issuing a Notice for a

parallel Meeting on the same day, inform the Company Secretary or the person

authorised by the Board in this behalf, and/or the Chairman/Managing Director/

Whole Time Director, as the case may be, to consider including the said item in

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

13

the Agenda for the Meeting. In such a case, where the Agenda for the Meeting

has already been circulated, provisions relating to taking up of items not included

in the Agenda in terms of paragraph 1.3.10 of SS-1 shall apply.

1.1.2 The Chairman may, unless dissented to or objected by the

majority of Directors present at a Meeting at which a Quorum

is present, adjourn the Meeting for any reason, at any stage

of the Meeting.

This paragraph of SS-1 deals with adjournment of a Meeting otherwise than for

want of Quorum. As per Major Law Lexicon, 4th Edition 2010, adjournment means

“a putting off until another time or transferring to a different place”.

Adjournment of a Meeting otherwise than for want of Quorum may be necessitated

for paucity of time to complete the Agenda or for any other reason viz. curfew,

earthquakes etc.

The Act does not contain any provisions as to who has the power to adjourn a

Meeting, otherwise than for want of Quorum. The Model Articles merely provide

that the Board of Directors may adjourn its Meetings, as it thinks fit [Regulation

67(i) of Table F of Schedule I to the Act].

Hence paragraph 1.1.2 of SS-1 clarifies that a Meeting which has been validly

summoned or convened, and where the requisite Quorum is present, may stil

be adjourned by the Chairman for any reason, unless a majority of the Directors

present at the Meeting dissent or object to such adjournment.

For reckoning such majority, the majority of Directors present at the Meeting

should be considered and not the majority of Directors of the Board.

1.2 Day, Time, Place, Mode and Serial Number of Meeting

1.2.1 Every Meeting shal have a serial number.

Every Meeting of the Board should be serially numbered for ease of reference.

While numbering serially, the company may choose to fol ow its existing system

of numbering, if any, or any new system of numbering, which should be distinct

and enable ease of reference and/ or cross reference.

Il ustrations

(i) Serial y numbering on Calendar Year basis as fol ows: “1/2015”,

“2/2015”, “3/2015” and so on…. In the next year, numbering would be

“1/2016”, “2/2016”, “3/2016” and so on.

14

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

(i ) Serially numbering on financial year basis as fol ows: “1/2015-16”,

“2/2015-16”, “3/2015-16” and so on….or 1/15-16, 2/15-16, 3/15-16 and

so on......

(i i) Continuous serial y numbering across years: 120th Meeting, 121st

Meeting, 122nd Meeting and so on ……

Here, a company may choose to either count and give continuous numbering

from its incorporation or give continuous numbering from Meetings held on or

after 1st July, 2015, this being the date from which SS-1 became effective.

In any case, the company should fol ow a uniform and consistent system.

It is advisable that the Board be informed about the system of numbering of the

Meeting and/or any change in the system of numbering; and the same be

recorded in the Minutes.

Serial number of Adjourned Meetings

Serial number of the original Meeting and the adjourned Meeting should be the

same. For eg: In case the serial number of the original Meeting is 12th Meeting,

the serial number of the adjourned Meeting should be 12th Meeting (Adjourned).

1.2.2 A Meeting may be convened at any time and place, on any day.

Aspects to be considered while fixing the day / date

A Meeting may be convened on any day as per the Gregorian calendar, including

on a public holiday, unless the Articles provide otherwise.

Sub–section (4) of Section 174 of the Act prohibits holding of Board Meetings

adjourned for want of Quorum on National Holidays. However, law is not

specifically prohibiting the original meeting to be held on a National Holiday.

Being a matter of good practice and as far as possible, the companies should

avoid holding of Board Meeting on a National Holiday, as the presence of the

employees of the company would be needed for smooth conduct of any such

Meeting.

Unless the Articles of the company provide otherwise, a Meeting adjourned for

want of Quorum should be held on the same day at the same time and same

place in the next week. If that day happens to be a National Holiday, then such

adjourned Meeting should be held on the next succeeding day which is not a

National Holiday at the same time and place, unless the Articles of the company

provide otherwise.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

15

The term “National Holiday” for this purpose refers to the National Holidays of

India.

Il ustration

A Meeting is convened on 8th August at 4:00 p.m. at the Registered Office of

the company. On that day, the required Quorum is not present. In the absence

of any provisions to the contrary in the Articles, the Meeting is automatically

adjourned to the same day in the next week, i.e. 15th August, at the same time

and place. However, since 15th August is a National Holiday, the adjourned

Meeting should be held on 16th August.

The Articles may provide for a stricter requirement than what is contained in the

law.

Aspects to be considered while fixing Times

A Meeting may be held at any time. However, this should be practical y construed

to mean a convenient time. As detailed deliberations are expected to take place

in Board Meetings, it is desirable to have Meetings during working hours, though

the Meeting may continue beyond working hours.

In case the Articles provide for a specific time at or during which the Meetings

should be held, the Meetings should be held only at or during that time.

Aspects to be considered while fixing the Venue

A Meeting may be held at the Registered Office of the company or at any other

place, including a remote place. A Meeting may be held in India or abroad.

In case the Articles provide for a specific place/city in which the Meetings should

be held, the Meetings should be held only at that place/city. If a Meeting of the

Board is held elsewhere, contrary to such clause in the Articles, none of the

decisions taken by the Board at such Meeting can be put into operation in any

manner. The same are liable to be set aside, because the decisions cannot be

validated by any belated amendment of the Minutes of the Board Meeting at

which the decision to hold the Board Meeting elsewhere may be purported to

have been taken [Aidqua Holdings (Mauritius) Inc. v. Tamil Nadu Water Investment

Co. Ltd. and Others (2008) 83 CLA 352 (CLB)].

Notice of the Meeting shal clearly mention a venue, whether registered office or

otherwise, to be the venue of the Meeting and al the recordings of the proceedings

of the Meeting, if conducted through Electronic Mode, shal be deemed to be

made at such place.

16

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

With respect to every Meeting conducted through Electronic Mode, the scheduled

venue of the Meeting as set forth in the Notice convening the Meeting, should be

deemed to be the venue of the said Meeting and al recordings of the proceedings

at the Meeting should be deemed to be made at such place [Rule 3(6) of the

Companies (Meetings of Board and its Powers) Rules, 2014].

Thus, the venue of the Meeting mentioned in the Notice shall be deemed to be

the place where recording of proceedings take place and therefore the Notice of

a Meeting should necessarily mention a place of the Meeting.

The place of the said Meeting should be chosen by the company keeping in mind

the availability of infrastructure at such place for recording of the proceedings,

the security and identification procedures and other requirements of law in this

regard which enable participation through Electronic Mode and safeguard the

integrity of the Meeting.

Meetings of the Committee and the Board on the same day

There are no restrictions on Meetings of Committees and of the Board being held

on the same day, provided reasonable time gap is kept between the two Meetings.

Coincidental physical presence of Directors

A mere coincidental physical presence of all Directors at one place cannot

constitute a Meeting.

1.2.3 Any Director may participate through Electronic Mode in a

Meeting unless the Act or any other law specifical y prohibits

such participation through Electronic Mode in respect of any

item of business.

The above mentioned requirement is in line with sub–section (2) of Section 173 of

the Act, which is an enabling provision recognising the presence of Directors

participating through Electronic Mode. This is an option available to the Director

to attend the Meeting through Electronic Mode.

A Director may attend all the Board Meetings through Electronic Mode, subject to

such limitations as the Act or any other law may specify, and further subject to the

restriction on participation in restricted items, as elaborated below.

Participation of a Director in a Meeting via telephone or tele-conferencing or any

other Mode which does not conform to the requirements of the relevant provisions

of the Act cannot be considered as participation of a Director through Electronic

Mode.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

17

If due to any technical issue emerged during the Meeting held through Electronic

Mode, a director chooses to participate through telephone or tele-conferencing

for remaining Meeting, then such participation cannot be considered as

participation of a Director through Electronic Mode.

Communication by a Director of his intention to participate through Electronic

Mode

A Director intending to participate through Electronic Mode should communicate

his intention to the Chairman or the Company Secretary of the company. He

should give prior intimation to that effect sufficiently in advance so that the

company is able to make suitable arrangements in this behalf [Rule 3(3)(d) of the

Companies (Meetings of Board and its Powers) Rules, 2014].

After giving the aforesaid intimation, if the Director decides to participate by

being present physical y at a particular Meeting, he may so participate after

communicating the same to the Company.

Participation by al Directors through Electronic Mode

Al the Directors may participate in a Meeting through Electronic Mode. In such a

case, at least one person, who may either be the Chairman or the Company

Secretary or in the absence of the Company Secretary, any other person duly

authorised in this behalf by the Chairman, should be physically present at the

scheduled venue of the Meeting given in the Notice to enable proper recording,

to safeguard the integrity of the Meeting and to fulfil other requirements of law in

this regard.

Meetings through Electronic Mode

There is no restriction on a company to hold all its Meetings through Electronic

Mode provided the company ensures presence of physical Quorum during

consideration of any of the restricted items of business and comply with the

applicable legal provisions.

A Director cannot participate in a Board Meeting through Electronic Mode from

his end, since it is necessary for the company to take due and reasonable care to

safeguard the integrity of the Meeting held through Electronic Mode by ensuring

sufficient security and identification procedures.

Participation of persons other than Directors through Electronic Mode

There is no prohibition on participation of the Company Secretary or the Auditors

or the Invitees through Electronic Mode.

18

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Directors shal not participate through Electronic Mode in the discussion 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 shal 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.

Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 requires

that restricted items shall not be dealt with in a Meeting through Electronic Mode.

In other words, the requisite Quorum should be present physical y in such

Meeting.

By extending the ambit of above provisions, the Directors should restrict their

participation through Electronic Mode in the discussion on items relating to

consideration/approval of Quarterly Financial Statements.

Chairman participating through Electronic Mode in respect of restricted

items

In case the Chairman of the Meeting is participating through Electronic Mode, he

should, while transacting any restricted items of business, vacate the Chair and

entrust the conduct of the proceedings in respect of such items to any other Non-

interested Director attending the Meeting physically and should not participate in

the meeting in respect of such items.

Conduct of adjourned Meetings through Electronic Mode

Even if the original Meeting of the Board was conducted physical y, the adjourned

Meeting may be conducted through Electronic Mode as long as the provisions

relating to Meetings conducted through Electronic Mode are complied with.

Similarly, if the original Meeting of the Board was conducted through Electronic

Mode, the adjourned Meeting may be conducted physically.

1.3 Notice

1.3.1 Notice in writing of every Meeting shal be given to every

Director by hand or by speed post or by registered post or

by facsimile or by e-mail or by any other electronic means.

A Meeting of the Board should be cal ed by giving a Notice in writing to every

Director [Sub–section (3) of Section 173 read with Rule 3(3)(a) of the Companies

(Meetings of Board and its Powers) Rules, 2014].

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

19

Notice of the Meeting should be given to all the Directors.

Various means of sending Notice are recognised under SS-1 viz. by hand or by

speed post or by registered post or by facsimile or by e-mail or by any other

electronic means.

“Electronic mail” means the message sent, received or forwarded in digital form

using any electronic communication mechanism that the message so sent,

received or forwarded is storable and retrievable [Definition in Rule 2(1)(g) of

Companies (Specification of Definitions Details) Rules, 2014].

Notice sent through e-mail may be sent as a text or as an attachment to an email

or as a notification providing electronic link or Uniform Resource Locator (URL) for

accessing such Notice.

Notice cannot be given by ordinary post since proof of delivery or

acknowledgement is not available. Notice should also be given to Directors who

have gone abroad or who usual y reside abroad and who do not have an address

in India.

Address for sending Notice

The Notice shal 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.

Notice of the Meeting should be sent to the Directors at their address registered

with the company [Sub–section (3) of Section 173 of the Act read with Rule 3(3)(a)

of the Companies (Meetings of Board and its Powers) Rules, 2014].

If the Director has specifical y required the company to send Notices to a particular

postal address, facsimile number or e-mail ID, the Notices should be sent to that

address or number or email ID.

Aspects relating to means of issuing Notice

If the Articles prescribe the means by which Notice has to be given, it should be

given accordingly, in which case proof of sending Notice and its delivery should

be maintained.

Where a Director specifies a particular means of delivery of Notice, the Notice

shall be given to him by such means.

If the Director is residing outside India, Notice of Meetings may be sent to him by

facsimile or by e-mail or by any other electronic means. If the Director concerned

20

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

has instructed the Notice to be sent to him by speed post or registered post, the

same should be sent to him by such specified means as well.

However, in case of a Meeting conducted at a shorter Notice, the Company may

choose an expedient mode of sending Notice.

In case of a Meeting conducted at a shorter Notice, the expedient mode which

ensures delivery of Notice before the Meeting may be adopted by the company

irrespective of mode of delivery of Notice specified by a particular Director.

Proof of sending and delivery of the Notice

Proof of sending Notice and its delivery shal be maintained by the company for

such period as decided by the Board, which shall not be less than three years

from the date of the Meeting.

The Act requires the Directors to devise proper systems to ensure compliance

with the provisions of all applicable laws and confirm that such systems are

adequate and operating effectively [Clause (f) of sub-section (5) of Section 134 of

the Act]. Ensuring proper and robust Board systems becomes al the more

important in the light of the increased accountability of the Directors and Key

Managerial Personnel as laid down under sub–section (12) of Section 149 read

with sub–section (60) of Section 2 of the Act.

It is in this context that SS-1 mandates companies to have a system of maintaining

the proof of sending and delivery of the Notice for a Meeting. This would ensure

appropriate and timely delivery of Notice as well as aid in mitigating disputes

arising due to non-receipt of Notices.

In case any legal proceedings in connection with the Notice or proceedings /

subject-matter covered directly by the Notice are pending, this proof should be

maintained til complete disposal of the proceedings, including limitation period

for any appeals.

The proof may be maintained in electronic form.

If the Notice is sent by e-mail or any other electronic means, it should be sent

using a system where proof of sending and delivery can be received or retrieved.

If the Notice is sent by hand, the signature of the Director or the recipient of the

Notice at the address of its delivery should be obtained as an acknowledgement,

which should then be maintained as proof of delivery of Notice. Companies may

also maintain a record/register for this purpose where signature of the concerned

Director or the recipient could be obtained.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

21

Form of Notice

The Notice should preferably be sent on the letter-head of the company. Where it

is not sent on the letter-head or where it is sent by e-mail or any other electronic

means, there should be specified, whether as a header or footer, the name of the

company and complete address of its registered office together with al its

particulars such as Corporate Identity Number (CIN) as required under Section 12

of the Act, date of Notice, authority and name and designation of the person who

is issuing the Notice, and preferably the phone number of the Company Secretary

or any other designated officer of the company who could be contacted by the

Directors for any clarifications or arrangements.

A specimen Notice is given in Annexure II.

Consequences of Irregular Notice

Al the above stipulations with respect to issuing Notices of Meetings emphasise

that a Meeting should be called and held after issuing a proper Notice in the

manner prescribed by SS-1. Any material irregularity in the Notice may affect the

validity of the Meeting itself and the decisions taken thereat.

Where the Notice of a Meeting is not sent to all the Directors, Resolutions passed

at such a Meeting are not valid [Parmeshwari Prasad Gupta v. Union of India

1973 AIR 2389].

Additional persons to whom Notice should be given

As provided in the fifth explanation to paragraph 1.3.7 of SS-1, where an Alternate

Director has been appointed, Notice should also be given to the Original Director

at the same time when Notice is given to such Alternate Director.

Like other Directors on the Board, the Original Director should have knowledge of

the developments and decisions taken at the Meetings of the Board. Therefore,

Notice, Agenda and Notes on Agenda should also be sent to the Original Director

for his information.

1.3.2 Notice shal 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.

For any Meeting to be valid, it should be called by proper Notice given by a

person duly authorised to do so. Notice should be issued by the Company

Secretary.

22

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Where there is no Company Secretary or in the absence of the Company Secretary,

any Director authorised by the Board or any other person authorised by the Board

for the purpose should issue Notice.

Notice should be signed by the Company Secretary. If there is no Company

Secretary, the Notice should be signed by any Director or any other person who is

authorised by the Board to issue Notice.

1.3.3 The Notice shal specify the serial number, day, date, time

and ful address of the venue of the Meeting.

The Notice should specify the serial number given to the Meeting, as required

under paragraph 1.2.1 of SS-1.

Day and date specified in the Notice should be as per the Gregorian calendar.

The time specified in the Notice should be the time of commencement of the

Meeting.

Notice of Requisitioned Meeting

In the case of a requisitioned Meeting, it is advisable to mention in the Notice the

fact that the Meeting is being convened on the requisition of a Director.

1.3.4 The Notice shal inform the Directors about the option available

to them to participate through Electronic Mode and provide

them al the necessary information.

If a director intends to participate through Electronic Mode, he shal give sufficient

prior intimation to the Chairman or the Company Secretary to enable them to

make suitable arrangements in this behalf.

Time-period within which the Directors need to send confirmation/intimation to

participate through Electronic Mode may also be mentioned in the Notice.

Further, the Notice should clearly set out necessary information such as manner

of participation through Electronic Mode, link, details of software and hardware

infrastructure needed, etc.

The director may intimate his intention of participation through Electronic Mode at

the beginning of the calendar year also, which shal be valid for such calendar

year.

However, mere non-intimation of intention to participate through Electronic mode

in the beginning of the calendar year does not disqualify a director to avail such

facility during the year provided sufficient prior intimation was given to the

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

23

Chairman or the Company Secretary to enable them to make suitable

arrangements in this behalf.

The Director who desires to participate through Electronic Mode may intimate

his intention of such participation at the beginning of the Calendar Year and

such declaration shal be valid for one Calendar Year [Clause 3(e) read with

Clause 3(d) of Rule 3 of the Companies (Meetings of Board and its Powers)

Rules, 2014].

The Notice shal also contain the contact number or e-mail address(es) of the

Chairman or the Company Secretary or any other person authorised 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 wil attend the Meeting physically.

However, if the Director decides to participate by being present physically at a

particular Meeting after giving the aforesaid confirmation/intimation, he may so

participate after suitably communicating the same to the Chairman or the

Company Secretary or any other person authorised by the Board.

In case of Meetings of the Committee, the requirements pertaining to

participation of Directors through Electronic Mode are equal y applicable and

need to be complied with by the company.

1.3.5 The Notice of a Meeting shal be given even if Meetings are

held on pre-determined dates or at pre-determined intervals.

The Articles or Resolution or any agreement to which the company is a party may

provide that Meetings should be held on a particular day of the week or month or

at prescribed intervals, or the Directors may agree in advance on the dates for

Meetings.

In al the above cases, Notice, Agenda and the Notes thereon should be given

separately for each Meeting in accordance with SS-1.

1.3.6 Notice convening a Meeting shal be given at least seven days

before the date of the Meeting, unless the Articles prescribe

a longer period.

In line with sub–section (3) of Section 173 of the Act, the requirement is to send

seven days’ Notice and not seven clear days’ Notice. Thus, for the purpose of

computing the period of seven days, the date of the Meeting should be excluded

but the date of Notice need not be excluded.

24

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Il ustration

If the Meeting is proposed to be held on 14th November, the last date for giving

the Notice would be 7th November.

Adequate Notice should be given

Adequate Notice of the Meeting should be given so that Directors can plan their

schedule so as to attend and participate in the Meeting. Participation in Meetings

is central to the discharge of a Director’s responsibilities. Unless Directors attend

Meetings and participate in discussions with other members of the Board, they

are not likely to be ful y aware of the affairs of the company and may not be able

to exercise the care and diligence that is expected of them.

Additional two days for Notice sent by post

In case the company sends the Notice by speed post or by registered post, an

additional two days shal be added for the service of Notice.

Addition of two days in case the company sends the Notice by speed post or by

registered post is in line with Rule 35(6) of the Companies (Incorporation) Rules,

2014 which provides that in case of delivery of Notice of a Meeting by post, the

service shal be deemed to have been effected at the expiration of forty eight

hours after the letter containing the same is posted.

However, the requirement of adding two days is applicable only if the Notice is

sent to any of the Directors solely by speed post or by registered post and not by

facsimile or by e-mail or any other electronic means.

In case the Notice is sent by facsimile or by e-mail or by any other electronic

means to the Directors, and it is additionally sent by speed post or by registered

post to all or any of the Directors, whether pursuant to their request or otherwise,

the additional two days need not be added.

Il ustration

If the Meeting is proposed to be held on 14th November, the last date for giving

the Notice would be 7th November.

1. In case Notice is being sent by facsimile or by e-mail or by any other

electronic means to the Directors, Notice should be sent latest by

7th November.

2. In case Notice is being sent by speed post or by registered post to the

Directors, Notice should be sent latest by 5th November.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

25

3. In case any of the Director requests for Notice to be sent to him by

post and therefore, in addition to the Notice being sent by facsimile or

by e-mail or by any other electronic means, the Notice is being sent

to that particular Director or all Directors by post, Notice should be

sent latest by 7th November.

4. In case any of the Director does not have an e-mail id and therefore

the Notice is being sent to him solely by post, Notice should be sent

to al Directors latest by 5th November.

Notice period in the Articles

The company may prescribe a longer Notice period through its Articles, in which

case the Articles should be complied with.

However, the statutory Notice period of seven days cannot be reduced by the company

in its Articles. The only exception to this is situations where the Articles provide for

giving Notice at a shorter period of time in terms of paragraph 1.3.11 of SS-1.

Notice for adjourned Meeting

Notice of an adjourned Meeting shall be given to al Directors including those

who did not attend the Meeting on the original y convened date and unless the

date of adjourned Meeting is decided at the Meeting, Notice thereof shal also be

given not less than seven days before the Meeting.

Notice of a Meeting adjourned for want of Quorum or otherwise should be given

to al Directors. This includes Directors who did not attend the Meeting on the

originally convened date.

If the date of the Meeting adjourned otherwise than for want of Quorum is decided

at the Meeting itself, the Notice should be given forthwith. If the date of the

Meeting so adjourned is not decided at the Meeting, the Notice should be given

not less than seven days before such adjourned Meeting. Thus, in case the date

of the Meeting adjourned otherwise than for want of Quorum is not decided at the

Meeting, such adjourned Meeting should be held only after a minimum period of

seven days, thereby making it possible to comply with the above explanation to

this paragraph of SS-1.

This is also applicable to Meetings held through Electronic Mode.

Since no Notice of the original Meeting was sent, none of the adjourned Meetings

were valid, and the business transacted therein was, therefore, bad [In Re

Portuguese Consolidated Copper Mines Ltd. (1889) 42 Ch D 160].

26

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Equity listed company should give prior intimation to the stock exchange(s)

about the meeting of the board of directors in the fol owing manner

(Regulation 29 of Listing Regulations): –

(i) At least two working days in advance (excluding the date of the

intimation and date of the meeting) of a board meeting in which

any of the following proposals are due to be considered –

• proposal for buyback of securities;

• proposal for voluntary delisting from the stock exchange(s);

• declaration/ recommendation of dividend;

• fund raising by way of further public of er, rights issue, American

Depository Receipts/Global Depository Receipts/ Foreign

Currency Convertible Bonds, qualified institutions placement,

debt issue, preferential issue or any other method and for

determination of issue price.

• Company should give prior intimation to stock exchange(s)

about the proposed General Meetings to be held / postal bal ot

for obtaining shareholder approval for further fund raising

indicating the type of issuance. Such intimation may be given

immediately after Board’s approval for convening of General

Meeting.

• issue of convertible securities including convertible debentures

or of debentures carrying a right to subscribe to equity shares

or the passing over of dividend.

• the proposal for declaration of bonus securities where such

proposal is communicated to the board of directors as part of

the agenda papers.

provided that in case the declaration of bonus issue is not on the

agenda of the meeting of the Board of Directors, prior intimation as

mentioned above is not required.

However, for al other matters stated above, other than the proposal

for declaration of bonus shares, prior intimation as mentioned above

is mandatory.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

27

(i ) At least five days in advance (excluding the date of the intimation

and date of the meeting) of a board meeting in which following

proposal is due to be considered –

Financial results viz. quarterly, half yearly, or annual, as the case

may be (the intimation shal include the date of such meeting of

board of directors).

Company shal publish Notice of the Board Meeting, where financial

results are to be considered, in the newspaper and on the website

of the company simultaneously with the submission of the same to

the stock exchanges; such newspaper publication should inter alia

provide the link of the website of the company and stock exchange(s).

Such information should be published in at least one English

language national daily newspaper circulating in whole or

substantial y the whole of India and in one daily newspaper

published in the language of the region, where the registered office

of the equity listed company is situated. The companies which have

listed their specified securities on SME Exchange are not required to

publish such information in Newspapers.

(i i) At least eleven working days in advance (excluding the date of

the intimation and date of the meeting) of a board meeting in

which any of the following proposals are due to be considered –

• any alteration in the form or nature of any of its securities that

are listed on the stock exchange or in the rights or privileges

of the holders thereof.

• any alteration in the date on which, the interest on debentures

or bonds, or the redemption amount of redeemable shares or

of debentures or bonds, shall be payable.

In case of companies whose have listed its Non-convertible Debt

securities or Non-convertible preference shares or both, should give prior

intimation to the stock exchange(s) about the meeting of the board of

directors in the fol owing manner (Regulation 50 of Listing Regulations):

(i) prior intimation of at least eleven working days before the date on

and from which the interest on debentures and bonds and

redemption amount of redeemable shares or of debentures and

bonds shall be payable.

28

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

(i ) shal intimate the exchanges at least two working days in advance

excluding the date of the intimation and date of the meeting, at

which the recommendation or declaration of issue of non-

convertible debt securities or any other matter affecting the rights

or interests of holders of non-convertible debt securities or non-

convertible redeemable preference shares is proposed to be

considered.

1.3.7 The Agenda, setting out the business to be transacted at the

Meeting, and Notes on Agenda shal be given to the Directors

at least seven days before the date of the Meeting, unless

the Articles prescribe a longer period.

The list of items of business to be transacted at a Meeting is known as the

“Agenda”. The Agenda draws attention to the relevant matters where deliberation

is required. The Notes on Agenda explain each item of the Agenda in an endeavour

to provide an understanding of points for discussion by the Board. The Agenda

should be accompanied or fol owed by Notes thereon explaining the proposal in

brief, in easily understandable language and setting out the points for decision of

the Board.

If the Directors are to perform their duties effectively, actively contribute to the

deliberations of the Board, and take informed decisions, it is necessary that they

receive adequate information sufficiently in advance of the Meeting. Such advance

information through the Agenda enables them to comprehend the matters to be

dealt with, seek and obtain further information on those matters before the Meeting,

if needed, and give due attention thereto. This becomes all the more important in

the light of the increased accountability of the Directors laid down under sub-

section (12) of Section 149 read with sub-section (60) of Section 2 of the Act.

Sending Agenda and Notes thereon in advance would also help the Directors to

come to their decisions expeditiously. This would establish a robust decision

making process, irrespective of the nature and scale of operations of a company.

Keeping this in mind and also the requirement in the Secretarial Audit Report

(Form No. MR-3) prescribed under the Act, wherein the Secretarial Auditor is

required to report on whether the Agenda and the detailed Notes on Agenda

have been sent at least seven days in advance to all Directors, this paragraph of

SS-1 lays down that the Agenda setting out the business to be transacted at the

Meeting and the Notes thereon should be sent to all the Directors at least seven

days before the date of the Meeting.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

29

The Agenda can be sent alongwith the Notice. In case the Notice is sent before

the prescribed period and if circumstances do not permit the sending of the

Agenda alongwith the Notice, the Agenda should be sent at least seven days

before the Meeting.

Although there is no prohibition on sending the Agenda and Notes on Agenda

separately, these should be sent at least seven days prior to the Meeting, unless

exempted in SS-1.

Period in the Articles

The Articles of the company may prescribe a longer period for sending the Agenda

and Notes thereto, in which case the Articles should be complied with.

However, the period of seven days cannot be reduced by the company in its

Articles. The only exception to this is where the Articles provide for sending

Agenda and Notes thereon at a shorter period of time in terms of paragraph 1.3.11

of SS-1.

Means of sending Agenda and Notes on Agenda

Agenda and Notes on Agenda shall be sent to all Directors by hand or by speed

post or by registered post or by e-mail or by any other electronic means. These

shall be sent to the postal address or e-mail 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.

In case the company sends the Agenda and Notes on Agenda by speed post or

by registered post, an additional two days shall be added for the service of

Agenda and Notes on Agenda.

The requirement of adding two days is applicable only if the Agenda and Notes

on Agenda are sent to any of the Directors solely by speed post or by registered

post and not by e-mail or any other electronic means.

In case the Agenda and Notes on Agenda are sent by e-mail or any other electronic

means to the Directors and additional y, they are sent by speed post or by

registered post to any or all the Directors, pursuant to their request or otherwise,

additional two days need not be added.

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. However, in case

of a Meeting conducted at a shorter notice, the Company may choose an expedient

mode of sending Agenda and Notes on Agenda.

30

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

In case of a Meeting conducted at a shorter Notice, the expedient mode which

ensures delivery of Agenda and Notes on Agenda before the date of the Meeting

may be adopted by the company irrespective of mode of delivery specified by a

particular Director.

Proof of sending Agenda and Notes on Agenda and their delivery shall be

maintained by the company for such period as decided by the Board, which shall

not be less than three years from the date of the Meeting.

The Notice, Agenda and Notes on Agenda shal be sent to the Original Director

also at the address registered with the company, even if these have been sent to

the Alternate Director. However, the mode of sending Notice, Agenda and Notes

on Agenda to the original director shall be decided by the company.

For sending of Agenda and Notes on Agenda, the requirements laid down in

paragraph 1.3.1 of SS-1 for sending Notice of the Meeting shal be mutatis-

mutandis applicable.

Notes related to Unpublished Price Sensitive Information

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 shal include at least one Independent

Director, if any.

“Shorter period of time” in this case means any period of less than seven days

and also includes tabling at the Meeting.

Majority of Directors for this purpose means majority of the total strength of the

Board.

Exemption from seven days’ period has been given in respect of notes on items

of business which are in the nature of Unpublished Price Sensitive Information

(UPSI), subject to certain conditions as stated above.

Where the company has Independent Director(s) and, if none of the Independent

Directors consents to the giving of Notes on items of Agenda which are in the

nature of Unpublished Price Sensitive Information (UPSI) at a shorter Notice, the

said Notes should not be given at shorter Notice.

For this purpose,

“unpublished price sensitive information” means any information, relating to a

company or its securities, directly or indirectly, that is not generally available

which upon becoming general y available, is likely to materially affect the price

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

31

of the securities and shall, ordinarily including but not restricted to, information

relating to the fol owing: –

(i) financial results;

(i ) dividends;

(i i) change in capital structure;

(iv) mergers, de-mergers, acquisitions, delistings, disposals and expansion

of business and such other transactions;

(v) changes in key managerial personnel; and

(vi) material events in accordance with the listing agreement.*

The above exemption with respect to sending of Notes related to UPSI at a shorter

period of time is applicable to listed companies.

In case of other companies, Notes pertaining to any of the items listed above may

be circulated at a shorter period of time, subject to the compliance of paragraph

1.3.11 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.

Consent to circulate Agenda items which are in the nature of UPSI at a shorter

Notice from the new Directors appointed during a financial year may be obtained

on an individual basis.

If this consent or dissent, obtained from the new Directors affect the consent

taken earlier from majority of directors, fresh consent should be taken from the

Board.

Il ustration

Assume there are 9 Directors and 5 have given their general consent at the

beginning of the financial year to give Notes on items of Agenda which are in

the nature of UPSI at shorter Notice. If 1 new Director is appointed, consent

from the new Director to circulate Agenda items which are in the nature of

UPSI at a shorter Notice may be obtained individually.

*Definition under SEBI (Prohibition of Insider Trading) Regulations, 2015

32

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

If this Director gives his consent, no fresh consent from the Board would be

needed. In case, this Director dissents or does not give his consent, fresh

consent should be taken from the Board.

When appointment of an Additional Director is confirmed at an Annual General

Meeting, no change in the Directors of the company can be said to have taken

place in the context of this paragraph of SS-1.

Similarly, if an existing Director who has accorded consent to circulate Agenda

items which are in the nature of UPSI at a shorter Notice ceases to be a Director

during a financial year, fresh consent shall be needed from the Board, only if it

affects the consent taken earlier from majority of directors.

Il ustration

Assume there are 9 Directors and 5 have given their general consent at the

beginning of the financial year to give Notes on items of Agenda which are in

the nature of UPSI at shorter Notice. If, out of these 5 who consented, 2 resign,

it means that out of the remaining 7 Directors only 3 have given their consent.

In such case, fresh consent is required.

Where general consent as above has not been taken, the requisite consent shal

be taken before the concerned items are taken up for consideration at the Meeting.

The fact of consent having been taken shal be recorded in the Minutes.

Supplementary Notes may be circulated at or before the Meeting

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 shal

include at least one Independent Director, if any.

Supplementary Notes on any of the Agenda Items may be circulated at or

before the Meeting, without obtaining any consent. However, requisite consent

is required for taking up the said Supplementary Notes for discussion at the

Meeting.

Where the company has Independent Director(s) and the Independent Director(s)

is/are not present at the Meeting or where there is no Independent Director in the

company, such item may be taken up with the consent of the Chairman and the

majority of the Directors present at the Meeting. Subsequent ratification of the

decision on such item by the Independent Directors or majority of Directors of the

company would not be needed in this case.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

33

In any case, if Supplementary Notes are circulated seven days prior to the date

of the Meeting, such consent is not required unless the Articles provide

otherwise.

Order of discussing business at the Meeting

The Board should usually consider the items of the Agenda in the same order in

which they are listed on the Agenda.

If some Directors wish to change the order, the Chairman may so permit. However,

the Chairman should always exercise his discretion careful y, keeping in mind

that there may be a Director who is unable to be present for the entire duration of

the Meeting and may have arranged to attend the Meeting only for participating

in a particular item of business.

1.3.8 Each item of business requiring approval at the Meeting shal

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.

Notes to set out the detailed points for discussion

The Notes on Agenda should set out the details of the proposal and relevant

material facts that enable the Directors to understand the meaning, scope and

implications of the proposal. In addition to this, the Notes on Agenda should also

disclose the nature and extent of interest, if any, of any of the Directors of the

company in the respective items of business, based on disclosures made by the

Director earlier.

Draft Resolution

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. However, any other

decision taken at the Meeting may also be recorded in the Minutes in the form of

Resolution.

Detailed Notes on each item on the Agenda requiring approval at the Meeting,

accompanied by a draft Resolution, where necessary, would be a step towards

ensuring informed decisions / deliberations.

Resolutions drafted and circulated to Directors in advance, along with the Agenda

saves time at the Meeting, clarifies the subject matter, facilitates discussion,

simplifies preparation of Minutes of the Meeting and enables issuance of certified

34

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

copies of Resolution, wherever required, after the Meeting and before the Minutes

thereof are finalised.

Specimen Agenda and items of business

The items of business that are required by the Act or any other applicable law to

be considered at a Meeting of the Board shal be placed before the Board at its

Meeting.

An il ustrative list of such items is given in Annexure I. This list is bifurcated into: 1) Items which are required to be approved by the Board at its Meeting as prescribed

under the Act, and 2) Items of business to be placed before the Board at its

Meeting il ustrated in SS-1 in addition to those prescribed under the Act is given in

Annexure IA and IB respectively.

There are certain items which shal be placed before the Board at its first

Meeting.

“First Meeting” means the first Meeting of the Board held after the incorporation of

the company.

Specimen Agenda for the First Meeting of the Board and for subsequent Board

Meetings are given in Annexure I I and IV respectively.

Drafting an Agenda

The practical aspects of drafting an Agenda, Notes on Agenda and related aspects

are given in Annexure V.

An item for some business which may arise before the Meeting, may be included

while circulating the Agenda by adding the words “if any” after the said item. For

eg: To review the status of legal cases, if any; if there is no update on the legal

cases at all, a nil report may be given.

If during the course of a Board Meeting, any Agenda item containing a

proposal is deferred for consideration to a subsequent Meeting and there is

any change in the said proposal, the Notes on Agenda of the new proposal

should explain the modifications in the proposal since the Board was already

provided with the Agenda of the earlier Meeting and has been informed of

the earlier proposal.

It is a good practice to mark each document with the Agenda item number for

ease of reference.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

35

Disclosure of outcome of Board Meeting by Equity Listed Companies

Equity listed company should disclose to the Exchange(s), outcome of

Meetings of the board of directors within 30 minutes of the closure of the

meeting, held to consider the fol owing (Schedule I I Part A of Listing

Regulations):

(i) dividends and/or cash bonuses recommended or declared on per

share or the decision to pass any dividend and the date on which

dividend shall be paid/dispatched;

(i ) any cancel ation of dividend with reasons thereof;

(i i) the decision on buyback of securities;

(iv) the decision with respect to fund raising proposed to be undertaken.

The intimation to stock exchange(s) should also contain reference to the

annual general meeting or extraordinary general meeting or postal bal ot

that is proposed to be held for obtaining shareholder approval for further

fund raising indicating type of issuance.

(v) increase in capital by issue of bonus shares through capitalisation

including the date on which such bonus shares shall be credited/

dispatched;

(vi) reissue of forfeited shares or securities, or the issue of shares or

securities held in reserve for future issue or the creation in any form

or manner of new shares or securities or any other rights, privileges

or benefits to subscribe to;

(vi ) short particulars of any other alterations of capital, including calls;

(vi i) financial results;

(ix) decision on voluntary delisting from stock exchange(s).

Such disclosures shall also be uploaded on the website of the Equity listed

company and the same shall remain there for a minimum period of five

years and thereafter as per the archival policy of the company.

1.3.9 Each item of business to be taken up at the Meeting shal be

serial y numbered.

Numbering shall be in a manner which would enable ease of reference or cross-

reference.

36

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

This paragraph of SS-1 requires every item on the Agenda to be numbered.

Generally, as a matter of practice, a serial number is usually put against each

item of business. This practice has been formalised through SS-1. If a company

fol ows this practice, it would enable ease of reference. Suppose a Director wants

to disclose his interest or concern, it would be very easy for him to refer to the

serial number of the particular item of business. Similarly, if the Board wants to

defer discussion on any item of business, it would be convenient to record the

same by saying that the discussion on “Item No. ............................” has been

deferred.

In any case, the company should fol ow a uniform and consistent system.

Il ustrations

(i) Serial y numbering irrespective of the number of the Meeting:

Items to be discussed in any Meeting of the Board would be numbered

1, 2, 3, 4… and so on.

(i ) Serially numbering on the basis of the number of the Meeting as

fol ows: Items to be discussed in 12th Meeting of the Board would be

numbered as 12.1, 12.2, 12.3, 12.4, etc. Items to be discussed in the

13th Meeting would be numbered as 13.1, 13.2, 13.3 and so on.

(i i) Continuous numbering across years/Meetings: Suppose there are

8 items to be discussed in the first Meeting and 10 items in second

Meeting. In such a case, the items of 1st Meeting wil be numbered as

item number 1-8 and the items in the second Meeting would be

numbered 9-18 and so on…..

A company may choose to count and give continuous numbering

either from its incorporation or from Meetings held on or after 1st July,

2015, this being the date from which SS-1 became effective.

1.3.10 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.

The decision taken in respect of any other item shal be final only on its ratification

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.

The Act has no stipulation with respect to taking up for consideration at the

Meeting any item of business not included in the Agenda circulated earlier.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

37

Many a times, after the Agenda and Notes thereon have been dispatched, it may

be necessary for an item of business to be transacted at a Meeting. In such

cases, instead of convening another Meeting, the business could be taken up for

consideration at the Meeting which has already been convened. For this purpose,

the Chairman would need to permit the same and a majority of the Directors

present in the Meeting would also need to consent. Further, the decision taken in

respect of any other item shall be final only if such decision is ratified by the

majority of the directors of the company. However, such ratification by majority is

not required where the item was approved at the Meeting itself by a majority of

Directors of the company.

For the purpose of ratification by the required majority as stated above, the decision

taken should be circulated to al the directors who were not present at the Meeting

and such decision, if ratified by the majority of directors of the company, shal be

effective from the date of the Meeting. Alternatively, the said decision may be

circulated to al the Directors along with the draft Minutes of the Meeting,

specifically highlighting the requirement of ratification, if any.

Where any Director is required to ratify a decision taken at a Meeting on any item

of business not included in the Agenda and he abstains from ratifying or does not

respond, then the decision taken in respect of such item shal not be presumed to

be approved by such Director. Therefore, the required ratification by a Director in

such a case should be explicit.

If the decision taken at the Meeting in respect of any item not included in the

Agenda is not ratified by majority of the directors of the Company, the decision of

the Board in respect of such item fails. It is therefore advisable that the company

implements the decision taken at the Board Meeting in respect of such item only

after it is ratified by majority of directors of the Company.

Il ustration

Company XYZ Ltd. has 9 Directors out of which 6 Directors are present at the

Meeting. An item not included in the Agenda is proposed to be taken up at a

Meeting. Fol owing are the scenarios and their effect:

1. Consent for taking up such item is obtained from only 3 Directors

present in the Meeting.

Effect: Such item should not be taken up at the Meeting.

2. Consent for taking up such item is obtained from 4 Directors present

at the Meeting, who also approve the item at the Meeting.

38

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Effect: The decision taken in respect of such item would be final only

after ratification by majority of directors of the Company i.e. 5 directors.

3. Consent for taking up such item is obtained from 5 Directors present

at the Meeting, who also approve the item at the Meeting.

Effect: No ratification necessary. The decision taken would be carried

through at it is passed by majority of directors of the Company.

Any item not included in the Agenda and Notes thereon may either be circulated

to the Directors before the Meeting or tabled at the Meeting, but can only be taken

up with the requisite consent as stipulated in this paragraph of SS-1.

However, the Act specifically provides for prior Notice in the case of some items

of business. For instance, Specific Notice has to be given to all Directors then in

India of a Resolution to be moved for appointment of a person as Managing

Director who is already the Managing Director or Manager of another company

(Third Proviso to sub-section (3) of Section 203 of the Act). Such items should be

taken up only if Notice is given in terms of the Act and should not be taken up

under this paragraph of SS-1.

Additional items of Agenda may be introduced at a Meeting adjourned for want

of Quorum by complying with this paragraph of SS-1.

1.3.11 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, shal 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.

Notice, Agenda and Notes on Agenda should be given at least seven days

before the Meeting, for the efficient conduct of business. However, to meet

certain urgent business requirements, it may be necessary to cal a Meeting at

shorter Notice.

In such cases, a Meeting may be called at shorter Notice by complying with this

paragraph of SS-1.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

39

In case of sending of shorter Notice, the Agenda and Notes thereon may also be

sent at a shorter period of time by complying with this paragraph of SS-1.

Further, in cases where seven days’ Notice of the Meeting has been given to al

the Directors, the Agenda and Notes thereon may be circulated at a shorter

period of time by complying with this paragraph of SS-1.

The manner of sending the Notice, the Agenda and Notes thereon explained in

earlier paragraphs of SS-1 shal mutatis-mutandis be applicable for sending

shorter Notice.

“Urgent business”

For the purpose of this paragraph, any matter, if it is urgent, may be taken up as

“urgent business” by issuing a shorter Notice.

Additional content in such Notice

The fact that the Meeting is being held at a shorter Notice shall be stated in the

Notice.

Holding a Meeting at shorter Notice is deviating from the conventional practice.

Hence, this fact should be brought out in the Notice convening the Meeting. As a

good governance practice, the reasons for convening the Meeting at shorter

Notice may also be stated in the Notice.

Presence of Independent Director or ratification of decisions

If none of the Independent Directors are present at the Meeting held on shorter

Notice and on the subsequent circulation of Minutes, none of the decisions or any

of the decisions taken at such Meeting is disapproved or not ratified by atleast one

Independent Director, if any, such decisions of the Board in respect of such items

fail. The company should, therefore not implement decisions taken at such Board

Meeting until they are ratified by atleast one Independent Director, if any.

Il ustration

Company XYZ Ltd. has 9 Directors out of which 3 are Independent Directors.

A Meeting is convened at a shorter Notice. Fol owing are the scenarios and

their effect :

1. One Independent Director is present at the Meeting.

Effect : No ratification necessary. Decision taken would be carried

through.

40

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

2. a. No Independent Director is present at such Meeting.

Effect: The decisions taken at the Meeting and Minutes of the Meeting

would be final only after ratification thereof by at least one Independent

Director.

b. In the above case, subsequently all Independent Directors abstain

from ratifying the Minutes or disapprove the decision taken by the

majority at the Meeting.

Effect: The decision fails.

c. In the above case, subsequently one Independent Director approves

the decision but the others disapprove the decision taken by the

majority at the Meeting.

Effect: The decision taken would be carried through.

In case the company does not have an Independent Director, ratification of the

decisions taken at such Meeting should be done by the majority of Directors of

the company. However, such ratification by majority is not required where the

item was approved at the Meeting itself by a majority of Directors of the company.

Il ustration

Company XYZ Ltd. has 9 Directors out of which none are Independent Directors.

A Meeting is convened at a shorter Notice. 6 Directors are present at the

Meeting. Fol owing are the scenarios and their effect:

1. 5 Directors out of 6 Directors who are present at the Meeting approve

the item(s) at the Meeting.

Effect: No ratification necessary. The decision taken would be carried

through.

2. a. 4 Directors out of 6 Directors who are present at the Meeting approve

the item(s) at the Meeting.

Effect: The decisions taken at the Meeting and the Minutes thereof

would be final only after ratification thereof by at least 1 Director other

than those present at the Meeting.

b. In the above case, subsequently, such number of Directors forming

majority of Directors of the company fail to ratify the Minutes or

disapprove the decisions taken by the majority at the Meeting.

Effect: The decision fails.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

41

2. Frequency of Meetings

2.1 Meetings of the Board

The company shal 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.

The Act requires that at least four Meetings of the Board be held in each year with

a maximum interval of one hundred and twenty days between any two consecutive

Meetings of the Board.

The Board of directors of Equity Listed Company shal meet at least four

times in a year, with a maximum time gap of one hundred and twenty days

between any two meetings.

“Year” means “Calendar Year”

“Year” is not defined in the Act and, therefore the definition under the General

Clauses Act, 1897 is made applicable. Further, the stipulation in the Act in case of

a One Person Company, Small Company or Dormant Company to hold at least

one Meeting of the Board in each half of a Calendar Year also clarifies the intention

of lawmakers to mean Calendar Year. Calendar Year has, therefore, been

prescribed in SS-1 for reckoning minimum number of Meetings.

First Meeting after incorporation

The company shall hold first Meeting of its Board within thirty days of the date of

incorporation. It shal be sufficient if subsequent Meetings are held with a maximum

interval of one hundred and twenty days between any two consecutive Meetings.

Il ustration

If a company is incorporated on 15th June, the first Meeting should be held

within thirty days i.e. latest by 14th July. if the meeting is held say on 10th July,

then the next Meeting should be held within 120 days from 10th July.

Frequency of Meetings over and above what is prescribed

Several companies schedule their Meetings at regular intervals, often coinciding

with the need to deal with matters such as periodic financial results. However, in

accordance with the exigencies of business and the needs of the company, the

Board may meet more frequently as and when required.

42

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

As a good governance practice, the Board may approve in advance, a calendar

of dates for Meetings to be held in a year.

Provisions for One Person Company, Smal Company and Dormant Company

Further, it shal be sufficient if a One Person Company, Smal Company or Dormant

Company holds one Meeting of the Board in each half of a calendar year and the

gap between the two Meetings of the Board is not less than ninety days.

If a One Person Company, Small Company or Dormant Company holds only two

Meetings in a year, then the gap between the two such Meetings should be

minimum 90 days. If more than two Meetings are held in a year where the gap

between the first and the last Meeting in a year exceeds 90 days then it would be

sufficient compliance of the requirement.

The above provision is equally applicable in case of a private “start-up Company”.

(MCA Notification G.S.R. 583(E) dated 13th June, 2017)

The term “start-up company” means a private company incorporated under the

Act and recognised as start-up in accordance with the notification issued by the

Department of Industrial Policy and Promotion, Ministry of Commerce and Industry.

Il ustration

In case a small company holds the first Meeting of the Calendar Year 2015 on

1st June, 2015, it would be sufficient if it holds one more Meeting on any day

before 31st December, 2015, but on or after 30th August 2015. If it holds the next

Meeting on 30th July, 2015, it should hold at least one more Meeting on or after

30th August, 2015, but before 31st December, 2015.

Meetings adjourned for want of Quorum

Meeting adjourned for want of Quorum should also be conducted within the

period stipulated in the SS-1.

Il ustration

A meeting was held on 1st January, 2016. The next meeting was convened on

27th April, 2016 being a date within the prescribed period of 120 days. If the

requisite Quorum is not present on 27th April, 2016 then, as per law, the Meeting

stands automatically adjourned to 4th May,2016. In such a case, there is non-

compliance unless the company convenes a meeting at shorter notice on or

before 30th April, 2016. At the said meeting, the Board may decide to cancel

the meeting adjourned to 4th May, 2016.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

43

It may be noted that the flexibility granted under sub-section (2) of Section 288 of

the Companies Act, 1956 regarding adjournment of a Board Meeting for want of

Quorum not amounting to violation as to the requirement of the periodicity of

holding Board Meetings is not available under the Companies Act, 2013. Hence,

there would be a violation of Section 173 of the Act, if the Meeting adjourned for

want of Quorum is not conducted within the statutory period.

The company should therefore endeavour to schedule its Meetings accordingly.

An adjourned Meeting being a continuation of the original Meeting, the interval

period in such a case, shall be counted from the date of the original Meeting.

Thus, in case of an adjourned Meeting, the gap of one hundred and twenty days

for the purpose of fixing up the date of the next Meeting or for any other purpose

should be counted from the date of the original Meeting.

2.2 Meetings of Committees

Committees shal 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.

Frequency of Meetings of a Committee

Committees should meet as often as required and at least as often as stipulated by

the Board while constituting the Committee. Guidelines, Rules and Regulations

framed under the Act or by any statutory/regulatory authority may contain provisions

for frequency of Meetings of a Committee and such stipulations should be fol owed.

For example, the Audit Committee of equity listed company should meet at

least four times in a year and not more than one hundred and twenty days

should elapse between two Meetings.

However, the Committees may meet more frequently in accordance with the

exigencies of business and the needs of the company.

Also, the Audit Committee of equity listed company may invite the finance

director or head of the finance function, head of internal audit and a

representative of the statutory auditor and any other such executives to be

present at the meetings of the committee.

Occasional y the audit committee may meet without the presence of any

executives of the company.

44

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

2.3 Meeting of Independent Directors

Where a company is required to appoint Independent Directors under

the Act, such Independent Directors shal meet at least once in a Calendar

Year.

However, the MCA vide Notification dated 5th July, 2017 has clarified that the

Independent Directors are required to meet at least once in a financial year.

Accordingly, the term “calendar year” stated in the above paragraph of SS-1

should be read as “financial year”.

The independent directors of the company shal hold at least one meeting in a

financial year without the attendance of non-independent directors and

members of management; [Clause VII(1) of Schedule IV to the Act].

The meeting shal be held to review the performance of Non-Independent Directors

and the Board as a whole; to review the performance of the Chairman and to

assess the quality, quantity and timeliness of flow of information between the

company management and the Board and its members that is necessary for the

Board to effectively and reasonably perform their duties.

A Meeting of Independent Directors is not a Meeting of the Board or of a Committee

of the Board. Therefore, provisions of SS-1 shal not be applicable to such Meetings.

A record of the proceedings of such a Meeting may be kept.

The Company Secretary, wherever appointed, shall facilitate convening and

holding of such meeting, if so desired by the Independent Directors.

In order to seek some clarification, opinion, views, etc., the Independent

Directors may invite the Company Secretary or the Managing Director or any

other officer of the company or a Company Secretary in Practice or any other

expert to attend such a Meeting or a part thereof. If so invited, the Company

Secretary or the Managing Director or any other officer of the company or a

Company Secretary in Practice or any other expert may attend such Meeting or

any part thereof.

Al the independent directors should strive to be present at the meeting of

Independent Directors.

3. Quorum

The Quorum for a Meeting is the minimum number of Directors whose presence

is required to constitute a valid Meeting and who are competent to transact

business and vote thereon.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

45

3.1 Quorum shal be present throughout the Meeting.

In order that a Meeting may be properly constituted and the business be validly

transacted, Quorum should be present.

Quorum shal be present not only at the time of commencement of the

Meeting but also while transacting business.

It is not sufficient if the Quorum is present at the commencement of the business.

It is necessary that the Quorum is present at the time of transacting the business,

i.e. at every stage of the Meeting and unless Quorum is present at the time of

transacting a particular item of business, the business transacted therein is

void.

Rule 3(5)(b) of the Companies (Meetings of Board and its Powers) Rules, 2014,

with respect to Meetings through Electronic Mode, requires the Chairman to

ensure that the required Quorum is present throughout the Meeting.

3.2 A Director shal neither be reckoned for Quorum nor shal be entitled

to participate in respect of an item of business in which he is

interested. However, in case of a private company, a Director shal

be entitled to participate in respect of such item after disclosure of

his interest.

An Interested Director should neither participate nor vote in respect of an item in

which he is interested, nor such Director be counted for Quorum in respect of

such item. However, such Director may be present in the Meeting during

discussions on such item.

Exemptions available to private companies

In case of a private company, MCA Notification dated 5th June, 2015 states that

sub-section (2) of Section 184 of the Act shal apply with the exception that the

Interested Director may participate at such Board Meeting after disclosure of his

interest. For the purpose of Quorum, as per Explanation to sub-section (3) of

Section 174 of the Act, an Interested Director means a Director covered under

sub-section (2) of Section 184 of the Act which in turn provides for disclosure of

interest by an Interested Director and prohibits his participation in an item in

which he is interested. [In line with MCA Notification No. G.S.R. 464(E) dated June

5th, 2015]

Further, MCA Notification G.S.R. 583(E) dated 13th June, 2017 specifically provides

that in case of a private company, an Interested Director may also be counted

towards quorum after disclosure of his interest pursuant to Section 184.

46

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Thus, for the purpose of this paragraph of SS-1, in case of a private company, an

Interested Director should be reckoned for Quorum in respect of an item in which

he is interested after he has disclosed his interest. Further he can be present and

participate, whether physical y or through Electronic Mode, during the discussions

on such item and is also entitled to vote thereon after such disclosure.

Related Party Transaction

If the item of business is a related party transaction, then the interested director

shall not be present at the Meeting, whether physical y or through Electronic

Mode, during discussions and voting on such item.

As per Rule 15(2) of the Companies (Meetings of Board and its Powers) Rules,

2014, an Interested Director shall not be present during discussions and voting

on the item in which he is interested, if the item happens to be a related party

transaction.

Definition of ‘interest’

For this purpose, a Director shal be treated as interested in a contract or

arrangement entered into or proposed to be entered into by the company:

(a) with any body corporate, if such Director, along with other Directors

holds more than two percent of the paid-up share capital of that body

corporate, or he is a promoter, or manager or chief executive officer of

that body corporate; or

Il ustration

Mr. A is a Director of XYZ Ltd. He is not holding any directorship in

PQR Ltd., and holds more than two percent of the paid-up share

capital of PQR Ltd.

In a contract between XYZ Ltd. and PQR Ltd., Mr. A should be

treated as interested in that particular item in the Board Meeting

of XYZ Ltd. Shareholding of more than 2% of the paid-up share

capital of PQR Ltd. makes him an Interested Director in respect of

that particular item in the Board Meeting of XYZ Ltd.

Mere common directorships are excluded from the purview of

interest.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

47

Il ustration

In the above il ustration, suppose Mr. A is also a Director (not a

promoter) of PQR Ltd., but he does not hold any shares in PQR Ltd.

In a contract between XYZ Ltd. and PQR Ltd., Mr. A should not be

treated as interested for that particular item in the Board Meeting

of XYZ Ltd. since mere common directorships are excluded from

the purview of interest.

(b) with a firm or other entity, if such Director is a partner, owner or Member,

as the case may be, of that firm or other entity.

‘Interest’ in case of Alternate Director

In case an Alternate Director has been appointed and the Original Director is

interested in a particular Resolution, the Alternate Director does not ipso facto

become interested in that particular Resolution by virtue of the Original Director

being interested. The Alternate Director should be treated as interested and not

entitled to vote only if he himself is interested in any other manner in such

Resolution.

Disclosure of interest by Interested Director

As stated, any Director of the company who is interested in a matter being

considered at the Meeting should disclose his interest.

Every Director should, at the first Meeting of the Board in which he participates as

a Director and thereafter at the first Meeting of the Board in every financial year or

whenever there is any change in the disclosures already made, then at the first

Board Meeting held after such change, disclose his concern or interest in any

company or companies or bodies corporate, firms, or other association of

individuals, which should include his shareholding [Sub-section (1) of Section 184

of the Act read with Rule 9 of the Companies (Meetings of Board and its Powers)

Rules, 2014].

An Interested Director should also disclose the nature of his concern or interest at

the Meeting of the Board where the contract or arrangement in which he is

interested as above is discussed.

Disclosure of interest, should be made by him, even if he himself, or he along

with other Directors holds less than two percent of the paid-up share capital of

that body corporate. This is required for the purpose of reckoning the limit of two

percent shareholding by all the Directors.

48

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Effect on the contract or arrangement if any of the above provisions are

violated

If any Director fails to make the disclosure mentioned above or participates in the

discussion on or votes on an item in which he is interested, then the concerned

contract or arrangement entered into shal be voidable at the option of the

company [Sub-section (3) of Section 184 of the Act].

In addition to the above, such Director shall be liable to vacate his office [Clauses

(c) & (d) of sub-section (1) of Section 167 of the Act].

Course of action if al the Directors are interested

An item where al or al but one of the Directors are interested cannot be transacted

at a Board Meeting and in such a case the proper course of action is to have the

matter decided at the General Meeting.

In the General Meeting, the voting entitlement of the Directors who are also

members of the company should be determined in terms of the provisions related

to transactions with Related Parties under Section 188 of the Act and the relevant

provisions of the Secretarial Standard on General Meetings (SS-2) and not under

this paragraph of SS-1.

3.3 Directors participating through Electronic Mode in a Meeting shal

be counted for the purpose of Quorum, unless they are to be

excluded for any items of business under the provisions of the Act

or any other law.

Al Directors participating through Electronic Mode in a Meeting should be counted

for the purpose of reckoning Quorum. However, under the provisions of the Act or

any other law, if any Director participating through Electronic Mode is not to be

counted for Quorum in respect of any item of business, then he should not be

counted for Quorum for such item of business [Sub-section (1) of Section 174 of the

Act read with Explanation to Rule 3(5)(a) of the Companies (Meetings of Board

and its Powers) Rules, 2014].

For this purpose, Interested Directors participating through Electronic Mode should

not be counted for Quorum as explained in paragraph 3.2 of SS-1.

3.4 Meetings of the Board

3.4.1 The Quorum for a Meeting of the Board shal be one-third of

the total strength of the Board, or two Directors, whichever

is higher.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

49

For the purpose of calculating the “total strength” and Quorum for a Meeting, the

fol owing should be noted:

(1) Total strength, for this purpose, shall not include Directors whose places

are vacant.

Il ustration

If, out of a total strength of fifteen Directors as fixed by the company

in General Meeting, four places are vacant, then the actual strength

of the Board for the purpose of computing the Quorum should be

eleven and not fifteen.

(2) Any fraction contained in the above one-third shall be rounded off to

the next one.

Il ustration

In the above il ustration, the Quorum should be 4 (i.e. 1/3rd of 11=

3.67 and fraction rounded off to next one).

(3) Invitees should not be considered for counting of Quorum.

Any Invitee may be allowed to attend a Meeting with the permission of

the Chair but his presence should not be counted towards Quorum nor

should he be allowed to vote on any item. He may, however, speak at

the Meeting with the permission of the Chair.

(4) As explained in paragraph 3.3 above, a Director participating through

Electronic Mode should be counted for the purpose of Quorum, unless

he is to be excluded for any item.

(5) As explained in paragraph 3.2 above, any Director who is interested in

a matter being considered at the Meeting should not be counted for

the purpose of determining the Quorum.

If the number of Interested Directors exceeds or is equal to two-thirds

of the total strength, the remaining Directors present at the Meeting,

being not less than two, shall be the Quorum during such item.

This shall not apply to a private company (in line with MCA Notification

No. G.S.R. 464(E) dated June 5, 2015).

In a situation where the Quorum excluding the Interested Directors is

less than two, the item may be considered in the General Meeting of

the members.

50

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Stricter provisions should be followed

The Articles may provide for a higher Quorum than what is prescribed under the

law.

Where the Quorum requirement provided in the Articles is higher than one-third

of the total strength, the company shall conform to such higher requirement.

For example, the Articles may provide for the presence of the Nominee Director at

all Meetings or may prescribe a Quorum of two-third of the total strength of the

Board for Meetings of the Board. Such provisions should be adhered to.

A company may provide by its Articles a higher but not a lower number or

proportion to constitute a valid Quorum [Amrit Kaur Puri v. Kapurthala Flour Oil &

General Mil s Co. P. Ltd. (1984) 56 Com Cases 194 (P&H)].

Consequences of Meeting where Quorum is not present

If Quorum is not present within half-an-hour from the time appointed for the

Meeting, or such further time as the Chairman may deem fit, the Meeting shal

stand adjourned.

If a Meeting of the Board could not be held for want of Quorum, then, unless

otherwise provided in the Articles, the Meeting shal automatical y stand

adjourned to the same day in the next week, at the same time and place or, if that

day is a National Holiday, to the next succeeding day which is not a National

Holiday, at the same time and place.

If there is no Quorum at the adjourned Meeting also, the Meeting shall stand

cancelled.

A Meeting can be adjourned only once for want of Quorum. If at the adjourned

Meeting also Quorum is not present, the Meeting shall stand cancelled and a

fresh Meeting should then be convened in order to transact the business within

the time frame prescribed under paragraph 2.1.

3.4.2 Where the number of Directors is reduced below the minimum

fixed by the Articles, no business shal be transacted unless

the number is first made up by the remaining Director(s) or

through a general meeting.

The Articles may provide for a minimum number of Directors. In such cases, it is

necessary to have the minimum number of Directors as prescribed in the Articles

for any business to be transacted by the Board at its Meeting. Unless the minimum

number of Directors prescribed by the Articles have been appointed, the Board is

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

51

not considered to be ful y constituted and even if the requisite number of Directors

to form a Quorum as per the Act is present, they cannot hold a valid Meeting.

A Board that consists of Directors less in number than the minimum fixed by the

Articles cannot exercise the functions of the Board [Vishwanath Prasad Jalan v.

Holyland Cinetone Ltd. (1939) 9 Comp. Cas. 324].

This would be so even if the number of Directors then in office is sufficient to

constitute the Quorum. Directors may, in such a case, act for the limited purpose

of cal ing a General Meeting or for fil ing the vacancies for the purpose of increasing

their number to at least the minimum [Sly Spink & Co. In Re. (1911) 2 Ch. 430].

Number of Directors fal s below Quorum

If the number of Directors is reduced below the Quorum fixed by the Act for a

Meeting of the Board, the continuing Directors may act for the purpose of increasing

the number of Directors to that fixed for the Quorum or of summoning a general

meeting of the company, and for no other purpose.

The Articles may provide for a higher Quorum than what is prescribed under the

law. In such a case, it is necessary to have the Quorum as prescribed in the

Articles for any business required to be transacted by the Board at its Meeting.

Accordingly, the above practice prescribed in SS-1 is also applicable in cases

where the number of Directors is reduced below the Quorum fixed by the Articles

i.e. in such cases, the continuing Directors may only act for the purpose of

increasing the number of Directors to that fixed by the Articles for Quorum or for

summoning a General Meeting for this purpose.

Al decisions taken at a Board Meeting of the company of which the Board is not

properly constituted, as required under the provisions of the Articles of Association

of the company, wil be nul and void even if the decisions taken at such Board

Meeting are in the interests of the company. Only a decision for appointment of

Director may be held to be valid [Maharashtra Power Development Corporation

Ltd. v. Dabhol Power Co. and Others (2003) 56 CLA 187 (CLB)].

3.5 Meetings of Committees

Unless otherwise stipulated in the Act or the Articles or under any other

law,the Quorum for Meetings of any Committee constituted by the Board

shal be as specified by the Board. If no suh Quorum is specified, thepresence

of al the members of any such Committee is necessary to form the Quorum.

This paragraph of SS-1 lays down the Quorum for Meetings of the Committees

which is different from the Quorum for Meetings of the Board. The Act or any other

52

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

law or the Articles or the Board while constituting the Committee or thereafter,

may stipulate the Quorum for the Meetings of the Committee. Such stipulations

should be fol owed.

Regulations framed under any other law may contain provisions for the Quorum

of a Committee and such stipulations shall be fol owed.

For instance, one such requirement is that at a Meeting of the Audit Committee of

an equity listed company, the Quorum should either be two members or one

third of the members of the Audit Committee whichever is greater, with at least

two Independent Directors [Regulation 18(2) of Listing Regulations].

In case neither the Act nor any other law nor the Articles nor the Board has

stipulated any Quorum for Meetings of a Committee, Quorum for the Meetings of

such Committee should be all the members of the Committee.

Where there is no specific provision, it is incumbent that the whole of the Committee

meets [Raj Kumar Gupta v. State of Bihar and Ors. AIR 1990 Pat 32]. In such a case,

the Meetings of the Committee for the consideration of restricted items require

presence of all its members physical y and not through Electronic Mode. It is

advisable that in the absence of law, the Articles or the Board should specify the

Quorum, being not less than two for Meetings of the Committees. This becomes

necessary to cover the eventuality of any member of the Committee, being

interested in any item of business to be considered by such Committee, is not

entitled to be counted for Quorum for such item.

4. Attendance at Meetings

4.1 Attendance register

4.1.1 Every company shal maintain attendance register for the

Meetings of the Board and Meetings of the Committee.

Attendance register helps in keeping proper record of the Meeting.

Attendance register is a formal evidence of the presence of the persons signing

such register. Maintenance of attendance register is a good secretarial practice

which helps in keeping proper record of the attendance in the Meeting, enables

cross-verification and also protects the interest of individual Directors. It contains

the signatures of the Directors who are present. The attendance register is also

contemplated under the Model Articles which state that “Every Director present at

any Meeting of the Board or of a Committee shal sign his name in a book to be

kept for that purpose” [Regulation 65 of Table F of Schedule I to the Act].

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

53

In the absence of copy of the Notice convening the Board Meeting and the log

book meant to record signatures of Directors attending the Meeting of the Board

of Directors and any other proof to show that a Meeting was held, a Meeting of

the Board of Directors cannot be accepted to be held [Dale & Carrington Investment

(P) Ltd. v. P. K. Prathapan and Others (2004) Supp (7) SCR 334].

In the absence of any documentary proof to show that Notice of the Meetings

was sent to the petitioners and that they were present in the Meeting, only by

inclusion of their names in the Minutes which was signed by the respondent

Chairman and no attendance register could be presented to substantiate these

facts, it may be inferred that the Meeting held was sham and to fabricate the

petitioners [Navin R. Shah and Ors. v. Simshah Estates and Trading Co. P. Ltd. and

Others (2005) 128 Comp. Cas. 55 (CLB)].

The pages of the attendance register shal be serially numbered.

Here, a company may choose either count and give continuous numbering to

the attendance register from its incorporation or from the Meetings held on or

after 1st July, 2015, this being the date from which SS-1 became effective.

Manner of maintaining attendance register

Attendance may be recorded on separate attendance sheets or in a bound book

or register.

If an attendance register is maintained in loose-leaf form, it shal be bound

periodical y, atleast once in every three years.

The attendance sheets or the register, as the case may be, if maintained in loose-

leaf form, should be bound at regular intervals but atleast once in every three

years.

4.1.2 The attendance register shal contain the fol owing particulars:

serial number and date of the Meeting; in case of a Committee

Meeting name of the Committee; place of the Meeting; time

of the Meeting; names and signatures of the Directors, the

Company Secretary and also of persons attending the Meeting

by invitation and their mode of presence, if participating

through Electronic Mode.

This paragraph of SS-1 lays down the contents of the attendance register.

Attendance register should, inter-alia, contain the names and signatures of the

Directors present, of the Company Secretary, who is in attendance and also of

persons attending the Meeting by invitation and also to indicate their mode of

presence, if participating through Electronic Mode.

54

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

The attendance register should also contain the capacity in which an Invitee

attends the Meeting and where applicable, the name of the entity such Invitee

represents, and the relation, if any, of that entity to the company. This would

enable recording of the same in the Minutes as required in paragraph 7.2.1.2 of

SS-1.

This paragraph of SS-1 also clearly classifies the persons “present”, “in attendance”

and “Invitees” for the purpose of the Meeting.

It is duty of the Company Secretary to facilitate the convening and attend the

Meetings of the Board and its Committees [Rule 10(2) of Companies (Appointment

and Remuneration of Managerial Personnel) Rules, 2014]. The Act does not

mandate as a part of his duty, any KMP other than the Company Secretary, to

facilitate the convening and attend the Meetings of the Board or its Committees.

Thus, the main participants of the Meeting i.e. Directors should be treated as

“present”; the Company Secretary, who is the person responsible for facilitating,

convening the Meeting and attend the same as a part of his duty should be

treated as “in attendance” and any other person other than the above two

categories, including KMPs, should be treated as “Invitees” at the Meeting, for al

purposes.

In case an Institution has appointed a Nominee Director on the Board of the

company and such Nominee Director is unable to attend the Meeting, another

person may be sent by the Institution to attend the specific Meeting. At times,

foreign col aborators of the company may be invited to attend Meetings. Al such

persons attending the Meeting by invitation should be treated as “Invitees”.

Persons who are present in a Meeting merely to provide administrative assistance

to an Invitee or Director or Company Secretary should neither be treated as

“Invitees” nor as “in Attendance”. The Chairman may use his discretion in recording

the presence of such persons.

If a Committee deems it necessary, it may invite any other Director, who is not a

member of the Committee, to attend the Meeting of the Committee for specific

purpose. Such Director should then be treated as an “Invitee” at the Meeting for al

purposes.

4.1.3 The attendance register shal be deemed to have been signed

by the Directors participating through Electronic Mode, if their

attendance is recorded in the attendance register and

authenticated by the Company Secretary or where there is

no Company Secretary, by the Chairman or by any other

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

55

Director present at the Meeting, if so authorised by the

Chairman and the fact of such participation is also recorded

in the Minutes.

Corol ary has been drawn from the provisions in the Act with respect to signing of

statutory registers if Directors are participating through Electronic Mode. [Rule

3(7) of the Companies (Meetings of Board and its Powers) Rules, 2014]

In terms of this paragraph SS-1, the attendance of any of the Directors participating

through Electronic Mode in a Meeting is required to be recorded in the attendance

register and authenticated by the Chairman or the Company Secretary. Such

authentication may also be done by any other director present at the meeting, if

so authorised by the Chairman. This is provided to facilitate the authentication

process in the absence of Company Secretary.

Authentication of the entries in the attendance register by the Company Secretary

or the Chairman confirms the integrity of the information entered in the Attendance

Register. Authentication also becomes essential considering the significance of

the attendance register as conclusive proof before the Courts/Tribunals, as also

for audit and other purposes.

In case of meeting where directors are present in person, each Director should

sign the attendance register. Additional y, the Company Secretary, who is in

attendance at Board Meetings and persons attending a Meeting by invitation,

should sign the attendance register.

Signing of the attendance register would not only be evidence of the particular

Director being present at the Meeting but would also facilitate payment of sitting

fees and accounting thereof by the company.

Roll cal for Directors participating through Electronic Mode

In case of Directors participating through Electronic Mode, the Chairman shal

confirm the attendance of such Directors. For this purpose, at the commencement

of the Meeting, the Chairman shal take a rol call. The Chairman or the Company

Secretary shall request the Director participating through Electronic Mode to state

his ful name and location from where he is participating and shall record the

same in the Minutes.

The requirement for rol call is in line with the requirement under Rule 3(4) and

Rule 3(5) of the Companies (Meetings of Board and its Powers) Rules, 2014.

During the rol call, every Director participating through Electronic Mode should

state, for the record, the fol owing namely:

56

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

(a) name;

(b) the location from where he is participating;

(c) that he has received the Agenda and all the relevant material for the

Meeting; and

(d) that no one other than the concerned Director is attending or having

access to the proceedings of the Meeting at the location mentioned in

(b) above. [Rule 3(4) of the Companies (Meetings of Board and its

Powers) Rules, 2014]

The proceedings of such Meetings shal be recorded through any electronic recording

mechanism and the details of the venue, date and time shal be mentioned.

4.1.4 The attendance register shal be maintained at the Registered

Office of the company or such other place as may be approved

by the Board.

The attendance register should not be maintained at any place other than the

Registered Office of the company, unless such maintenance is approved by the

Board.

The attendance register may be taken to any place where a Meeting of the Board

or Committee is held.

Approval of the Board is not required for this purpose, since carrying the attendance

register, on a temporary basis, to the place of Meeting of the Board or Committee

does not amount to “Maintenance at a place other than the Registered Office of

the company”.

4.1.5 The attendance register is open for inspection by the Directors.

Even after a person ceases to be a Director, he shal be entitled

to inspect the Attendance Register of the Meetings held during

the period of his Directorship.

The Company Secretary in Practice appointed by the company or the Secretarial

Auditor or the Statutory Auditor of the company can also inspect the attendance

register as he may consider necessary for the performance of his duties.

This would enable the Statutory Auditors or the Secretarial Auditors or the Company

Secretary in Practice to discharge their professional duties fairly.

Officers of the Registrar of Companies, or the Government, or the regulatory

bodies, if so authorised by the Act or any other law, can also inspect the attendance

register during the course of an inspection.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

57

While providing inspection of attendance register, the Company Secretary, or the

official of the company authorised by the Company Secretary to facilitate

inspection, should take all precautions to ensure that the attendance register is

not mutilated or in any way tampered with during the course of an inspection.

A Member of the company is not entitled to inspect the attendance register.

4.1.6 The attendance register shal be preserved for a period of at

least eight financial years from the date of last entry made

therein and may be destroyed thereafter with the approval of

the Board.

Corol ary has been drawn from Rule 15 of the Companies (Management and

Administration) Rules, 2014 which prescribes a period of eight years for

preservation of register of debenture-holders or any other security holders and

annual return.

The period of eight financial years should be counted from the end of the financial

year to which the last entry in the register pertains to.

Il ustration

In case the attendance register contains the attendance record of a Meeting

held on 5th May, 2010 as the first entry and 18th March, 2015 as the last entry,

the attendance register should be preserved at least up to 31st March, 2023

i.e. for eight financial years from 31st March, 2015 since the last entry therein

is 18th March, 2015.

Further, considering the importance of such records, prior approval of the Board

is necessary for their destruction. This is because the Directors are responsible

for devising and ensuring effective operation of proper and adequate Board

systems, and the need to refer to or inspect this register and the recording

therein may arise at anytime.

Al such records destroyed after 1st July, 2015 require the approval of the Board,

even if such records pertain to a period prior to SS-1 coming into force.

It may be noted that the Board may authorise destruction of such records only

after the expiry of the period specified in this paragraph of SS-1.

4.1.7 The attendance register shal be in the custody of the Company

Secretary.

Where there is no Company Secretary, the attendance register shall be in the

custody of any other person authorised by the Board for this purpose.

58

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Custody, for the purpose of this paragraph of SS-1, should not be construed to

mean physical custody. What this particular paragraph of SS-1 signifies is the

responsibility cast upon the Company Secretary or any other person authorised

by the Board for this purpose, as the case may be.

The Company Secretary or any other person authorised by the Board for this

purpose, should take all precautions to ensure that the attendance register is

under proper locking system, if applicable, and that no other person has access

to the attendance register without his permission.

4.2 Leave of absence shal be granted to a Director only when a request

for such leave has been communicated to the Company Secretary

or to the Chairman or to any other person authorised by the Board

to issue Notice of the Meeting.

Request for leave of absence may be either oral or written. Any such request

received should be mentioned at the Meeting and should be recorded in the

Minutes of the Meeting.

The Minutes of the Meeting should clearly mention the names of the Directors

present at the Meeting and those who have been granted leave of absence.

Vacation of office of Director

The office of a Director shall become vacant in case the Director absents himself

from all the Meetings of the Board held during a period of twelve months with or

without seeking leave of absence of the Board.

For the purpose of counting of Board Meetings held in the preceding twelve

months, the counting should commence from the date of the first Board

Meeting held immediately after the Meeting which the Director concerned

last attended.

Il ustration

Suppose, the Board Meetings of a company were held on 28th March, 2014,

25th June, 2014, 20th September, 2014, 30th December, 2014 and 27th March,

2015. Director X attended the Meeting on 28th March, 2014 and did not

attend any Meetings thereafter. In such a case, the count for Meetings of

the Board held during a period of twelve months for the purpose of reckoning

his vacation of office should commence from 25th June, 2014. Thus, if he

does not attend any of the Meetings held upto end June 2015, he shal

vacate the office.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

59

The requirement of this paragraph of SS-1 with respect to vacation of office is only

for attendance of a Director in the Board Meeting and not for the manner of

attending the Board Meeting. Therefore, Board Meeting attended by a Director,

whether physically or through Electronic Mode, shall be sufficient attendance for

the purpose of this paragraph.

A Board Resolution need not be passed to show that office of Director has been

vacated by a particular Director. Vacation of office is automatic as soon as a

Director is found to have incurred disability as contemplated by clause (g) of sub-

section (1) of Section 283 of the Companies Act, 1956 (corresponding to clause (b)

of sub-section (1) of Section 167 of the Act) [Bharat Bhushan v. H.B. Portfolio Leasing

Ltd. (1992) 74 Comp. Cas. 20 (Del)].

As a matter of good governance, due intimation of such vacation should be sent

to such Director forthwith and the Board may take note of such vacation at its next

Meeting.

Proxies cannot be appointed to attend Board Meetings

The Act does not contain any provision conferring on the Directors the right to

appoint a proxy to attend Board Meetings. A Director cannot appoint another

person as his proxy to attend a Board Meeting since the right to appoint a proxy

is not a common law right and can only be given by statute.

5. Chairman

5.1 Meetings of the Board

5.1.1 The Chairman of the company shal be the Chairman of the

Board. If the company does not have a Chairman, the Directors

may elect one of themselves to be the Chairman of the Board.

The term “Chairman” is not defined in the Act. However, there is adequate

elaboration through case laws.

The procedure for appointment and powers and duties of a Chairman may be

prescribed in the Articles of the company.

Appointment of Chairman

For a Meeting to be properly constituted, the Chairman of the Board or a validly

elected person should be in the chair.

The Act does not provide for appointment of a Chairman of the Meeting but the

Model Articles provide that the Board may elect a Chairman of its Meetings and

60

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

determine the period for which he is to hold office [Regulation 70 (i) of Table F of

Schedule I to the Act].

While appointing such person, the Board may stipulate a time period for the

person to continue as Chairman of the Board. At the end of such period, the Board

may either re-appoint the person or appoint any other Director as Chairman of

the Board.

It is considered a good practice for every company to have a Chairman who

would be the Chairman for Meetings of the Board of Directors as well as general

meetings of the company. Normally, the Directors elect one amongst themselves

to be the Chairman of the Board and he continues to act as such until he ceases

to be a Director or until another Director is appointed as the Chairman.

The Chairman may be appointed in accordance with the relevant provision in the

Articles. Companies may provide, in their Articles, for the appointment of a Vice-

Chairman to act as Chairman in the absence of the Chairman. In absence of such

provision in the Articles and in the absence of the Chairman, the Directors may

elect one of themselves as a Chairman for the Meeting.

Managing Director/ Chief Executive Officer as the Chairman

An individual should not be appointed or re-appointed as the Chairman of the

company, in pursuance of the Articles of the company, as well as the Managing

Director or Chief Executive Officer of the company at the same time unless,–

(a) the Articles of the company provide otherwise; or

(b) the company does not carry on multiple businesses. (First Proviso to

sub-section (1) of Section 203 of the Act)

However, the above restrictions shall not apply to such class of companies

engaged in multiple businesses and which have appointed one or more Chief

Executive Officers for each such business as may be notified by the Central

Government (Second Proviso to sub–section (1) of Section 203 of the Act).

At present, public companies having paid-up share capital of rupees one hundred

crore or more and annual turnover of rupees one thousand crore or more, decided

on the basis of the latest audited balance sheet, have been exempted by the

Central Government (S.O. 1913(E). dt. 25th July, 2014).

The office of Chairman ipso facto comes to an end when the Chairman ceases to

be a Director. However, the converse is not the case, i.e. the Chairman can

continue to be a Director after he ceases to be the Chairman. Where a company

has the same person as Chairman and Managing Director, the person holding

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

61

that office can cease to be the Chairman but may continue as Managing Director

and, in case he ceases to be the Managing Director, he can continue to be the

Chairman, as a Non-Executive Director, unless his contract specifies otherwise.

5.1.2 The Chairman of the Board shal conduct the Meetings of the

Board. If no such Chairman is elected or if the Chairman is

unable to attend the Meeting, the Directors present at the

Meeting shal elect one of themselves to chair and conduct

the Meeting, unless otherwise provided in the Articles.

The main function of the Chairman is to preside over and conduct the Meeting in

an orderly manner.

If no Chairman is elected by the Board, or if at any Meeting, the Chairman is not

present within five minutes after the time appointed for holding the Meeting, the

Directors present may choose one of their number to be Chairman of the Meeting

[Regulation 70 of Table F of Schedule I to the Act].

Duties of the Chairman

It would be the duty of the Chairman to check, with the assistance of Company

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

the Act or any other applicable guidelines, Rules and Regulations before

proceeding to transact business. The Chairman shall then conduct the Meeting.

The Chairman shall encourage deliberations and debate and assess the sense

of the Meeting.

Responsibility of the Chairman

The Chairman is the person responsible for the actual conduct of proceedings of

the Meeting, which inter alia requires him to:

(i) ensure that only those items of business as have been set out in the

Agenda or any other matter which the Board approves of are transacted;

and items of business general y are transacted in the order in which

the items appear in the Agenda.

(i ) regulate the proceedings of the Meeting and encourage deliberations

and debate, secure the effective participation of al Directors, encourage

all to make effective contribution and assess the sense of the Meeting.

(i i) decide al questions that arise at the Meeting on the validity or otherwise

of Resolutions and the right to vote thereon, as also the right of certain

persons to attend.

(iv) ensure that the proceedings of the Meeting are correctly recorded.

62

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Interested Chairman should vacate the Chair

If the Chairman is interested in an item of business, he shall entrust the conduct

of the proceedings in respect of such item to any Non-Interested Director with the

consent of the majority of Directors present and resume the Chair after that item

of business has been transacted. However, in case of a private company, the

Chairman may continue to chair and participate in the Meeting after disclosure of

his interest.

If the item of business is a related party transaction, the Chairman shal not be

present at the Meeting, whether physically or through Electronic Mode, during

discussions and voting on such item.

Il ustration

Type of

Item of

Board Meeting

Company Business

Quorum

Participate

Vote

Presence

Public

Interested

X

X

X



Company Chairman/

Director

Related

X

X

X

X

Party

Transaction

(After disclosure of interest)

Private

Interested









Company Chairman/

Director

Related

X

X

X

X

Party

Transaction

The Act prohibits an Interested Director from participating in the items in which he

is interested. The ambit of this provision has been incorporated in SS-1 by requiring

an Interested Chairman to entrust the Chair to a Non-Interested Director during

discussion on items in which he is interested.

This would encourage unbiased and fair decision making at the Meeting.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

63

The provisions with respect to meaning of interest, disclosure of interest and

prohibition on participation, voting and presence of the Interested Director

explained earlier in paragraph 3.2 shal be applicable mutatis-mutandis to the

Interested Chairman.

Responsibility of Chairman in case of Meeting through Electronic Mode

In case some of the Directors participate through Electronic Mode, the Chairman

and the Company Secretary shal take due and reasonable care to safeguard the

integrity of the Meeting by ensuring sufficient security and identification

procedures to record proceedings and safe keeping of the recordings. No person

other than the Director concerned shall be allowed access to the proceedings of

the Meeting where Director(s) participate through Electronic Mode, except a

Director who is differently abled, provided such Director requests the Board to

allow a person to accompany him and ensures that such person maintains

confidentiality of the matters discussed at the Meeting.

The Chairman shal ensure that the required Quorum is present throughout the

Meeting and at the end of discussion on each agenda item the Chairman shal

announce the summary of the decision taken thereon.

Where a Meeting is held through Electronic Mode, the Chairman of the Meeting

and the Company Secretary, if any, should take due and reasonable care, in line

with Rule 3(2) of the Companies (Meetings of Board and its Powers) Rules, 2014,

to –

(a) safeguard the integrity of the Meeting by ensuring sufficient security

and identification procedures;

(b) ensure availability of proper equipment for Electronic Mode or facilities

for providing transmission of the communication for effective

participation of the Directors and other authorised participants at the

Meeting;

(c) record proceedings and prepare the Minutes of the Meeting;

(d) store for safekeeping and marking the tape recording(s) or other

Electronic recording mechanism as part of the records;

(e) ensure that no person other than the concerned Director is attending or

has access to the proceedings of the Meeting held through Electronic

Mode; and

(f) ensure that participants attending the Meeting through audio visual

64

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

means are able to hear and see the other participants clearly during

the course of the Meeting.

Chairman’s right to casting vote

Unless otherwise provided in the Articles, in case of an equality of votes, the

Chairman shal have a second or casting vote.

A second or casting vote is a deciding vote. Second or casting vote is the vote of

the Chairman of a Meeting which he can use in the event of a tie in voting, i.e.

equality of votes in favour of or against a Resolution. Second or casting vote is

different from the original vote of the Chairman as a Director and it can be

exercised only after the process of voting has been completed.

Second or casting vote to the Chairman is allowed by the Model Articles under

the Act. [Regulation 68(i ) and 73(i ) of Table F of Schedule I to the Act].

In the event of equality of votes on a particular matter at a Meeting, the Chairman

may cast a second or casting vote on such matter, subject to any provision to the

contrary in the Articles.

The Articles of the company may thus expressly prohibit exercise of second or

casting vote by the Chairman, in which case, the Chairman shall not have a

second or casting vote. In case the Articles are silent, the Chairman may have a

second or casting vote at his discretion.

The discretion whether or not to use his second or casting vote vests entirely with

the Chairman.

5.2 Meetings of Committees

A member of the Committee appointed by the Board or elected by the

Committee as Chairman of the Committee, in accordance with the Act or

any other law or the Articles, shal conduct the Meetings of the Committee.

If no Chairman has been so elected or if the elected Chairman is unable to

attend the Meeting, the Committee shal elect one of its members present to

chair and conduct the Meeting of the Committee, unless otherwise provided

in the Articles.

The Board may appoint a Chairman for a Committee at the time of the constitution

of the Committee.

If the Board has not appointed the Chairman, the Committee may elect a Chairman

of its Meetings and if no such Chairman is elected, or if at any Meeting the

Chairman is not present within five minutes after the time appointed for holding

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

65

the Meeting, the members present may choose one of their members to be

Chairman of the Meeting unless otherwise provided in the Articles (Regulation

72 of Table F of Schedule I to the Act).

The Company Secretary should be the Secretary to the Committee. It is the duty of

the Company Secretary to facilitate the convening of Meetings of the Board and

its Committees [Rule 10 (2) of Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014].

The provisions relating to Meetings of Committees are generally the same as

those applicable to Board Meetings. For example, proper Notice of the Meeting

should be given, Quorum should be present, there should be a Chairman, issues

should be decided by simple majority and, in case of equality of votes, the Chairman

should have a second or casting vote, unless otherwise provided in the Articles.

The Chairman of a Committee or any other person authorised by him should

apprise the Board of the decisions taken at the Meetings of the Committee.

6. Passing of Resolution by Circulation

The Act requires certain business to be approved only at Meetings of the Board.

However, other business that requires urgent decisions can be approved by

means of Resolutions passed by circulation. Resolutions passed by circulation

are deemed to be passed at a duly convened Meeting of the Board and have

equal authority.

An exception to the general rule

General y, Directors act or exercise their powers by means of Resolutions passed

at Meetings, but it may not always be convenient to call a Meeting of the Board to

discuss matters on account of urgency or for any other justifiable reason. To

enable Directors to take decisions in such circumstances, Section 175 of the Act

provides for passing of a Resolution by circulation. Al items of business may be

considered for passing by circulation, except for certain items which are specified

as not to be passed by circulation.

6.1 Authority

6.1.1 The Chairman of the Board or in his absence, the Managing

Director or in their absence, any Director other than an

Interested Director, shal decide, before the draft Resolution

is circulated to al the Directors, whether the approval of the

Board for a particular business shal be obtained by means of

a Resolution by circulation.

66

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

This paragraph lays down as to who shall decide whether or not the approval of

the Board for a particular business be obtained by means of a Resolution by

circulation. It is advisable that such decision be indicated in the note being sent

alongwith the Resolution proposed to be passed by circulation.

For the purpose of this paragraph of SS-1, in case of a private company, an

Interested Director may also decide, before the draft Resolution is circulated to al

the Directors, whether the approval of the Board for a particular business should

be obtained by means of a Resolution by circulation.

In addition to the items prescribed in the Act (given in Annexure IA), an il ustrative

list of items given under SS-1 that should not be passed by circulation is given in

Annexure IB.

6.1.2 Where not less than one-third of the total number of Directors

for the time being require the Resolution under circulation to

be decided at a Meeting, the Chairman shal put the Resolution

for consideration at a Meeting of the Board.

“Total number of Directors” above means the “total strength of the Board” which

does not include Directors whose places are vacant.

Interested Directors shall not be excluded for the purpose of determining the

above one-third of the total number of Directors.

Il ustration

A company has 9 Directors, out of which say, 3 Directors are interested in

the Resolution. In such a case, for the purpose of reckoning the 1/3rd

stipulation as above, the total number of Directors should be taken as 9 and

not 6 (9-3 Interested Directors). Thus, if 3 Directors (1/3rd of 9), (which number

may include Interested Directors), require the Resolution under circulation

to be decided at a Meeting, the Resolution by circulation should not be

proceeded with.

However, this does not mean that Interested Directors shall be entitled to

participate and vote when the said item of business is taken up at a Meeting

of the Board.

6.2 Procedure

6.2.1 A Resolution proposed to be passed by circulation shal be

sent in draft, together with the necessary papers, to al the

Directors including Interested Directors on the same day.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

67

It is necessary to send the draft of the Resolution to be passed by circulation

together with the necessary papers.

No Resolution should be deemed to have been duly passed by the Board or by

a Committee thereof by circulation, unless the Resolution has been circulated

in draft, together with the necessary papers, if any, to al the Directors, or

members of the Committee, as the case may be [Sub-section (1) of Section 175

of the Act].

The words “necessary papers” should be interpreted to mean all those papers

that are necessary for the recipient to arrive at an informed decision in relation to

the subject matter of the Resolution proposed to be passed by circulation.

The draft Resolution together with al the necessary papers should be sent on the

same day to al Directors including Interested Directors, Nominee Directors and

Directors residing abroad.

If an Alternate Director is appointed, the draft should also be sent to the Original

Director for information only.

6.2.2 The draft of the Resolution to be passed and the necessary

papers shal be circulated amongst the Directors by hand,

or by speed post or by registered post or by courier, or by

e-mail or by any other recognised electronic means.

The draft of the Resolution and the necessary papers shal 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 the addresses appearing

in the Director Identification Number (DIN) registration of the Director.

In case of Directors residing abroad, the draft Resolution and the necessary

papers may be sent by e-mail or any other recognized electronic means.

Proof of sending and delivery of the draft of the Resolution and the necessary

papers shall be maintained by the company for such period as decided by the

Board, which shal not be less than three years from the date of the Meeting.

The aforesaid period of three years or such higher period as decided by the

Board, shall be counted from the date of subsequent Meeting at which such

resolution was noted by the Board.

The provisions with respect to sending of Notice and proof of delivery as explained

in paragraph 1.3.1 shall mutatis-mutandis be applicable for sending the draft of

the Resolution and the necessary papers.

68

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

6.2.3 Each business proposed to be passed by way of Resolution

by circulation shal be explained 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, the nature of concern or interest,

if any, of any Director in the proposal, which the Director had

earlier disclosed and the draft of the Resolution proposed.

The note shal also indicate how a Director shal signify assent

or dissent to the Resolution proposed and the date by which

the Director shal respond.

Notice and Agenda are not necessary for passing of a Resolution by circulation.

However, necessary papers which explain the purpose of the Resolution should

be sent along with the draft Resolution to all the Directors, or in the case of a

Committee, to all the members of the Committee.

It would be advisable to also explain the reasons as to why approval is sought by

circulation.

As explained earlier in paragraph 6.1.2, if not less than one-third of the total

number of Directors for the time being require the Resolution under circulation to

be decided at a Meeting, the Resolution should be considered at a Meeting and

cannot be passed by circulation. As such, it is necessary to put in the note being

circulated with the proposed Resolution, the last date for receiving responses

from the Director to the Resolutions proposed.

Each Resolution shall be separately explained.

The decision of the Directors shall be sought for each Resolution separately.

A single note containing more than one Resolution may be circulated but the

note should enable the signifying of the decision by a Director on each Resolution

separately.

Not more than seven days from the date of circulation of the draft of the Resolution

shall be given to the Directors to respond and the last date shal be computed

accordingly.

An additional two days shal be added for the service of the draft Resolution, in

case the same has been sent by the company by speed post or by registered

post or by courier.

If the last date specified by the company for receiving response to the moving of

a Resolution by circulation falls, say, on the 7th day from the date of sending the

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

69

note containing the proposal, it should be understood that the Director concerned

should respond to the same in such a way that his response reaches the Chairman

or the Company Secretary or any other person appointed for that purpose on or

before the expiry of the said time-limit of seven days.

Depending upon the necessity and urgency, the company may give seven days

or less time for responding to the proposal.

A suggested format for circulation is given in Annexure VI.

6.3 Approval

6.3.1 The Resolution is passed when it is approved by a majority of

the Directors entitled to vote on the Resolution, unless not

less than one-third of the total number of Directors for the

time being require the Resolution under circulation to be

decided at a Meeting.

For a Resolution under circulation to be passed, it should be approved by a

majority of dis-interested Directors, who are entitled to vote.

Il ustration

If there are 9 Directors of whom 2 are interested, the Resolution should be

assented by at least 4 Directors (out of the 7 dis-interested Directors).

As explained earlier in paragraph 6.1.2, if not less than one-third of the total number

of Directors for the time being require the Resolution under circulation to be decided

at a Meeting, the Resolution should be considered at a Meeting and cannot be

passed by circulation, even if a majority of the Directors approve it by circulation.

Il ustration

If, out of the Board strength of 10 Directors, 6 Directors communicate their

assent, the Resolution shall not be considered as passed until the stipulated

last date has expired, or, if ahead of the said date, 2 more Directors have also

signified their assent/dissent so that the possibility of 1/3rd asking for a physical

Meeting is no longer possible.

Requisite Majority

If any special majority or the affirmative vote of any particular Director or Directors

is specified in the Articles, the Resolution shall be passed only with the assent of

such special majority or such affirmative vote.

70

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Prohibition on voting by Interested Director

An Interested Director shal not be entitled to vote. For this purpose, a Director

shall be treated as interested in a contract or arrangement entered or proposed

to be entered into by the company:

(a) with any body corporate, if such Director, along with other Directors

holds more than two percent of the paid-up share capital of that body

corporate, or he is a promoter, or manager or chief executive officer of

that body corporate; or

(b) with a firm or other entity, if such Director is a partner, owner or Member,

as the case may be, of that firm or other entity.

The concept of Interested Director at a Meeting is also applicable to the Resolution

passed by circulation and the provisions of paragraph 3.2 as explained earlier

shall be applicable mutatis-mutandis.

Numbering of Resolutions

Every such Resolution shall carry a serial number.

During e-filing, companies are required to quote Resolution numbers in certain

cases. Numbering would facilitate the above and also enable ease of reference.

The company may choose to fol ow its existing system of numbering, if any or

any new system of numbering, which should be distinct and enable ease of

reference or cross-reference.

Il ustrations

(i) Serially numbering on Calendar Year basis:

“Circular Resolution No. 1/2015”, “2/2015”, “3/2015” and so on….

(i ) Serially numbering on financial year basis:

“Circular Resolution No. 1/2015-16”, “2/2015-16”, “3/2015-16” and so

on…

(i i) Continuous numbering across years:

Circular Resolution No. 10, 11, 12 … and so on...

In any case, the company should fol ow a uniform and consistent system while

numbering the Resolutions.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

71

6.3.2 The Resolution, if passed, shal be deemed to have been passed

on the earlier of:

(a) the last date specified for signifying assent or dissent

by the Directors; or

(b) the date on which assent has been received from the

required majority, provided that on that date the number

of Directors, who have not yet responded on the

resolution under circulation, along with the Directors who

have expressed their desire that the resolution under

circulation be decided at a Meeting of the Board, shal

not be one third or more of the total number of Directors;

and

shal be effective from that date, if no other effective date is

specified in such Resolution.

Paragraph 6.3.2 is intended to assist in reckoning the date on which a Resolution

is deemed to have been passed. In this regard, paragraph 6.3.2 introduces two

closing dates and provides that the circular Resolution could be taken as passed

on one of those dates, whichever is earlier.

Reading paragraphs 6.3.1 and 6.3.2 in conjunction, if a majority of Directors have

assented to the Resolution and if the eventuality of not less than one-third of the

total number of Directors requiring the matter to be decided at a Meeting becomes

improbable on a date before the last date fixed for response, the Resolution shall

be deemed to have been passed on that date. (As il ustrated in Scenarios I and

I I hereafter)

Effective date of the Resolution

Effective date of the Resolution passed by circulation shall be the date on which

the Resolution is deemed to be passed as reckoned above. However, in case the

Resolution or the Note circulated specifies any other date to be the effective date,

then such date shall be the effective date.

Manner of response from Directors

Directors shall signify their assent or dissent by signing the Resolution to be

passed by circulation or by e-mail or any other electronic means.

A scanned copy of the signed response may also be sent.

If the response is sent by the Director by e-mail or any other electronic means,

72

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

such response need not be signed or fol owed by a physical signed copy of

response.

Directors shall append the date on which they have signed the Resolution. In

case a Director does not append a date, the date of receipt by the company of the

signed Resolution shall be taken as the date of signing.

If the response is received by e-mail or by any other electronic means, the date

of receipt by the company of such response should be taken as the date of

signing the Resolution.

In cases where the interest of a Director is yet to be communicated to the company,

the concerned Director shal disclose his interest before the last date specified for

the response and abstain from voting.

In cases where the interest of a Director is yet to be communicated to the company,

it is desirable that the Interested Director should disclose his interest to the company

forthwith.

Once the concerned Director discloses his interest as above, the company should

forthwith inform the other Directors the fact of such Director being interested in

the proposed Resolution. It is advisable to inform the interest of Director to other

Directors through e-mail or other electronic means so that other Directors are

swiftly informed and send their assent and dissent accordingly.

For the above purpose, in case of a private company, an Interested Director

should disclose his interest latest by the last date specified for the response but

before voting on the Resolution (In line with MCA Exemption Notification dated

5th June, 2015).

In case not less than one-third of the Directors wish the matter to be discussed

and decided at a Meeting, each of the concerned Directors shal communicate

the same before the last date specified for the response.

In case the Director does not respond on or before the last date specified for

signifying assent or dissent, it shall be presumed that the Director has abstained

from voting.

If the approval of the majority of Directors entitled to vote is not received by the

last date specified for receipt of such approval, the Resolution shall be considered

as not passed.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

73

Il ustrations

Company XYZ has 9 Directors. It circulated a Resolution on 1st May among

the Directors and requested them to respond on or before 8th May.

Scenario I:

• 3 Directors sent their assent to the proposed circular Resolution on

2nd May.

• 1 Director sent a request on 4th May for convening a Meeting.

• 2 Directors sent their assent for the Resolution on 5th May.

• 1 Director sent his assent on 6th May

• 1 Director sent his dissent on 6th May

• 1 Director sent his assent on 7th May.

Effect:

In this case, the Resolution would be carried through since 7 Directors

(forming majority) have assented. The date of passing shall be deemed to

be 6th May since the eventuality of 1/3rd of the Directors requesting for a

Meeting becomes improbable on that day.

Scenario II:

• 5 Directors sent their assent to the proposed Resolution on 2nd May.

• 1 Director sent a request on 4th May for convening a Meeting.

• 2 Directors sent their dissent on 5th May.

• 1 Director sent the assent on 6th May.

Effect:

In this case, the Resolution would be passed since 6 Directors (forming

majority) have approved. The date for passing the Resolution shall be

deemed to be 5th May since the eventuality of at least 3 Directors (i.e. 1/3rd

of the Directors) requesting for a Meeting becomes improbable on that day.

Scenario I I:

• 2 Directors sent their assent to the proposed circular Resolution on

1st May.

• 2 Directors sent their dissent on 4th May.

74

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

• 2 Directors sent their assent on 6th May.

• 1 Director asked to decide the matter at the Meeting and

communicated the same on 6th May.

• 1 Director sent his assent on 7th May and

• 1 Director did not respond til 8th May.

Effect:

It should be presumed that one Director, who did not vote til the last date

specified for sending assent or dissent, has abstained from voting.

5 Directors (forming majority of Directors) have assented and hence the

Resolution would be carried through. The date of passing of Resolution

shall be deemed to be 7th May since the eventuality of at least 3 Directors

(i.e. 1/ 3rd of the Directors) requesting for a Meeting becomes improbable

on this day and also assent of the 5th Director is received on the said day.

Scenario IV:

• 5 Directors sent their assent on 2nd May.

• 1 Director asked to decide the matter at the Meeting on 3rd May.

• 1 Director sent his assent on 5th May.

• 1 Director asked to decide the matter at the Meeting on 6th May.

• 1 Director asked to decide the matter at the Meeting on 8th May.

Effect:

In this case, the matter should not be deemed to be passed by circulation

even though 6 Directors (forming majority) have approved. It should be

taken up at a Meeting since 3 Directors, forming 1/3rd of the Directors sent

their request for the same before the last date of passing of Resolution.

Scenario V:

The Director sending his request for Meeting on 8th May in the above case,

sent his request on 9th May i.e. after the last date for response.

Effect:

The same should not be considered and the Resolution would be passed,

since 6 Directors (forming majority) have approved. The deemed date of

passing of Resolution shall be deemed to be 8th May.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

75

6.4. Recording

Resolutions passed by circulation shal be noted at a subsequent Meeting of

the Board and the text thereof with dissent or abstention, if any, shal be

recorded in the Minutes of such Meeting.

This is in line with sub-section (2) of Section 175 of the Act, which requires a

Resolution passed by circulation to be noted at a subsequent Meeting of the

Board or the Committee thereof, as the case may be, and recorded in the Minutes

of such Meeting.

The text of the Resolution along with details of dissent and abstention should be

recorded and taken note of in the next Meeting and should be recorded in the

Minutes of such Meeting.

As a matter of good governance, if a Resolution by circulation is not passed due

to lack of majority, or if it has to be taken up at a Meeting of the Board due to one-

third of the directors requiring the same, this fact should be appropriately recorded

in the Minutes of the next Meeting.

6.5 Validity

Passing of Resolution by circulation shal be considered valid as if it had been

passed at a duly convened Meeting of the Board.

This shall not dispense with the requirement for the Board to meet at the specified

frequency.

7. Minutes

‘Minutes’ are the official recording of the proceedings of the Meeting and the

business transacted at the Meeting.

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.

If the Minutes are kept in the prescribed manner, the Meeting shall be deemed to

have been duly called and held, and all proceedings thereat to have duly taken

place, until the contrary is proved.

The only way to prove that the Resolution was passed at the Board Meeting of the

company is that the Minutes Book in which the particular Resolution was recorded

should be produced before the Court, as that alone can form evidence of the fact

that the Resolution was passed in the Board Meeting [Escorts Ltd. v. Sai Auto (1991)

72 Com. Cases 483 (Del)].

76

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Minutes of Meeting were rejected as evidence for not being maintained as per

the requirements of the Act [Marble City Hospitals and Research Centre (P) Ltd. v.

Sarabjeet Singh Mokha (2010) 99 SCL 303 (MP)].

As such, Minutes of Meetings constitute a very important statutory record and

serve as evidence of various matters, until the contrary is proved.

The burden of proof is on the person who questions the correctness of the

proceedings of a Meeting as recorded in the Minutes. If the Minutes of the Meeting

are not recorded or signed within the period prescribed under the statute, it

would be presumed that the Minutes have not been properly kept and hence

such Minutes cannot be produced as evidence. [B Sivaraman and Others v.

Egmore Benefit Society Ltd. (1992) 2 Comp L J 218 (Mad)]

Accordingly, when Minutes are duly drawn and signed, the contents of the Minutes

are presumed to be true and the burden of proof lies on those who al ege the

contents to be not true.

Minutes help in understanding the deliberations and decisions taken at the

Meeting.

There is no restriction in law on the language of recording Minutes.

7.1 Maintenance of Minutes

7.1.1 Minutes shal be recorded in books maintained for that purpose.

The Minutes of proceedings of each Meeting should be entered in the books

maintained for that purpose [Rule 25(1)(b) of the Companies (Management and

Administration) Rules, 2014].

Where Minutes are not recorded in a proper book, statutory presumption under

Section 195 of the Companies Act, 1956 (corresponding to Section 118 of the

Companies Act, 2013) does not take effect and no such Meeting could be regarded

as having been held [V.G. Balasundaram v. New Theatres Carnatic Talkies Pvt.

Ltd. (1993) 77 Com. Cases 324 (Mad)].

7.1.2 A distinct Minutes Book shal be maintained for Meetings of

the Board and each of its Committees.

Minutes Books should be distinctly kept and maintained for different Meetings

such as Meetings of the Board and Meetings of various Committees of the

Board [Rule 25(1)(a) of the Companies (Management and Administration) Rules,

2014].

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

77

7.1.3 A company may maintain its Minutes in physical or in

electronic form.

Minutes may be maintained in electronic form in such manner as prescribed

under the Act and as may be decided by the Board. Minutes in electronic form

shal be maintained with Timestamp.

Every listed company or a company having not less than one thousand

shareholders, debenture holders and other security holders, may maintain its

records in electronic form [Rule 27 of the Companies (Management and

Administration) Rules, 2014]. An Explanation underneath the said Rule states that

the term “records” means any register, index, agreement, memorandum, Minutes

or any other document required by the Act or the rules made thereunder to be

kept by a company.

Timestamp

Timestamp is the most authentic way to assure existence of electronic documents,

agreements, certificates or any other vital information in electronic form. The

term ‘Timestamp’ is derived from rubber stamps used in offices to record when

the document was received. However, in modern times, usage of the term has

expanded to refer to digital date and time information attached to digital data. For

example, computer files contain Timestamps that indicate when the file was last

modified; digital cameras add Timestamps to the pictures they take, recording

the date and time the picture was taken.

For the purpose of SS-1, Timestamp should be created with a system integrated

time to mark the creation or modification of a file. When a file is created, the

system itself should note the time at which the file is created or modified. When

a digital signature is affixed, the date and time of signing should get recorded

automatical y. When an e-mail is received or sent, there should be a recording of

the time by the system. Al this should be recorded by a Secured Computer

System.

Consistency in the form of maintaining Minutes

A company shall however fol ow a uniform and consistent form of maintaining

the Minutes. Any deviation in such form of maintenance shall be authorised by

the Board.

Companies should maintain the Minutes of all Meetings either in physical form

or in electronic form. In other words, companies should not maintain Minutes of

a few Meetings in physical form and of a few Meetings in electronic form.

78

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Maintenance of Minutes in electronic form

Where Minutes are maintained in electronic form, fol owing requirements should

be satisfied –

(a) the information contained therein remains accessible so as to be usable

for a subsequent reference;

(b) it is retained in the format in which it was originally generated, or in a

format which can be demonstrated to represent accurately the

information originally generated;

(c) the details which would facilitate the identification of the origin,

destination, date and time of generation are available in the electronic

record.

The Managing Director, Company Secretary or any other Director or officer of the

company as the Board may decide, should be responsible for the maintenance

and security of Minutes in electronic form [Rule 28(1) of the Companies

(Management and Administration) Rules, 2014]. The Board may authorise any

one of the above to maintain the Minutes Book whose duty and responsibility

would be to maintain it securely.

The person who is responsible for the maintenance and security of Minutes in

electronic form should –

(a) provide adequate protection against unauthorised access, alteration or

tampering of the Minutes;

(b) ensure against loss of the Minutes as a result of damage to, or failure

of the media on which the Minutes are maintained;

(c) ensure that the signatory of the Minutes does not repudiate the signed

Minutes as not genuine;

(d) ensure that computer systems, software and hardware are adequately

secured and validated to ensure their accuracy, reliability and consistent

intended performance;

(e) ensure that the computer systems can discern invalid and altered

Minutes;

(f) ensure that Minutes are accurate, accessible, and capable of being

reproduced for reference later;

(g) ensure that the Minutes are at al times capable of being retrieved to a

readable and printable form;

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

79

(h) ensure that Minutes are kept in a non-rewriteable and non-erasable

format like pdf. version or some other version which cannot be altered

or tampered;

(i) ensure that a backup is kept of the updated Minutes maintained in

electronic form; such backup is authenticated and dated and is securely

kept at such place as may be decided by the Board;

(j) limit the access to the Minutes to the Managing Director, Company

Secretary or any other Director or officer or persons performing work of

the company as may be authorised by the Board in this behalf; access

may be given to the Auditor(s) and/or other persons as al owed in

terms of the relevant paragraphs of SS-1.

(k) ensure that any reproduction of the non-electronic original Minutes in

electronic form is complete, authentic, true and legible when retrieved;

(l) arrange and index the Minutes in a way that permits easy location,

access and retrieval of any particular record; and

(m) take necessary steps to ensure security, integrity and confidentiality of

Minutes.

7.1.4 The pages of the Minutes Books shall be consecutively

numbered.

This shall be fol owed irrespective of a break in the Book arising out of periodical

binding in case the Minutes are maintained in physical form. This shal be equal y

applicable for maintenance of Minutes Book in electronic form with Timestamp.

So as to facilitate easy retrieval of any decision/Resolution and additionally to

safeguard the integrity of the Minutes, the pages of the Minutes Book should be

consecutively numbered irrespective of break in the Minutes Book. Thus, where

a Minutes Book is ful and a new Minutes Book is prepared, the numbering

should continue from the number appearing on the last page of the previous

Minutes Book.

This should also be fol owed irrespective of the number or year of Meeting.

For the purpose of this paragraph of SS-1, a company may choose to give

consecutive numbering from Meetings held on or after 1st July, 2015, this being

the date from which SS-1 became effective.

In the event any page or part thereof in the Minutes Book is left blank, it shall be

scored out and initialled by the Chairman who signs the Minutes.

80

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

7.1.5 Minutes shal not be pasted or attached to the Minutes Book,

or tampered with in any manner.

The law prohibits pasting of Minutes in the Minutes Book and hence Minutes

cannot be type-written and then pasted in bound Minutes Book or in loose leaves.

Minutes should also not be printed on a piece of paper, whether on letter-head or

any other paper, and pasted in the Minutes Book.

It is with a view to maintaining the integrity and evidentiary value of Minutes that

a lot of safeguards have been introduced in SS-1 so that Minutes are kept,

maintained and preserved with requisite care and caution.

7.1.6 Minutes Books, if maintained in loose-leaf form, shal be bound

periodical y depending on the size and volume and coinciding

with one or more financial years of the company.

Maintenance of Minutes in loose-leaf form is not specifical y provided under

the Act. However, MCA has issued clarifications supporting the contention that

Minutes kept in loose-leaf form can be said to be in accordance with the

provisions of the Act.

If Minutes are maintained in loose-leaf form, these should be bound in one or

more than one book, coinciding with the calendar year or financial year. This

would facilitate proper maintenance and preservation of Minutes.

Security in case of Minutes maintained in loose leaves

There shal be a proper locking device to ensure security and proper control to

prevent removal or manipulation of the loose leaves.

This is to ensure security and effective control.

Further, if Minutes are kept in loose-leaf form, the company should:

1. take adequate precautions, appropriate to the means used, for guarding

against the risk of falsifying the information recorded; and

2. provide means for making the information available in an accurate

and intelligible form within a reasonable time to any person lawful y

entitled to examine the records.

7.1.7 Minutes Books shal be kept at the Registered Office of the

company or at such other place as may be approved by the

Board.

Minutes Books of the Board and Committee Meetings shal be kept in the

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

81

Registered Office of the company or such other place as the Board may decide.

[Rule 25(1)(e) of the Companies (Management and Administration) Rules, 2014].

7.2. Contents of Minutes

7.2.1 General Contents

7.2.1.1 Minutes shal state, at the beginning the serial number

and type of the Meeting, name of the company, day,

date, venue and time of commencement of the Meeting.

Minutes should state at the beginning the fol owing:

1. The name of the company

2. The type of Meeting (Board Meeting, Committee Meeting, etc.)

3. The serial number, day, date and venue of the Meeting

4. The time of commencement of the Meeting

The time of conclusion of the meeting should also be recorded in the Minutes

either at the beginning or at the end of the Minutes. The requirement of recording

the time of conclusion of the Meeting is relevant for listed companies in the light

of the requirements under the Listing Regulations. Since SS-1 promotes good

corporate practices, this requirement has been extended to other companies as

wel . This would also help the Minutes to be complete in al aspects.

Adjourned Meeting

In respect of a Meeting adjourned for want of Quorum, a statement to that effect

by the Chairman or in his absence, by any other Director present at the Meeting

shall be recorded in the Minutes.

The Minutes of the adjourned Meeting should be prepared separately and in the

same manner as the Minutes of the original Meeting and the fact that the Meeting

is an adjourned Meeting should be specified in such Minutes.

For the purpose of recording the time of conclusion of the Meeting which has

been adjourned, the time at which such Meeting was adjourned should be

recorded.

7.2.1.2 Minutes shal record the names of the Directors present

physical y or through Electronic Mode, the Company

Secretary who is in attendance at the Meeting and

Invitees, if any, including Invitees for specific items.

82

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Minutes should record the names of the fol owing:

1. the Directors present, physically or through electronic mode

The Minutes should disclose the particulars of the Directors who

attended the Meeting through Electronic Mode [Sub-Rule 11(b) of Rule 3

of the Companies (Meetings of Board and its Powers) Rules, 2014].

The names of the Directors shal be listed in alphabetical order or in

any other logical manner, but in either case starting with the name of

the person in the Chair.

The term “any other logical manner” should be liberal y construed as

the manner in which the company deems it appropriate to record the

names of Directors present with some logic behind e.g. designation,

seniority, etc. of the directors.

2. the Company Secretary, if any, in attendance, and

3. the Invitees, if any, including Invitees for specific items

The capacity in which an Invitee attends the Meeting and where

applicable, the name of the entity such Invitee represents and the

relation, if any, of that entity to the company shal also be recorded.

If an Invitee is present only during the discussion on a particular item

of business, such fact should also be mentioned in the Minutes.

Any officer of the company who attends the Meeting, other than the

Company Secretary, should be treated as an Invitee to the Meeting and

the name of such person should be included in the Minutes.

Besides the above, the Minutes should also record the fol owing:

1. The name of the Director who took the Chair.

2. The precise nature of actual business transacted and what was formal y

proposed and ultimately decided upon.

3. Vote of thanks.

7.2.1.3 Minutes shal contain a record of al appointments made

at the Meeting.

Minutes shal record all appointments approved by the Board. For example:

Appointment of Directors, KMPs, etc.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

83

Where the Minutes have been kept in accordance with the Act and all

appointments have been recorded, then until the contrary is proved, all

appointments of Directors, First Auditors, Key Managerial Personnel, Secretarial

Auditors, Internal Auditors and Cost Auditors, shall be deemed to have been duly

approved by the Board.

7.2.2 Specific Contents

7.2.2.1 Minutes shal inter-alia contain:

(a) The name(s) of Directors present and their mode

of attendance, if through Electronic Mode.

In case all Directors are present physically, the

Minutes need not specially record the mode of

attendance. However, the Minutes should record the

same in respect of Directors who participated in the

Meeting through Electronic Mode.

(b) In case of a Director participating through Electronic

Mode, his particulars, the location from where he

participated and wherever required, his consent to

sign the statutory registers placed at the Meeting.

Minutes should record the location from where the

Directors participating through Electronic Mode

participated in the Meeting.

(c) The name of Company Secretary who is in

attendance and Invitees, if any, for specific items

and mode of their attendance if through Electronic

Mode.

(d) Record of election, if any, of the Chairman of the

Meeting.

The election, if any, of the Chairman of the Meeting,

as provided in paragraph 5 of SS-1, should be recorded

in the Minutes.

(e) Record of presence of Quorum

If at the commencement of the Meeting, Quorum is

present, but subsequently any Director leaves before

the close of the Meeting due to which the Quorum

84

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

requirement is not met for businesses taken up

thereafter, then the Meeting should be adjourned and

a statement to that effect should be recorded in the

Minutes.

(f) The names of Directors who sought and were

granted leave of absence.

(g) Noting of the Minutes of the preceding Meeting.

Minutes of the preceding Meeting, including any

adjourned Meeting, should be noted.

(h) Noting the Minutes of the Meetings of the

Committees.

Minutes of a Board Meeting should contain a noting

of the Minutes of the Meetings of all its Committees

which have been entered in the Minutes Book of the

respective Committees and which have not yet been

noted by the Board.

This is a good governance practice which would

ensure that the Board remains intimated about the

deliberations and discussions that have taken place

at Committee Meetings.

(i) The text of the Resolution(s) passed by circulation

since the last Meeting, including dissent or

abstention, if any.

If any Director on the Board dissents or abstains from

voting on any of the Resolution passed by circulation,

then such dissent or abstention should be recorded

in the Minutes.

(j) The fact that an Interested Director did not

participate in the discussions and did not vote on

item of business in which he was interested and in

case of related party transaction such director was

not present in the Meeting during discussions and

voting on such item.

In case of a private company, the Minutes should

record the fact that an interested Director after

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

85

disclosure of his interest participated in the discussion

and voted thereat (In line with MCA Notification No.

G.S.R. 464(E) dated June 5, 2015)

(k) The views of the Directors particularly the

Independent Director, if specifical y insisted upon

by such Directors, provided these, in the opinion

of the Chairman, are not defamatory of any person,

not irrelevant or immaterial to the proceedings or

not detrimental to the interests of the company.

(l) If any Director has participated only for a part of

the Meeting, the Agenda items in which he did not

participate.

In the event, a particular Director leaves the Meeting

early, the fact of his so leaving should be incorporated

in the Minutes. Likewise, if a particular Director joins

the Meeting after its commencement, this fact should

also be recorded in the Minutes.

(m) The fact of the dissent and the name of the Director

who dissented from the Resolution or abstained

from voting thereon.

Names of Directors who abstained from voting and

names of those dissenting should also be mentioned

in the Minutes.

(n) Ratification by Independent Director or majority of

Directors, as the case may be, in case of Meetings

held at a shorter Notice.

If the Independent Director does not ratify the decision

taken at the Meeting held at a shorter Notice or if he

abstains from such ratification, a statement to that

effect should be recorded in the Minutes.

(o) Consideration of any item other than those included

in the Agenda with the consent of majority of the

Directors present at the Meeting and ratification

of the decision taken in respect of such item by a

majority of Directors of the company.

86

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Minutes should state that items which were not

included in the Agenda were taken up with the

consent of the Chairman and majority of the Directors

present at the Meeting. Minutes should also state that

the decision taken in respect of such item has been

approved / ratified by the majority of the Directors of

the company.

(p) The time of commencement and conclusion of the

Meeting.

The Minutes should record the time when the Meeting

commenced and concluded.

In addition to what is stated above, the fol owing should also be recorded in the

Minutes, to the extent applicable:

(a) the fact that the Notices given by Directors disclosing their Directorships

and shareholding in other companies, bodies corporate, firms, or other

association of individuals as per Section 184 of the Act and their

shareholdings in the company/holding/subsidiary/associate company

as per Section 170 of the Act, were read and noted;

(b) the fact of unanimity of decisions of dis-interested Directors as

contemplated by Sections 203 and 186 of the Act and listed out in

Annexure IC;

(c) the fact that the register of contracts with related parties and contracts

and bodies etc. in which Directors are interested was placed before

the Meeting and was signed by al the Directors present thereat (Section

189 of the Act);

(d) Noting of declaration of independence by Independent Directors

[Sub-section (7) of Section 149 of the Act];

(e) Noting of declaration that none of the Directors are disqualified to be

appointed / continuing as a Director of the company or are disqualified

to act as a Director on the basis of non-compliance by other companies

on the Board(s) of which they are Directors, in terms of the provisions of

sub-section (2) of Section 164 of the Act;

(f) In case of demise or resignation or disqualification of any Director,

details of such Director and noting of vacation of his office.

(g) In case a Resolution placed before the Board is rejected or withdrawn,

the fact of it so having been rejected or withdrawn.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

87

As already stated, if a Resolution by circulation is not passed due to lack of

majority, or if it has to be taken up at a Meeting of the Board due to one-third of the

directors requiring the same, this fact should appropriately be recorded in the

Minutes of the next Meeting, as a matter of good governance.

If a Meeting has been cal ed in pursuance of a request by a Director, such fact

should also be recorded in the Minutes.

7.2.2.2. Apart from the Resolution or the decision, Minutes shal

mention the brief background of al proposals and

summarise the deliberations thereof. In case of major

decisions, the rationale thereof shal also be mentioned.

Brief description of the discussions which took place should be recorded in the

Minutes, as evidence of the fact that the Board has considered and deliberated

the matter before taking any decision on the same.

The decisions shall be recorded in the form of Resolutions, where it is statutorily

or otherwise required. In other cases, the decisions can be recorded in a narrative

form.

For instance: If the Board approves a project, the decision of the Board may be

mentioned with the fol owing narrative since there is no statutory mandate in this

case to record the decision in the form of Resolution:

“Project XYZ was approved by the Board after a thorough discussion.”

Where a Resolution was passed pursuant to the Chairman of the Meeting

exercising his second or casting vote, the Minutes shall record such fact.

The Article, if any, referring to the casting vote by the Chairman should also be

recorded in the Minutes.

7.3 Recording of Minutes

Companies fol ow diverse practices with respect to recording of Minutes. Some

companies record only the decisions while few companies record only the

Resolutions that capture the decisions taken and some companies record the

entire proceedings in the form of almost an exact transcript of what had transpired

at the Meeting. SS-1 seeks to harmonise such divergent practices by providing

principles for recording of Minutes.

The Minutes should be recorded in such a way that it enables any reader to

understand what had transpired in the Meeting.

Specimen Minutes of the first and subsequent Board Meetings are given in

Annexure VI and VI I respectively.

88

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

7.3.1 Minutes shal contain a fair and correct summary of the

proceedings of the Meeting.

Minutes are not an exhaustive record of everything said at a Meeting. Minutes

should record the decisions of the Board, with a narrative to put them in context.

They should not attempt to record al reasons for decisions taken, i.e. al arguments

put forth for and against a particular Resolution. There is also no need to record

the details of voting.

Since the Notes on Agenda contain the background of the proposal in detail, the

Minutes should contain only the summary of the proposal. It is not required that

whatever is contained in the Notes on Agenda be reproduced verbatim; however,

the crux of the matter should be captured in the Minutes.

The Company Secretary shall record the proceedings of the Meetings. Where

there is no Company Secretary, any other person duly authorised by the Board or

by the Chairman in this behalf shall record the proceedings.

In case a Company Secretary is unable to attend a Meeting, or in the absence of

the Company Secretary, any other person duly authorised by the Board or by the

Chairman may attend and record the proceedings of the Meeting.

The Chairman shal ensure that the proceedings of the Meeting are correctly

recorded.

Chairman’s discretion

The Chairman has absolute discretion to exclude from the Minutes, matters

which in his opinion are or could reasonably be regarded as defamatory of any

person, irrelevant or immaterial to the proceedings or which are detrimental to

the interests of the company.

The Chairman has the responsibility to ensure that the Minutes contain a fair and

accurate summary of the proceedings at the Meeting. The word “fair” signifies

the need to record matters as transpired at the Meeting without any bias. While

doing so, he has absolute discretion to exclude matters of the nature as specified

above.

When draft Minutes are circulated to the Directors, they may revert to the Chairman

directly or through the Company Secretary with their suggestions, comments and

observations. The Chairman should consider such suggestions, comments and

observations objectively in the light of the proceedings that transpired at the

Meeting and settle the draft of the Minutes.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

89

7.3.2 Minutes shal be written in clear, concise and plain language.

Minutes need not be an exact transcript of the proceedings at the Meeting.

Minutes should be written in simple language and should contain a brief synopsis

of the discussions along with the decisions taken at the Meeting.

Minutes should record the essential elements of the discussion and the complete

text of the Resolutions passed at the Meeting.

In case any Director requires his views or opinion on a particular item to be

recorded verbatim in the Minutes, the decision of the Chairman whether or not to

do so shal be final.

Minutes shal be written in third person and past tense. Resolutions shal however

be written in present tense.

There is no restriction in law on the language in which the Minutes are recorded.

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, shal be

identified by initial ing of such documents by the Company

Secretary or the Chairman.

Initialling would help in authentication of documents placed before the Board on

the basis of which the Board has given any approval.

For instance, if a letter of intent for an item/project was tabled at the Meeting, the

fact that such a letter was presented at the meeting should be mentioned in the

Minutes and such letter should be initialled for its identification by the Company

Secretary or the Chairman.

However, documents placed for noting and/or documents which have been

signed by the Chairman, or a Director or any other official of the company need

not be initial ed again. Thus, only unsigned documents, reports, notes or

presentations, placed before the Board, in respect of items requiring a decision of

the Board, need to be initialled.

It is further clarified that the unsigned documents, reports, notes or presentations

included in the Agenda Notes circulated to the Directors prior to the Meeting do

not need such initialling.

The authenticated papers should be retained for the same period as the Agenda

and Notes thereon are kept and maintained.

90

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

7.3.4 Where any earlier Resolution(s) or decision is superseded or

modified, Minutes shal contain a specific reference to such

earlier Resolution(s) or decision or state that the Resolution is

in supersession of al earlier Resolutions passed in that regard.

In case a Resolution passed at an earlier Meeting is being modified or superseded

in any subsequent Meeting, specific reference of such earlier Resolution should

be given in the Minutes or if there are several resolutions on the same aspect, all

of which are superseded, it should be stated that the present Resolution is in

supersession of all earlier Resolutions.

7.3.5 Minutes of the preceding Meeting shal be noted at a Meeting

of the Board held immediately following the date of entry of

such Minutes in the Minutes Book.

It is necessary to note the fact that Minutes of an earlier Meeting have been

entered in the Minutes Book and they have been taken on record. Considering

that Minutes of a Meeting are finalised and entered in the Minutes Book after

seeking comments from Directors, the question of approval of such Minutes at

the next Board Meeting does not arise. Hence, at the subsequent Board Meeting,

the Directors should only note the Minutes finalised by the Chairman and entered

in the Minutes Book.

Minutes of Committee Meeting

Minutes of the Meetings of any Committee shall be noted at a Meeting of the

Board held immediately fol owing the date of entry of such Minutes in the Minutes

Book.

Il ustration

In case, the Meeting of a Committee is held on 1st July and the Meeting of the

Board is held on 20th July, Minutes of the Meeting of the Committee should be

entered in the Minutes Book on or before 31st July.

Say, the Minutes of this Meeting of the Committee are entered in the Minutes

Book on 28th July. In such a case, the Minutes of such Meeting should be noted

at the Meeting of the Board held immediately fol owing 28th July.

If the Minutes of this Meeting of the Committee are entered in the Minutes

Book on 15th July, the Minutes of such Meeting should be noted at the Meeting

of the Board held immediately fol owing 15th July, i.e. on 20th July.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

91

7.4. Finalisation of Minutes

Within fifteen days from the date of the conclusion of the Meeting of the

Board or the Committee, the draft Minutes thereof shal 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 al the members of the Board or

the Committee, as on the date of the Meeting, for their comments.

The above requirement has been introduced in line with Rule 3(12) of the

Companies (Meetings of Board and its Powers) Rules, 2014, which requires the

draft Minutes of the Meetings held through Electronic Mode to be circulated to the

Directors within fifteen days. This requirement has been extended to physical

Meetings also since it is a good practice.

Means of sending draft Minutes

Where a Director specifies a particular means of delivery of draft Minutes, these

shall be sent to him by such means.

The requirement is to circulate the draft Minutes within fifteen days. This

requirement does not pertain to the receipt of the draft Minutes by the Directors

within fifteen days.

Il ustration

If the Meeting is held on 1st September, 2015, the Minutes should be circulated

latest by 15th September, 2015 and the receipt of the same by the directors

thereafter would be in compliance.

Proof of sending draft Minutes and its delivery shal be maintained by the company

for such period as decided by the Board, which shall not be less than three years

from the date of the Meeting.

The provisions regarding proof of sending and delivery of Notice as explained in

paragraph 1.3.1 of SS-1 shall mutatis-mutandis be applicable here also.

To whom should the draft Minutes be sent?

The draft Minutes should be sent to the Directors or members of the Committee,

as the case may be, who were present at the Meeting, either physical y or through

Electronic Mode to ensure accurate recording of decisions taken at the Meeting

and to obviate the possibility of misstatements or errors.

The draft Minutes should also be sent to those Directors who were not present at

the Meeting for information and comments thereon, if any. This is because all the

92

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Directors are responsible for the decisions taken at any Board Meeting, whether

or not they attended the Meeting.

As a good governance practice, the draft Minutes of a Meeting in which a particular

person has been appointed as Director should be sent to such newly appointed

Director, irrespective of whether he attended such Meeting or not, since he is also

responsible for the decisions of the Board from the date of his appointment as a

Director.

A Director, who ceases to be a Director after a Meeting of the Board is entitled to

receive the draft Minutes of that particular Meeting and to offer comments thereon,

irrespective of whether he attended such Meeting or not.

The fact that the Director has vacated his office, by any reason whatsoever, shall

not affect his right to receive such Minutes.

The draft Minutes of a meeting should be made available to such Director even if

the cessation of Directorship has taken place during the Meeting concerned.

Time limit for response

The Directors, whether present at the Meeting or not, shall communicate their

comments, if any, in writing on the draft Minutes within seven days from the date

of circulation thereof, so that the Minutes are finalised and entered in the Minutes

Book within the specified time limit of thirty days.

Discretion of the Chairman

If any Director communicates his comments after the expiry of the said period of

seven days, the Chairman, if so authorised by the Board, shal have the discretion

to consider such comments.

Every director who attended the meeting, whether personally or through video

conferencing or other audio visual means, shall confirm or give his comments in

writing, about the accuracy of recording of the proceedings of that particular

meeting in the draft minutes, within seven days or some reasonable time as

decided by the Board, after receipt of the draft minutes failing which his approval

shal be presumed. [Rule 3(12)(b) of Companies (Meetings of Board and its powers)

Rules, 2014]

According to the above rule the Board may decide a reasonable period for

comments on the draft minutes circulated to al the Directors. However, in the

absence of any such decision, comments on the draft minutes received after 7

days may be considered by the Chairman, if he is authorised by the Board for this

purpose.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

93

Effect in the event of no response

In the event a Director does not comment on the draft Minutes, the draft Minutes

shall be deemed to have been approved by such Director.

However, where an Independent Director is required to ratify a decision taken at

a Meeting held at shorter Notice and such Director abstains from ratifying or does

not ratify the decision, then, in such a case, the decision taken / draft Minutes

shall not be presumed to be approved by such Director.

7.5 Entry in the Minutes Book

7.5.1 Minutes shal be entered in the Minutes Book within thirty

days from the date of conclusion of the Meeting.

The Minutes of proceedings of each Meeting should be entered in the books

maintained for that purpose within thirty days of the conclusion of the Meeting

[Rule 25(1)(b)(i) of the Companies (Management and Administration) Rules, 2014].

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.

7.5.2 The date of entry of the Minutes in the Minutes Book shal be

recorded by the Company Secretary.

Where there is no Company Secretary, it shal be entered by any other person

duly authorised by the Board or by the Chairman.

The date of entry of the Minutes should be recorded on the last page of the

respective Minutes. If the Minutes are maintained in electronic form, the date of

entry should be captured in Timestamp.

7.5.3 Minutes, once entered in the Minutes Book, shal not be altered.

Any alteration in the Minutes as entered shal be made only

by way of express approval of the Board at its subsequent

Meeting at which the Minutes are noted by the Board and

the fact of such alteration shal be recorded in the Minutes of

such subsequent Meeting.

Any corrections or modifications in the text of Minutes, duly entered in the Minutes

Book and signed by the Chairman, would tantamount to alteration of Minutes.

Modification of Resolutions passed by the Board

A Resolution passed by the Board cannot be subsequently modified or altered,

94

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

unless the Resolution is superseded, modified or altered by the Board by means

of another Resolution duly passed.

7.6 Signing and Dating of Minutes

7.6.1 Minutes of the Meeting of the Board shal be signed and dated

by the Chairman of the Meeting or by the Chairman of the

next Meeting.

Minutes of the previous Meeting may be signed either by the Chairman of such

Meeting at any time before the next Meeting is held or by the Chairman of the

next Meeting at the next Meeting.

Although Minutes may be signed by the Chairman of the next Meeting, the

Minutes of a Meeting should be finalised by the Chairman of that Meeting, so that

the Minutes may be entered in the Minutes Book within the specified time limit of

thirty days.

Minutes of a Meeting may be signed by the Chairman of that Meeting or by the

Chairman of the next Meeting, as the actual act of signing (as distinct from mere

’entering’) could take place beyond a period of thirty days if the succeeding

Meeting is held after a period of thirty days from the date of the earlier Meeting.

However, it is not obligatory to wait for the next Meeting in order to have the

Minutes of the previous Meeting signed. Such Minutes may be signed by the

Chairman of the Meeting at any time before the next Meeting is held.

7.6.2 The Chairman shal initial each page of the Minutes, sign the

last page and append to such signature the date on which

and the place where he has signed the Minutes.

Each page of the Minutes of a Meeting of the Board or a Committee thereof

should be initial ed or signed and the last page should be dated and signed by

the Chairman of the said Meeting or the Chairman of the next Meeting [Rule

25(1)(d)(i) of the Companies (Management and Administration) Rules, 2014].

The place for this purpose should be the city where the Minutes are being signed.

The date on which the Minutes are signed should be appended to the signature.

Any blank space in a page between the conclusion of the Minutes and signature

of the Chairman shall be scored out.

The Minutes should be recorded on consecutive pages of the Minutes Book. No

blank space should be left in between the Minutes.

If the Minutes are maintained in electronic form, the Chairman shal sign the

Minutes digitally.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

95

Scanned signature of the Chairman cannot be affixed on the Minutes.

7.6.3 Minutes, once signed by the Chairman, shal not be altered,

save as mentioned in this Standard.

As stated in paragraph 7.5.3 of SS-1, any alteration in the Minutes, as entered,

should be made only by way of an express approval of the Board at its subsequent

Meeting at which the Minutes are noted by the Board and the fact of such alteration

shall be recorded in the Minutes of such subsequent Meeting.

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

authorised by the Board, shal be circulated to al 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.

This paragraph contains the procedure with respect to issuing a copy of the

signed Minutes to the Directors.

In case the Minutes are maintained in physical form, a photocopy of the signed

Minutes should be taken and certified by the Company Secretary.

Certification is nothing but signing under the word “Certified” or in a similar manner

to distinguish a mere copy from the original.

In case of Minutes maintained in electronic form, the same may be circulated to

all Directors after it is digitally certified by the Company Secretary.

Where there is no Company Secretary, any Director who has been duly authorised

by the Board or the Chairman should certify and send the Minutes to the Directors

for their reference and record.

There is no restriction on the certification of a copy of the signed Minutes by a

Director who was not present at such Meeting. Such Director should however

ensure that what he certifies is the copy of the Minutes signed by the Chairman.

The provisions with respect to sending of draft Minutes of a Meeting in which a

person is appointed as a Director or a Director ceases to be a Director are mutatis-

mutandis applicable for circulating a copy of the signed Minutes of that Meeting

to the Director(s) so appointed or ceased.

The requirement of circulating a copy of the signed Minutes has been introduced

96

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

with the aim of protecting the interest of Directors, including Independent Directors,

by requiring the provision of proper and adequate information in a transparent

manner, especially in the light of the increased accountability of the Directors,

including Independent Directors and Non-Executive Directors laid down under

sub-section (12) of Section 149 read with sub-section (60) of Section 2 of the Act.

However, a director may waive his right to receive the copy of signed minutes.

Such waiver may be communicated in writing or may be recorded in the minutes.

Circulation of a copy of the signed Minutes would be a safeguard for the Directors

as final approved and signed copies of the Minutes would be available with

them as a handy record for future reference which would enable them to discharge

their responsibilities and duties diligently.

If an Alternate Director is appointed, it is advisable to send the copy of the signed

Minutes also to the Original Director for his information.

Proof of sending signed Minutes and its delivery shal be maintained by the

company for such period as decided by the Board, which shal not be less than

three years from the date of the Meeting.

7.7 Inspection and Extracts of Minutes

7.7.1 The Minutes of Meetings of the Board and any Committee

thereof can be inspected by the Directors.

Minutes should be open for inspection during business hours by any Director at

the registered office of the company or at such other place in India where Minutes

are maintained [Sub-section (3) of Section 128 read with sub-section (12) of Section

2 of the Act].

Additionally, by virtue of any agreement or the Articles, any other person may be

permitted to seek and obtain such information or such inspection rights.

A Director is entitled to inspect the Minutes of a Meeting held before the period of

his Directorship.

A Director of a company may need to inspect or receive copies of the Minutes of

the Meetings held before the period of his Directorship since the decisions taken

earlier may have implications on the current decisions to be taken. Furthermore,

it would help him to understand the company better and to shape his thoughts so

as to take part in the Meetings constructively and effectively.

A Director is entitled to inspect the Minutes of the Meetings held during the period

of his Directorship, even after he ceases to be a Director.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

97

This aims to protect the interest of individual Directors, including Independent

Directors, by requiring the provision of proper and adequate information in a

transparent manner, especially in the light of the increased accountability of

Independent Directors under the Act.

Often a Director, upon ceasing to be a Director of the company, may be in need of

Minutes of Meetings of the Board and also of the Committees of the Board, which

he had served on for the sake of his own protection in case of any legal

proceedings such as oppression and mismanagement matters, class action

suits, misfeasance proceedings, criminal prosecutions, etc.

In order to protect the interest of the company, a system may be introduced

requiring a person ceasing to be a Director who desires to inspect the Minutes

Book, to submit a formal application in writing giving the purpose for which such

inspection is sought and to furnish a non-disclosure undertaking to ensure that

he is bound by obligations of confidentiality.

Entitlement of Members

A Member of the company is not entitled to inspect the Minutes of Meetings of

the Board.

Unless a Member is or was a Director of the company, he is not entitled to inspect

Minutes of Meetings of the Board. However, this paragraph of SS-1 does not come

in the way of the Articles of a company containing a provision enabling Members

to have inspection rights of Minutes Books, Books of Account and other Books and

Papers. In closely held companies and in joint venture companies, such rights are

usual y incorporated in the Articles and in such cases, a Member may be entitled

to inspect or take copies or extracts of Minutes of Meetings of Board.

A contractual right of inspection, just as a statutory right of inspection, can be

exercised whatever the motive or interest of a person may be [Rameshwar Lal

Nath v. Calcutta Wheat & Seed Association Limited (1938) 8 Comp. Cas. 78].

Others entitled for inspection

The Company Secretary in Practice appointed by the company, the Secretarial

Auditor, the Statutory Auditor, the Cost Auditor or the Internal Auditor of the company

can inspect the Minutes as he may consider necessary for the performance of his

duties.

This would enable the Statutory Auditor or the Secretarial Auditor or the Company

Secretary in Practice, as the case may be, to discharge their professional duties

fairly.

98

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Officers of the Registrar of Companies can inspect the Minutes Book during the

course of inspection [Section 206-207 of the Act]. Officers of the Government/

Regulatory bodies, if so authorised by the Act or any other law, can also inspect

the Minutes Book.

Mode for Inspection and care to be taken

Inspection of Minutes Book may be provided in physical or in electronic form.

While providing inspection of Minutes Book, the Company Secretary or the official

of the company authorised by the Company Secretary to facilitate inspection

shall take all precautions to ensure that the Minutes Book is not mutilated or in

any way tampered with by the person inspecting.

7.7.2 Extracts of the Minutes shal be given only after the Minutes

have been duly entered in the Minutes Book. However,

certified copies of any Resolution passed at a Meeting may

be issued even earlier, if the text of that Resolution had been

placed at the Meeting.

Only after the Minutes have been entered in the Minutes Book, extracts of Minutes

can be given to third parties.

However, without waiting for these formalities, certified copies of the Resolutions

can be issued even earlier, once a Resolution is passed. Provided, certified copies

of Resolutions can be given only when the text of a Resolution proposed to be

passed at a Meeting had been placed before the Meeting. Many a times, it might

be necessary to furnish certified copies of Resolutions or file the same with

authorities for various purposes. Therefore, when the Notes on Agenda are

prepared, if an item is of such nature as would require a certified copy to be given

to third parties immediately after the passing of the Resolution, the text of the

Resolution should be included in the Notes on Agenda or tabled at the Meeting

so that certified copies can be issued at any time after the Resolution is passed.

Such situations may arise in the case of Resolutions passed for opening of bank

accounts, taking loans from financial institutions, etc. where the bank account

cannot be opened/operated or the financial assistance cannot be availed of

without furnishing a certified copy of the Resolution.

A company can implement Resolutions passed at Meetings of the Board or

Committee thereof without waiting for noting of the concerned Minutes at the

next Meeting of the Board or the Committee, as the case may be.

A copy of the Board Resolution may be certified by the Company Secretary or the

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

99

Chairman or by any Director. There is no restriction on the certification of a Board

Resolution by a Director who was not present at the Meeting where such a

Resolution was passed. Such Director should however ensure that what he

certifies is based on his knowledge of what had transpired at the Meeting.

A Director is entitled to receive, a copy of the Minutes of a Meeting held before the

period of his Directorship.

A Director is entitled to receive a copy of the signed Minutes of a Meeting held

during the period of his Directorship, even if he ceases to be a Director.

Extracts of the duly signed Minutes may be provided in physical or electronic

form.

The provisions with respect to sending of draft Minutes of a Meeting in which a

person is appointed as a Director or a Director ceases to be a Director are mutatis-

mutandis applicable for giving extracts of the Minutes of that Meeting.

A Director is entitled to demand an extract of the Minutes of Meetings for any

period prior to his appointment as a Director. However, after he ceases to be a

Director, he can demand extracts of Minutes only for the period during which he

was a Director. He cannot demand extracts of Minutes of Meetings held prior to

his induction as a Director nor in relation to Meetings held during the period after

he ceases to be a Director. The company may introduce proper systems for

streamlining such requests and every such request by a person ceasing to be a

Director should preferably be in writing giving the purpose for which such extracts

are sought and while delivering extracts of the Minutes, if thought fit, the company

may insist on the person demanding the extracts to execute a non-disclosure

undertaking to ensure that he is bound to maintain confidentiality.

Notwithstanding the above, Directors of the company have a duty to maintain

confidentiality of any information relating to the company.

8. Preservation of Minutes and other Records

8.1 Minutes of al Meetings shal be preserved permanently in physical

or in electronic form with Timestamp.

Where, under a scheme of arrangement, a company has been merged or

amalgamated with another company, Minutes of all Meetings of the transferor

company, as handed over to the transferee company, shal be preserved

permanently by the transferee company, notwithstanding that the transferor

company might have been dissolved.

100

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

The preservation of Minutes of the merged or amalgamated company would

ensure easy reference to any important decisions taken prior to the merger or

amalgamation.

8.2 Office copies of Notices, Agenda, Notes on Agenda and other related

papers shal be preserved in good order in physical or in electronic

form for as long as they remain current or for eight financial years,

whichever is later and may be destroyed thereafter with the

approval of the Board.

Copies of the Notice cal ing the Meeting and other papers, documents,

agreements, approvals, etc. related to the business transacted at the Meeting

should be retained at least for as long as the related subject remains relevant or

for eight Financial Years, whichever is later.

Corol ary has been drawn from Rule 15 of the Companies (Management and

Administration) Rules, 2014 which prescribes a period of eight years for

preservation of register of debenture-holders or any other security holders and

annual return.

These papers explain in detail all the proposals made at the Board Meeting and

hence would enable easy reference to the important decisions taken earlier

alongwith the rationale for the decisions. Therefore, considering the importance

of these papers, prior approval of the Board is necessary for their destruction. This

is also because the Directors are responsible for devising and ensuring effective

operation of proper and adequate Board systems and since the need to refer to

these papers may arise at anytime.

Office copies of Notices, Agenda, Notes on Agenda and other related papers of

the transferor company, as handed over to the transferee company, shall be

preserved in good order in physical or electronic form for as long as they remain

current or for eight financial years, whichever is later and may be destroyed

thereafter with the approval of the Board and permission of the Central

Government, where applicable.

The permission of the Central Government for destroying such records has been

prescribed in line with the provisions of Section 239 of the Act, which provides

that the books and papers of a company which has been amalgamated with, or

whose shares have been acquired by, another company should not be disposed

of without the prior permission of the Central Government and before granting

such permission, Government may appoint a person to examine the books and

papers or any of them for the purpose of ascertaining whether they contain any

evidence of the commission of an offence in connection with the promotion or

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

101

formation, or the management of the affairs of the transferor company or its

amalgamation or the acquisition of its shares.

Any record destroyed after 1st July, 2015 requires the approval of the Board, even

if such record pertains to a period prior to the applicability of SS-1.

It may be noted that the Board may authorise destruction of such records only

after the expiry of the period specified in this paragraph of SS-1.

8.3 Minutes Books shal be in the custody of the Company Secretary.

Where there is no Company Secretary, Minutes Books shall be in the custody of

any Director duly authorised for the purpose by the Board.

The Company Secretary or any Director who has been duly authorised for this

purpose, as the case may be, should ensure that the Minutes books are under a

proper locking system and no person has access to the Minutes without his

permission. Minutes maintained in electronic form should also be kept under a

proper security system.

9. Disclosure

The Report of the Board of Directors shal include a statement on compliances

of applicable Secretarial Standards.

The above statement may be given as under:

“The Directors have devised proper systems to ensure compliance with the

provisions of all applicable Secretarial Standards and that such systems are

adequate and operating effectively”.

The above statement is intended to align the disclosure requirement with the

provisions of Section 134(5)(f) of the Act, which requires the Directors to state in

the Directors Responsibility Statement that the Directors have devised proper

systems to ensure compliance with the provisions of all applicable laws and that

such systems are adequate and operating effectively.

10. Equity listed company should ensure additional compliances as

enumerated in the annexures given below:

(a) Key functions and responsibilities of the Board of Directors of an

equity listed company (Annexure-IX)

(b) Corporate governance requirements with respect to subsidiary of

an equity listed company (Annexure-X)

102

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Annexure I

(Refer Paragraph 1.3.8)

Il ustrative list of items of business which shal not be passed by circulation

and shal be placed before the Board at its Meeting

General Business Items

• Noting Minutes of Meetings of Audit Committee and other Committees.

• Approving financial statements and the Board’s Report.

• Considering the Compliance Certificate to ensure compliance with the

provisions of all the laws applicable to the company.

• Specifying list of laws applicable specifically to the company.

• Appointment of Secretarial Auditors and Internal Auditors.

Specific Items

• Borrowing money otherwise than by issue of debentures.

• Investing the funds of the company.

• Granting loans or giving guarantee or providing security in respect of

loans.

• Making political contributions.

• Making cal s on shareholders in respect of money unpaid on their

shares.

• Approving Remuneration of Managing Director, Whole-time Director

and Manager.

• Appointment or Removal of Key Managerial Personnel.

• Appointment of a person as a Managing Director / Manager in more

than one company.

• In case of a public company, the appointment of Director(s) in casual

vacancy subject to the provisions in the Articles of the company.

• According sanction for related party transactions which are not in the

ordinary course of business or which are not on arm’s length basis.

• Sale of subsidiaries

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

103

• Purchase and Sale of material tangible/intangible assets not in the

ordinary course of business.

• Approve Payment to Director for loss of office.

• Items arising out of separate Meeting of the Independent Directors if so

decided by the Independent Directors.

Corporate Actions

• Authorise Buy Back of securities

• Issue of securities, including debentures, whether in or outside India.

• Approving amalgamation, merger or reconstruction.

• Diversify the business.

• Takeover another company or acquiring control ing or substantial stake

in another company.

Additional list of items in case of listed companies

• Noting minutes of Board Meetings of the unlisted subsidiary.

• Quarterly, half-yearly and annual financial results for the listed company.

• Recruitment and remuneration of senior officers just below the level of

the Board of Directors.

• Agreement by the company with existing share transfer agent/ the

new share transfer agent in the manner as specified by the Board from

time to time.

• Statement of al significant transactions and arrangements entered into

by the unlisted subsidiary.

• Approving Annual operating plans and budgets.

• Capital budgets and any updates.

• Information on remuneration of Key Managerial Personnel.

• Show cause, demand, prosecution notices and penalty notices which

are materially important.

• Fatal or serious accidents, dangerous occurrences, any material effluent

or pol ution problems.

104

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

• Any material default in financial obligations to and by the company, or

substantial non-payment for goods sold by the company.

• Any issue, which involves possible public or product liability claims of

substantial nature, including any judgement or order which, may have

passed strictures on the conduct of the company or taken an adverse

view regarding another enterprise that can have negative implications

on the company.

• Details of any joint venture or col aboration agreement.

• Transactions that involve substantial payment towards goodwil , brand

equity, or intellectual property.

• Significant labour problems and their proposed solutions. Any significant

development in Human Resources/ Industrial Relations front like signing

of wage agreement, implementation of Voluntary Retirement Scheme

etc.

• Quarterly details of foreign exchange exposures and the steps taken

by management to limit the risks of adverse exchange rate movement,

if material.

• Non-compliance of any regulatory, statutory or listing requirements and

shareholder services such as non-payment of dividend, delay in share

transfer etc.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

105

Annexure IA

(Refer the head “Background” and Paragraph 1.3.8)

Powers of the Board to be exercised at Board Meetings as prescribed under

the Act

(a) To make calls on shareholders in respect of money unpaid on their

shares;

(b) To authorise buy-back of securities under Section 68 of the Act;

(c) To issue securities, including debentures, whether in or outside India;

(d) To borrow monies;

The above clause shal not apply to borrowings by a banking company

from other banking companies or from the Reserve Bank of India, the

State Bank of India or any other banks established by or under any Act.

(Explanation I to sub-section (3) of Section 179 of the Act)

In respect of dealings between a company and its bankers, the exercise

by the company of the power specified in clause (d) shal mean the

arrangement made by the company with its bankers for the borrowing

of money by way of overdraft or cash credit or otherwise and not the

actual day-to-day operation on overdraft, cash credit or other accounts

by means of which the arrangement so made is actually availed of.

(Explanation I to sub-section (3) of Section 179 of the Act)

(e) To invest the funds of the company;

(f) To grant loans or give guarantee or provide security in respect of loans;

(g) To approve financial statement and the Board’s report;

(h) To diversify the business of the company;

(i) To approve amalgamation, merger or reconstruction;

(j) To take over a company or acquire a control ing or substantial stake in

another company;

(k) Any other matter which may be prescribed, which at present are as

fol ows:

(1) To make political contributions;

(2) To appoint or remove key managerial personnel (KMP);

(3) To appoint internal auditors and Secretarial Auditor;

106

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

[Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 read

with amendment thereto dated 18th March, 2015]

The acceptance by a banking company in the ordinary course of its business of

deposits of money from the public repayable on demand or otherwise and

withdrawable by cheque, draft, order or otherwise, or the placing of monies on

deposit by a banking company with another banking company on such conditions

as the Board may prescribe, shal not be deemed to be a borrowing of monies or,

as the case may be, a making of loans by a banking company within the meaning

of Section 179. (Second Proviso to sub–section (3) of Section 179 of the Act)

Appoint a Director to fil a casual vacancy

In the case of a public company, if the office of any director appointed by the

company in General Meeting is vacated before his term of office expires in the

normal course, the resulting casual vacancy may, in default of and subject to any

regulations in the Articles of the company, be fil ed by the Board of Directors at a

Meeting of the Board:

Provided that any person so appointed shall hold office only up to the date up to

which the director in whose place he is appointed would have held office if it had

not been vacated.

(Sub-section (4) of Section 161 of the Act)

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

107

Annexure IB

(Refer the Paragraphs 1.3.8 and 6.1.1)

Il ustrative List of Items to be exercised at Board Meeting as given in SS-1 in

addition to those prescribed under the Act

General Business Items

1. Noting Minutes of Meetings of Audit Committee and other Committees.

2. Considering the Compliance Certificate to ensure compliance with the

provisions of all the laws applicable to the company.

3. Specifying list of laws applicable specifically to the company.

The Board is required to take note of the specific list of laws applicable to the

company. For example, Banking Regulation Act, 1949 in case of banking

companies.

Specific Items

1. Approving remuneration of Managing Director, Whole-time Director and

Manager.

2. Approving appointment of a person as a Managing Director / Manager

in more than one company.

3. According sanction for transactions with Related Party which are not in

the ordinary course of business or which are not on arm’s length basis.

4. Approving sale of subsidiaries

5. Approving purchase and sale of material tangible/intangible assets

not in the normal course of business.

6. Approving payment to Managing Director/Whole-time Director/

Manager for loss of office.

7. Items arising out of separate Meeting of the Independent Directors if so

decided by the Independent Directors.

Additional list of items in case of listed companies

1. Noting minutes of Board Meetings of the unlisted subsidiary.

2. Quarterly, half-yearly and annual financial results for the listed company.

3. Recruitment and remuneration of senior officers just below the level of

the Board of Directors.

108

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

4. Agreement by the company with existing share transfer agent/ the

new share transfer agent in the manner as specified by the Board from

time to time.

5. Statement of al significant transactions and arrangements entered into

by the unlisted subsidiary.

6. Approving Annual operating plans and budgets.

7. Approving Capital budgets and any updates.

8. Approving / Noting Information on Remuneration of Key Managerial

Personnel.

9. Noting show cause, demand, prosecution notices and penalty notices

which are materially important.

10. Noting fatal or serious accidents, dangerous occurrences, any material

effluent or pol ution problems.

11. Noting any material default in financial obligations to and by the

company, or substantial non-payment for goods sold by the company.

12. Noting any issue, which involves possible public or product liability

claims of substantial nature, including any judgement or order which,

may have passed strictures on the conduct of the company or taken an

adverse view regarding another enterprise that can have negative

implications on the company.

13. Noting details of any joint venture or col aboration agreement.

14. Noting transactions that involve substantial payment towards goodwil ,

brand equity, or intellectual property.

15. Noting significant labour problems and their proposed solutions. Any

significant development in Human Resources/ Industrial Relations front

like signing of wage agreement, implementation of Voluntary Retirement

Scheme etc.

16. Noting Quarterly details of foreign exchange exposures and the steps

taken by management to limit the risks of adverse exchange rate

movement, if material.

17. Noting non-compliance of any regulatory, statutory or listing

requirements and shareholder services such as non-payment of

dividend, delay in share transfer etc.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

109

Annexure IC

(Refer the head “Background” and Paragraph 7.2.2.1)

Powers to be exercised by unanimous consent

(a) Power to appoint or employ a person as its Managing Director under

Section 203 of the Act if he is the Managing Director or Manager of one

and not more than one other company;

(b) Power to invest or to give loans or guarantee or security under Section

186(5) of the Act.

(c) Power to remove trustees for the depositors after issue of circular or

advertisement and before expiry of his term [Rule 7(4) of the Companies

(Acceptance of Deposits) Rules, 2014]

110

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Annexure ID

(Refer the head “Background”)

Powers to be exercised subject to passing of

Special Resolution at General Meeting or through Postal Bal ot

(a) To sell, lease or otherwise dispose of the whole or substantial y the

whole of the undertaking of the company or, where the company owns

more than one undertaking, of the whole or substantially the whole of

any such undertaking.

Explanation. – For the purposes of this clause, –

(i) “undertaking” shall mean an undertaking in which the investment

of the company exceeds twenty per cent of its net worth as per

the audited balance sheet of the preceding financial year or an

undertaking which generates twenty per cent of the total income

of the company during the previous financial year;

(i ) the expression “substantially the whole of the undertaking” in any

financial year shall mean twenty per cent or more of the value of

the undertaking as per the audited balance sheet of the preceding

financial year;

Nothing in clause (a) above shall affect the title of a buyer or other

person who buys or takes on lease any property, investment or

undertaking as referred to therein, in good faith; or the sale or lease of

any property of the company where the ordinary business of the

company consists of, or comprises, such selling or leasing.

Any special Resolution conveying consent of the company as aforesaid

may stipulate such conditions as may be specified therein including

conditions regarding the use, disposal or investment of the sale

proceeds which may result from the transaction. However, conditions

so stipulated shall not be deemed to authorise the company to effect

any reduction in its capital except in accordance with the applicable

provisions contained in the Act.

(b) To invest otherwise in trust securities the amount of compensation

received by it as a result of any merger or amalgamation.

(c) To borrow money, where the money to be borrowed, together with the

money already borrowed by the company wil exceed aggregate of its

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

111

paid-up share capital and free reserves apart from temporary loans

obtained from company’s bankers in the ordinary course of business.

Provided that the acceptance by a banking company, in the ordinary

course of its business, of deposits of money from the public, repayable

on demand or otherwise, and withdrawable by cheque, draft, order or

otherwise, shal not be deemed to be a borrowing of monies by the

banking company within the meaning of this clause.

Special Resolution under this clause shal specify the total amount upto

which monies may be borrowed by the Board of Directors.

Explanation. – For the purposes of this clause, –

the expression “temporary loans” means loans repayable on demand

or within six months from the date of the loan such as short-term, cash

credit arrangements, the discounting of bil s and the issue of other

short-term loans of a seasonal character, but does not include loans

raised for the purpose of financial expenditure of a capital nature;

No debt incurred by a company in excess of the limit imposed by

clause (c) above shall be valid or effectual, unless the lender proves

that he advanced the loan in good faith and without knowledge that

the limit imposed by that clause had been exceeded.

(d) To remit or give time for the repayment of, any debt due from a Director.

[Section 180 of the Act]

The above restrictions would not however be applicable to a private company

since MCA has vide its Notification dated 5th June, 2015 exempted private

companies from the provisions of Section 180 of the Act.

112

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Annexure IE

(Refer the head “Background”)

Powers to be exercised subject to approvals of the General Meeting or the

Central Government or the National Company Law Tribunal or the

requirements of other Statutory Authorities and/or Regulators

(i) To appoint a Managing Director, Whole-time Director or Manager and

pay Remuneration to such person in case such appointment or

remuneration is at variance to the conditions specified in Schedule V;

(General Meeting and Central Government approval) [Sub-section (4)

of Section 196 of the Act]

(i ) To make contributions to bona fide charitable and other funds in excess

of the limit of 5% of the average net profits for the immediately preceding

three financial years; (General Meeting approval) (Section 181)

(i i) To give any loan or any guarantee or provide security in connection

with a loan to any other body corporate or person and acquire by way

of subscription, purchase or otherwise, the securities of any other body

corporate in excess of the limits laid down for the said purposes for the

Board of Directors (Section 186); (General Meeting approval by special

Resolution)

(iv) In case of a public company, in the absence or inadequacy of profits of

a company in any financial year, to pay Remuneration to its managerial

personnel within the limit and in excess of the limits set out in Clause

A and B of section I of Part I of Schedule V appended to the Act;

(Section 197).

(v) In case of listed companies, disposal of shares in its material subsidiary

which would reduce its shareholding (either on its own or together

with other subsidiaries) to less than 50% or cease the exercise of control

over the subsidiary except in cases where such divestment is made

under a scheme of arrangement duly approved by Court/ Tribunal.

(Previous approval of Shareholders in General Meeting by way of

Special Resolution) (SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015)

(vi) In case of listed companies, to pay Remuneration (apart from sitting

fees) to non-executive Directors, including independent Directors,

(Previous approval of shareholders in General Meeting) (SEBI (Listing

Obligations and Disclosure Requirements) Regulations, 2015).

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

113

(vi ) In case of listed companies, to sel , dispose and lease assets amounting

to more than twenty percent of the assets of the material subsidiary on

an aggregate basis during a financial year unless the sale/disposal/

lease is made under a scheme of arrangement duly approved by a

Court/Tribunal (Prior approval of shareholders by way of special

Resolution) (SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015).

(vi i) In case of listed companies, al material Related Party Transactions

shall require approval of the shareholders through Ordinary Resolution

and al the related parties shall abstain from voting on such resolutions

(SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015).

The above clause is not applicable in case related party transactions entered are

between:

(a) Two government companies.

(b) A holding company and its whol y owned subsidiary whose accounts

are consolidated with such holding company and placed before the

shareholders at the General Meeting for approval. Similarly, in case of

insurance companies and banking companies, approval of IRDA and

RBI respectively is required for certain items in accordance with their

extant rules.

114

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Annexure IF

(Refer the head “Background”)

Powers which may be Delegated by the Board

(a) To borrow monies;

(b) To invest the funds of the company;

(c) To grant loans or give guarantee or provide security in respect of loans.

Powers delegated by the Board should prescribe the limits in respect

of :

(i) the total amount outstanding at any one time upto which moneys

may be borrowed by the delegate;

(i ) the total amount outstanding upto which the funds may be

invested and the nature of investments which may be made by

the delegate; and

(i i) the total amount outstanding upto which loans may be made by

the delegate, together with the purposes and the maximum

amount in respect of each individual case.

[Sub-section (3) of Section 179 of the Act]

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

115

Annexure II

(Refer Paragraph 1.3.1)

Specimen Notice of a Board Meeting1

NOTICE OF ....................... (SERIAL NUMBER OF MEETING) BOARD MEETING 1

Mr. . . . . . . . . . .. .

Director,

New Delhi.

Dear Sir,

NOTICE is hereby given that the ................................. (serial number of Meeting)

Meeting of the Board of Directors of the company wil be held on. . . . . . . . .. . . . . . . .

(day of the week), the ................................. (date) ................................. (month)

. . . . . . . . . . . (year) at . . . . . . . . . . . (a.m./p.m.) at. . . . . . . . . . . (Venue)2. The Agenda of the business to be transacted at the Meeting is enclosed/wil fol ow3.

You may attend the Meeting through Electronic Mode, the details of which are

enclosed. In case you desire to participate through such mode, please send a

confirmation in this regard to .......................... (Name of Company Secretary/

Chairman/other Authorised Person), email . . . . . . . . . . . , Tel No. . .. . . . . . . . .. within

...................... days (time frame)4 to enable making necessary arrangements.

Kindly make it convenient to attend the Meeting.

Yours faithful y,

(Signature)

(Name)

(Designation)

(Email, phone No.)

1. This should preferably be on the letter-head of the company. Where it is not sent on the letter-head or where it is sent by e-mail or any other electronic means, there should be specified, whether as a header or footer, the name of the company and complete address of

its registered office together with al its particulars such as Corporate Identification Number (CIN) as required under Section 12 of the Act, date of Notice, authority and name and designation of the person who is issuing the Notice and preferably, the phone number of the

Company Secretary or any other senior officer who could be contacted by the Directors for any

clarifications or arrangements.

2. If the Meeting is at a venue other than the Registered Office / Corporate Office of the company, detailed location of such venue should be given.

3. The Agenda, together with the notes thereon, may either be sent alongwith the Notice or

may fol ow at a later date.

4. In the absence of an advance communication or confirmation as indicated herein, from the

Director regarding his participation through Electronic Mode, it shal be assumed that he wil

attend the Meeting physical y.

116

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Annexure III

(Refer Paragraph 1.3.8)

Il ustrative List of Items of Business for the Agenda for the

first Meeting of the Board of Directors

1. To appoint the Chairman of the Meeting.

2. To grant leave of absence, if any.

3. To note the Certificate of Incorporation of the company, issued by the

Registrar of Companies.

4. To take note of the Memorandum and Articles of Association of the

company, as registered.

5. To note the situation of the Registered Office of the company and ratify

the registered document of title of premises of the registered office in

the name of the company or a Notarised copy of lease / rent agreement

in the name of the company.

6. To note the first Directors of the company.

7. To read and record the Notices of disclosure of interest given by the

first Directors.

8. To consider appointment of Additional Directors.

9. To consider appointment of the Chairman of the Board.

10. To consider constitution of Board Committees and approve their terms

of reference.

11. To consider appointment of the First Auditors.

12. To adopt the Common Seal of the company, if any.

13. To appoint Bankers and to open bank accounts of the company.

14. To approve entering into agreements with depositories for issue of

shares in dematerialised form and authorising Directors to execute the

said agreements on behalf of the company.

15. To authorise printing of share certificates and correspondence with the

depositories, if any.

16. To authorise the issue of share certificates to the subscribers to the

Memorandum and Articles of Association of the company.

17. To approve and ratify preliminary expenses and preliminary agreements.

18. To approve the appointment of Key Managerial Personnel, if applicable,

and other senior officers.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

117

Annexure IV

(Refer Paragraph 1.3.8)

Il ustrative Agenda of a Meeting other than the

first Meeting of the Board of Directors

Agenda for the ....................... (Number) Meeting of the Board of Directors of

....................... (Company Name), to be held on ............... (Day), .......................

(Date, Month and Year) at ....................... (Time) at ....................... (Venue)

1. Attendance and Minutes

1.1 To elect a Chairman of the Meeting (if applicable);

1.2 To grant leave of absence to Directors not present at the Meeting;

1.3 To take note of the Minutes of the previous Meeting;

1.4 To take note of the action taken in respect of the earlier decisions of the

Board;

1.5 To take note of the Resolutions passed by circulation since the last

Meeting, if any;

1.6 To take note of the minutes of Meetings of Committee(s) of the Board;

1.7 To take note of the certificate of compliance.

2.Directors (including, where applicable, Alternate Directors)

2.1 To read and take note of the disclosure of interests by Directors;

2.2 To read and take note of disclosure of shareholdings of Directors in the

company and its holding / subsidiary / associate company;

2.3 To read and take note of declarations by Independent Directors that

they meet the criteria of independence laid down in the Act;

2.4 To sign the register of contracts;

2.5 To give consent to a contract, wherever applicable in which a Director(s)

is/are interested ;

2.6 To consider appointment(s) and fixation of Remuneration(s) of key

managerial personnel, through the Nomination and Remuneration

Committee, where applicable;

2.7 To consider and to give consent for the appointment of a Managing

Director/Manager who is already a Managing Director/Manager of

118

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

another company, through the Nomination and Remuneration

Committee, where applicable;

2.8 To take note of nomination of Director(s) made by financial institution(s)/

BIFR/ Central Government/bank(s) etc.;

2.9 To recommend for the approval of Members, appointment of

Independent Directors, through the Nomination and Remuneration

Committee, where applicable;

2.10 To appoint Additional Directors(s), through the Nomination and

Remuneration Committee, where applicable;

2.11 To appoint a Director to fil the casual vacancy of a Director, through the

Nomination and Remuneration Committee, where applicable;

2.12 To accept/ take note of resignation(s) of Director(s)/ withdrawal/change

of nomination in case of nominee Director(s);

2.13 To consider commission for Non-Executive Directors;

2.14 To delegate powers to Managing/ Whole-time Directors or to

Committees constituted by the Board.

3. Related party transactions

3.1 To approve transactions with Related Party which are not in the ordinary

course of business or which are not on arm’s length basis, through the

Audit Committee, where applicable;

3.2 To recommend for the approval of the Members, transactions with

Related Party beyond the prescribed threshold limits and which are

either entered not in the ordinary course of business or not on arm’s

length basis, through the Audit Committee, where applicable.

4. Shares

4.1 To authorise printing of new share certificates;

4.2 To approve transfer/ transmission/ transposition of shares;*

4.3 To authorise issue of duplicate share certificates;*

4.4 To authorise issue of share certificates without surrender of letters of

allotment;*

*unless delegated to a Committee.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

119

4.5 To consider the position of dematerialized and rematerialized shares

and the beneficial owners.

5. Share Capital

5.1 To make al otment of shares;

5.2 To make calls on shares;

5.3 To forfeit shares;

5.4 To issue bonus shares;

5.5 To issue rights shares;

5.6 To make fresh issue of share capital;

5.7 To authorise buy-back of shares.

6. Debentures, Loans and Public Deposits

6.1 To consider matters relating to issue of debentures including

appointment of Debenture Trustees;

6.2 To borrow money otherwise than on debentures and by way of

Commercial Paper, Certificate of Deposit, etc.;

6.3 To approve raising of money through public deposits;

6.4 To approve the text of the advertisement for acceptance of public

deposits and to sign the same.

7. Long term loans from financial institutions/ banks

7.1 To authorise making applications/ availing long term loans from

financial institutions/ banks and to authorise officers to accept

modifications, approve the terms and conditions of loans, execute loan

and other agreements and to affix the Common Seal of the company

on documents;

7.2 To accept terms contained in the letter of intent of financial institutions/

banks;

7.3 To authorise execution of hypothecation agreements and to create

charges on the company’s assets;

7.4 To take note of the statement of total borrowings/ indebtedness of the

company.

120

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

In case of availing of loans/ financial assistance from banks/ financial institutions,

the draft Resolutions are general y provided by the banks/ financial institutions,

which may be modified as appropriate and circulated to the Directors along with

the related item of the Agenda.

8. Banking Facilities

8.1 To open/ operate/ close bank accounts;

8.2 To avail bank loans;

8.3 To renew/ enhance banking facilities including bank overdraft;

8.4 To open special/ separate banks accounts for dividend, deposits and

unpaid amounts thereof.

9. Investments, Loans and Guarantees

9.1 To consider investment in securities of of other bodies corporate;

9.2 To consider other investments;

9.3 To make loans to other persons;

9.4 To consider placing inter-corporate deposits;

9.5 To consider giving guarantees for loans to other bodies corporate or

security in connection with such loans.

10. Review of Operations

10.1 To review operations;

10.2 To consider periodic performance report of the company.

Brief notes on the working of the company or its units or branches should contain

figures comparable with the figures for the corresponding period of the previous

year and that of the budget or forecast for that period.

11. Payment of interim dividend

11.1 To consider payment of interim dividend.

12. Projects

12.1 To take note of the progress of implementation of modernization/ new

project(s) in hand;

12.2 To consider expansion/ diversification.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

121

13. Capital Expenditure

13.1 To sanction capital expenditure for purchasing/ replacing machinery

and other fixed assets;

13.2 To approve sale of old machinery/ other fixed assets of the company.

14. Revenue Expenditure

14.1 To approve mandatory CSR expenditure of the company, through the

CSR Committee;

14.2 To approve donations including contributions to political parties;

14.3 To sanction grants to public welfare institutions;

14.4 To sanction staff welfare grants and other revenue expenditure;

14.5 To approve writing off bad debts.

15. Auditors, etc.

15.1 To appoint an Auditor to fil a casual vacancy in the office of the Auditor,

through the Audit Committee, where applicable;

15.2 To appoint a Cost Auditor, through the Audit Committee, where

applicable;

15.3 To appoint a Secretarial Auditor.

15.4 To appoint an Internal Auditor.

16. Personnel

16.1 To appoint, accept the resignation of, promote or transfer any senior

officer of the company;

16.2 To approve/ amend rules relating to employment/ employee welfare

schemes, and provident fund/ superannuation/ gratuity schemes of

the company;

16.3 To sanction loan limits for officers and staff or personal exigencies or

for purchase of a vehicle, land, house, etc.;

16.4 To formulate personnel policies.

17. Legal Matters

17.1 To note and to give directions on significant matters;

122

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

17.2 To consider amendment to Memorandum/ Articles of Association;

17.3 To consider and take note of the status of pending litigations by and

against the company.

18. To approve agreements

Restructuring

18.1 To consider merger/ demerger/ amalgamation;

18.2 To consider formation of joint ventures;

18.3 To consider subsidiarization / desubsidiarization of other companies.

19. Delegation of Authority

19.1 To nominate occupier/ factory manager under Factories Act; an owner

under Mines Act or Directors / representatives under the Legal Metrology

Act;

19.2 To delegate powers to representative to attend General Meetings of

companies in which the company has investments;

19.3 To delegate powers to approve transfer, transmission, issue of duplicate

share certificates/ allotment letters, etc.;

19.4 To delegate authority with regard to signing of contracts, deeds and

other documents; execution of indemnities, guarantees and counter-

guarantees; filing, withdrawing or compromising legal suits;

19.5 To delegate authority with regard to registration, filing of statutory returns,

declarations, etc. (in the physical or Electronic Mode) under company

law, central excise, sales tax, customs and other laws;

19.6 To delegate powers in respect of the employees of the company

including matters relating to appointments, confirmations, discharge,

dismissal, acceptance of resignations, granting of increments and

promotions, taking disciplinary actions, sanctioning of leave, travel bil s

and welfare expenses, etc.;

19.7 To delegate powers to grant advances to contractors, suppliers, agents,

etc.;

19.8 To delegate powers relating to purchase/construction and sale of stores,

spare parts, raw materials, fuel and packing materials; fixed assets;

shares or debentures of companies; government securities; and to fix

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

123

limits up to which executives can authorise or sanction payments;

operating of bank accounts etc.;

19.9 To delegate powers to engage consultants, retainers, contractors, etc.;

19.10 To delegate powers to provide financial assistance to employees, etc.

for personal exigencies or for purchase of a vehicle, house, etc.;

19.11 To delegate powers to al ow rebates/ discounts on sales; to incur

expenditure on advertisements, to settle claims, to sanction donations,

etc.

20. Annual Financial Statements

20.1 To consider annual financial statements, through the Audit Committee,

where applicable;

20.2 To consider consolidated financial statements, if applicable, through

the Audit Committee, where applicable;

20.3 To consider recommending dividend to shareholders;

20.4 To approve appropriation of profits and transfers to reserves;

20.5 To take note of the Auditors’ report.

21. Annual General Meeting

21.1 To appoint an agency and a scrutiniser for conduct of e-voting in

connection with the Resolutions proposed at the Annual General

Meeting;

21.2 To ascertain the Directors retiring by rotation;

21.3 To convene the Annual General Meeting;

21.4 To close the register of members and decide the record date / book

closure period;

21.5 To recommend for the approval / ratification of the Members,

appointment and remuneration of Auditors;

21.6 To recommend for the ratification of the Members, remuneration of the

Cost Auditors;

21.7 To consider other matters requiring shareholders’ approval;

21.8 To approve the Report of the Board of Directors;

124

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

21.9 To approve the Notice of the General Meeting and authorise the

Company Secretary to issue the Notice to the Members and all other

persons and to take al action as may be necessary in this regard.

22. Miscellaneous matters

22.1 To consider matters arising out of the Minutes of the previous Meeting;

22.2 To fix the date and venue of the next Meeting;

22.3 Any other matter with the permission of the Chair and with the consent

of the majority of the Directors present at the Meeting.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

125

Annexure V

(Refer Paragraph 1.3.8)

Drafting of Agenda, Notes on Agenda and related matters –

Practical aspects

1. While preparing the Agenda and notes thereon, good drafting is of the

essence. Important or non-routine items of the Agenda have to be

written with special care, employing not only good drafting skil s but

also an understanding of commercial considerations and the business

environment. For the purpose :

(a) Divide the Agenda into two parts: - the first part containing usual

or routine items and the second part containing other items which

can further be bifurcated as (i) items for approval; and (i ) items

for information/noting.

(b) For each item of the Agenda an explanatory note should be

provided. The explanatory note should give sufficient details of

the proposal, including the proposed Resolution, if any, references

to the provisions of the Companies Act and other applicable laws,

the Memorandum and Articles of Association, other relevant

documents, decisions of previous Board or General Meetings, as

necessary. The explanatory note may be drafted under the

fol owing heads :

(i) Background (or Introduction);

(i ) Proposal, with recommendations of the management;

(i i) Provisions of Law;

(iv) Decision(s) to be taken ; and

(v) Interest, if any, of any Directors.

2. As a good governance practice, the agenda item should be initiated by

the concerned Department (Head of Department or other authorised

person) and approved by the competent authority as may be decided

by the Board.

3. The Company Secretary should refer to the Agenda of previous

Meetings, to see whether any items had been deferred and should

consider whether such items are to be included for discussion at the

ensuing Meeting.

126

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

4. The Company Secretary should also refer to the Minutes of the Meeting

held during the corresponding period of the previous year to see

whether there are any recurring periodic items (e.g. interim/final

dividend, quarterly results). The Company Secretary should finalise the

Agenda in consultation with the Chairman or in his absence the

Managing Director or in his absence the Whole-time Director.

5. Notes on policy matters should present clear-cut issues in order to

facilitate due deliberations and precise decisions at the Meeting.

6. The Company Secretary should keep, in addition to a record of matters

to be discussed, a separate folder of all such correspondence, notes

and documents which need to be dealt with at the Meeting. In preparing

the Agenda, the Company Secretary should refer to this folder to ensure

that al items which require the decision of the Board are included in

the Agenda.

7. A separate Agenda item number should be given for items which are

brought forward for discussion from a previous Meeting rather than

placing them under the omnibus Agenda items. For example:

Item No.9. DISINVESTMENT MANDATE

To note the appointment of the company as advisors for the

disinvestment process of ABC Limited.

(Refer to Item No. 18 of the Minutes of the Meeting held on.....).

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

127

Annexure VI

(Refer Paragraph 6.2.3)

Resolution No. _________

........ (NAME OF COMPANY)

Mr. ......... (Director)

Dear Sir,

Resolution by circulation

The fol owing Resolution is intended to be passed by circulation as per the

provisions of Section 175 of the Companies Act, 2013. A note explaining the

urgency and necessity for passing the said Resolution by circulation and the

supporting papers (if any) are enclosed.

“RESOLVED THAT.. .. .. . .. .. .. .

(Resolution intended to be passed is to be reproduced)”

None of the Directors are deemed to be concerned or interested in the Resolution.

*Assent / Dissent / Require Meeting

Signature

Name

Date

Kindly indicate your response to the aforesaid Resolution, by appending your

signature and the date of signing in the space provided beneath the Resolution

and return one copy to the undersigned or by e-mail at the address mentioned

below so as to reach us on or before .......................................

Yours faithful y,

For ....... ..... ...... ...... ...... .... (Name of Company).

Company Secretary

e-mail id:

Address:

Contact No:

*Strike off whichever is not applicable

128

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Annexure VII

(Refer Paragraph 7.3)

Specimen Minutes of the first Board Meeting

Minutes of the first Board Meeting of ....................... (Company Name),

held on ....................... (Day), ....................... (Date, Month and Year) at

....................... (Venue) from ....................... (Time of Commencement)

Present:

1. ……………. (in the Chair)

2. …………….

3. …………….

4. …………….

In attendance:

……………

Company Secretary

1. Chairman for the Meeting

Mr.………….. ………..was elected as the Chairman for the Meeting.

2. Quorum

The business before the Meeting was taken up after having established

that the requisite Quorum was present.

3. Leave of absence

Leave of absence was granted to Mr./ Ms. X who expressed his inability

to attend the Meeting owing to his pre-occupation.

4. Certificate of Incorporation of the company

The Board was informed that the company has been incorporated on

.……… and the Directors noted the Certificate of Incorporation

No……………. of …….…, dated ……..... issued by the Registrar of

Companies,…………………....

5. Memorandum and Articles of Association

A printed copy of the Memorandum and Articles of Association of the

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

129

company as registered with the Registrar of Companies, ………….was

placed before the Meeting and noted by the Board.

6. Registered Office

The Board noted that the Registered Office of the company wil be at

…………….., the intimation of which has already been given to the

Registrar of Companies,……………….

7. First Directors

The Board noted that in terms of Article ............. of the Articles of

Association of the company, Mr.………, Mr.….………and

Mr.…………… are the first Directors of the company.

8. Notices of disclosure of interest by the Directors

Notices of interest under Section 184(1) of the Companies Act, 2013

received from Mr.………, Mr.………. and Mr.………, Directors of the

company, on ……………, were tabled and the contents thereof were

read and noted by the Board.

9. Appointment of Additional Directors

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Chairman proposed that Mr. ………….…. having DIN ……….. and

Mr.………….. having DIN ………… be appointed Additional Directors

of the company in terms of Section 161 of the Companies Act, 2013.

Brief profiles of Mr. ………….…. and Mr.………….. along with their

consents to act as Directors, if appointed, were tabled.

The Board agreed with the same and passed the fol owing Resolutions:

(a) “RESOLVED THAT, pursuant to the provisions of Section 161 of the

Companies Act, 2013 and Companies (Appointment and

Qualification of Directors) Rules, 2014 and any other applicable

provisions read with Article _____ of the Articles of Association

of the company, Mr.…………....be and is hereby appointed as

Additional Director of the company to hold office from the date of

this Meeting til the first Annual General Meeting of the company.”

“RESOLVED FURTHER THAT……., Director/Company Secretary be

and is hereby authorised to sign and file necessary forms/

130

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

documents with the Registrar of Companies and make entries,

as appropriate, in the registers of the company.”

(b) “RESOLVED THAT, pursuant to the provisions of Section 161 of the

Companies Act, 2013 and Companies (Appointment and

Qualification of Directors) Rules, 2014 and any other applicable

provisions read with Article _____ of the Articles of Association

of the company, Mr.……….... be and is hereby appointed as

Additional Director of the company to hold office from the date of

this Meeting til the first Annual General Meeting of the company.”

“RESOLVED FURTHER THAT………., Director/Company Secretary

be and is hereby authorised to sign and file necessary forms/

documents with the Registrar of Companies and make entries,

as appropriate, in the registers of the company.”

10. Chairman and Vice-Chairman of the Board

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Board, after discussion, decided that Mr. ……………. be appointed

as Chairman of the Board, who would be the Chairman for al Meetings

of the Board as also for general meetings of the company. The Board

also decided that Mr. ……………. be appointed as Vice-Chairman of

the Board.

The Board thereafter passed the fol owing Resolution:

“RESOLVED THAT until otherwise decided by the Board, Mr.……………

be and is hereby elected as the Chairman of the Board of Directors of

the company.”

“RESOLVED FURTHER THAT, until otherwise decided by the Board,

Mr.…………… be and is hereby elected as the Vice-Chairman of the

Board of Directors of the company.”

11. Board Committees

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Board approved constitution of the fol owing Board Committees, as

required in terms of Sections 177 and 178 of the Companies Act, 2013,

with the members as detailed below:

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

131

(a) Audit Committee

………………

(b) Nomination and Remuneration Committee

………………

(c) Stakeholders Relationship Committee

……………….

(d) Corporate Social Responsibility (CSR) Committee

………………

The Board also approved the Terms of Reference of the Audit

Committee, the Nomination and Remuneration Committee, the

Stakeholders Relationship Committee and the CSR Committee, as tabled,

copies of which were initialled by the Chairman for the purpose of

identification.

12. Appointment of First Auditors

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Chairman stated that pursuant to Section 139 of the Companies

Act, 2013, First Auditors are to be appointed within thirty days from the

registration of the company. For this purpose, Messrs. …………….....,

Chartered Accountants,……………....., had been approached to act as

the first Auditors of the company. A letter received from Messrs.

…………….. . , conveying their consent was placed before the Directors.

The Board, after discussion passed the fol owing Resolution:

“RESOLVED THAT Messrs. .. ............, Chartered Accountants, …., ......, be

and are hereby appointed pursuant to Section 139(6) of the Companies

Act, 2013, as the first Auditors of the company at such remuneration as

may be fixed by the Board in consultation with the Auditors to hold

office from the date of this Meeting til the conclusion of the first Annual

General Meeting of the company.”

“RESOLVED FURTHER THAT the Director/Company Secretary be and is

hereby authorised to make the necessary filings with the Statutory

Authorities”.

132

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

[Not applicable to Government companies or any other company owned

or control ed, directly or indirectly, by the Central Government, or by any

State Government or Governments, or partly by the Central Government

and partly by one or more State Governments - in such cases appointment

of auditors to be made by Comptrol er and Auditor General].

13. Common Seal of the company, if any (not mandatory)

The Chairman tabled a Seal bearing the company’s name, CIN and the

address of the registered office to be adopted as the Common Seal of

the company, and the fol owing Resolution was passed:

“RESOLVED THAT the Common Seal of the company, the impression of

which appears in the margin against this Resolution, be and is hereby

adopted as the Common Seal of the company.”

14. Appointment of Chief Executive Officer of the company

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Chairman informed the Board that for promotion, development

and expansion of the company’s business, it is necessary to appoint a

whole – time Chief Executive Officer. He advised the Board that it is

proposed to appoint Mr. ............... who has vast industry experience as

the Chief Executive Officer of the company; Mr…………. has given his

consent to act as Chief Executive Officer, if appointed. The Board agreed

with the same and passed the fol owing Resolution:

“RESOLVED THAT pursuant to Section 203 of the Companies Act, 2013,

Mr................... be and is hereby appointed as the Chief Executive Officer

of the company, on the terms and conditions set out in the draft

agreement/ appointment letter, placed on the table, a copy of which

was initial ed by the Chairman for the purpose of identification.”

“RESOLVED FURTHER THAT Mr. …………., Chief Executive Officer, do

perform such functions and duties specified in the agreement/

appointment letter and as assigned to him by the Board from time to

time.”

“RESOLVED FURTHER THAT _____, Director/Company Secretary be and

is hereby authorised to sign and file the necessary forms/documents

with the Registrar of Companies and make entries, as appropriate, in

the registers of the company.”

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

133

15. Appointment of Company Secretary

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Chairman advised the Board that it is proposed to appoint Mr.

…………, who holds the prescribed qualifications as Company

Secretary of the company; Mr…………. has given his consent to act as

Company Secretary, if appointed. The Board agreed with the same and

passed the fol owing Resolution:

“RESOLVED THAT pursuant to Section 203 of the Companies Act, 2013,

Mr.…….., holding the prescribed qualification under Section 2(24) of

the Companies Act, 2013, be and is hereby appointed as Company

Secretary of the company, on the terms specified in the draft agreement/

appointment letter, placed on the table, a copy of which was initialled

by the Chairman for the purpose of identification.”

“RESOLVED FURTHER THAT Mr. ……………, Company Secretary, do

perform the duties which are required to be performed by a secretary

under the Companies Act, 2013 and any other duties assigned to him

by the Board or the Chief Executive Officer.”

“RESOLVED FURTHER THAT ……., Director be and is hereby authorised

to sign and file the necessary forms/documents with the Registrar of

companies and make entries, as appropriate, in the registers of the

company.”

16. Appointment of Chief Financial Officer

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Chairman advised the Board that it is proposed to appoint Mr..........

who is a ………………… (Qualification) as the Chief Financial Officer

of the company; Mr…………. has given his consent to act as Chief

Financial Officer, if appointed. The Board agreed with the same and

passed the fol owing Resolution:

“RESOLVED THAT pursuant to Section 203 of the Companies Act, 2013,

and related Rules and Regulations framed thereunder, Mr. ............ be

and is hereby appointed as Chief Financial Officer of the company, on

the terms specified in the draft agreement/ appointment letter, placed

on the table, a copy of which was initial ed by the Chairman for the

purpose of identification.”

134

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

“RESOLVED FURTHER THAT Mr. ………….., Chief Financial Officer, do

perform the functions which are required to be performed by a Chief

Financial Officer under the Companies Act, 2013 and any other duties

assigned to him by the Board or the Chief Executive Officer.”

“RESOLVED FURTHER THAT …….., Director/Company Secretary be and

is hereby authorised to sign and file the necessary forms/documents

with the Registrar of Companies and make entries, as appropriate, in

the registers of the company.”

17. Appointment of bankers and opening Bank A/c with ….. Bank

The Chairman informed the Board that it is proposed to open a current

account in the name of the company with ................Bank. The Board

agreed with the same and passed the fol owing Resolution:

“RESOLVED THAT a current account be opened in the name of ……...

Limited with the …....... Bank, ……..., and that the Bank be instructed to

honor al cheques, bil s of exchange, promissory notes or other orders

which may be drawn by/ accepted/ made on behalf of the company

and to act on any instructions so given relating to the account, whether

the same be overdrawn or not, relating to the transactions of the

company and that any two of the fol owing Directors/officers of the

company, jointly, namely:

1. Mr...Director

2. Mr...Director

3. Mr ...Chief Financial Officer

4. Mr ...Company Secretary

be and are hereby authorised to sign on behalf of the company, cheques

or any other instruments/ documents drawn on or in relation to the

said account and the said signatures shal be sufficient authority and

shall bind the company in all transactions between the Bank and the

company.”

18. Printing of Share Certificates

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Chairman informed the Board that it would be necessary to print

share certificates for allotment of shares to the subscribers to the

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

135

Memorandum of Association as wel as for any further issue of capital.

A format of the share certificate in Form SH-1 in terms of Rule 5 of the

Companies (Share Capital and Debentures) Rules, 2014 was placed on

the table and the Board passed the fol owing resolution:

“RESOLVED THAT 1,00,000 equity share certificates of the company be

printed, in the format placed before the Meeting and initial ed by the

Chairman for the purpose of identification, and that the certificates bear

serial Nos. 1 to 1,00,000.”

“RESOLVED FURTHER THAT the aforesaid blank share certificates be

kept in safe custody with Mr…………, Company Secretary.”

19. Issue of Share Certificates to the subscribers

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Chairman informed the Board that Mr.……., Mr……... and Mr.

……..., who are subscribers to the Memorandum of Association of the

company, had each agreed to take and have taken______

(__________) equity shares in the company. He further informed the

Board that pursuant to Section 2(55) of the Companies Act, 2013, the

names of the said subscribers to the Memorandum of Association

have been entered in the Register of Members and that equity share

certificates are required to be issued to them. The Board agreed with

the same and passed the fol owing Resolution:

“RESOLVED THAT Mr.………., Mr.………. and Mr. ……….., the

subscribers to the Memorandum of Association of the company who

had agreed to take and have taken__________ (__________) equity

shares each of the company, be issued equity share certificates and

that Mr.………. and Mr.…………….., Directors of the company, and

Mr.…………..., Company Secretary, be and are hereby authorised to

sign the said certificates.”

20. Statement of Preliminary Expenses and Preliminary Agreements

The Chairman placed before the Meeting a statement of expenses

incurred in connection with the formation of the company and a copy

of agreements entered into before the formation of the company. The

Board approved the same and passed the fol owing Resolution:

136

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

“RESOLVED THAT preliminary expenses of Rs……incurred in connection

with the incorporation of the company and the preliminary agreements

entered be and are hereby approved and confirmed as per the

statement submitted by the Chairman.”

“RESOLVED FURTHER THAT the preliminary expenses of Rs……..

incurred by Mr.………..., Director of the company, be reimbursed to the

said Mr………. out of the funds of the company.”

21. Authorisation to sign returns, forms, documents etc. filed with

various regulatory authorities

Various returns, forms, documents etc. are required to be filed with

various regulatory authorities including the Ministry of Corporate Affairs

by the company from time-to-time. The Board passed the fol owing

resolution in this regard:

“RESOLVED THAT ………………. and ………………….. Director of the

company be and is hereby authorised to sign on behalf of the company,

various documents, forms, returns, etc. required to be filed with various

regulatory authorities under the relevant statutory provisions.”

22. Next Board Meeting

It was decided to hold the next Board Meeting at……......... a.m./ p.m.

on………. (Day), ……….. (Date, Month and Year) at……….. (Venue).

23. Conclusion of the Meeting

There being no other business, the Meeting concluded at .... (Time)

with a vote of thanks to the Chair.

Place ............ ......

Date .. . . . . . . . . .

. . .………

Chairman

Entered on

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

137

Annexure VIII

(Refer Paragraph 7.3)

Specimen Minutes of a subsequent Board Meeting

Minutes of the .............. Meeting of the Board of Directors of ........................

(Company Name) held on .............. (Day), .............. (Date, Month and Year),

at .................... (Venue) from .............. (Time of Commencement)

PRESENT

A.B.

Chairman

C.D.

Directors

E.F.

I.J.

K.L.

Managing Director

IN ATTENDANCE

X. . .

Secretary

INVITEES

Y.. . .

Chief Financial Officer

Z…….

Designation and Organisation

1. Chairman for the Meeting

Mr/Ms…………….was elected as the Chairman for the Meeting.

2. Leave of absence

Leave of absence from attending the Meeting was granted to Mr. M.N.

and Mr. O.P. who expressed their inability to attend the Meeting owing

to their preoccupation.

3. Quorum

The business before the Meeting was taken up after having established

that the requisite quorum was present.

4. Minutes of the previous Board Meeting

The Minutes of the …………. Meeting of the Board of Directors of the

138

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

company held on ……………….., as circulated, were noted by the

Board and signed by the Chairman.

5. Minutes of the Committee Meetings

The Minutes of the …………. Meeting of the …………… Committee

held on ……………….., as circulated, were noted by the Board.

6. Resolution passed by circulation since the last Meeting.

The fol owing Resolution was passed by circulation on ………….. (date

of passing of the Resolution) in terms of the provisions of Section 175 of

the Companies Act, 2013.

“RESOLVED THAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .”

Mr. ……………………, Director dissented on the Resolution.

7. Action Taken Report

The fol owing action taken was noted by the Board:

Item No.

Item

Action Taken

———

———

———

8. Register of Contracts

The Register of Contracts in which Directors are interested under Section

189 of the Companies Act, 2013 and the Rules thereunder was signed

by al the Directors present.

9. Notices of Disclosure of Interest of Directors

(a) The fol owing Notices received from the Directors of the company,

notifying their interest in other bodies corporate pursuant to the

provisions of Section 184 of the Companies Act, 2013, were read

and recorded:

Name of the Director

Nature of Interest

Date of Notice

(b) A Notice dated .... .................. received from Mr. I.J. pursuant to

the provisions of Section 170 of the Companies Act, 2013,

disclosing his shareholding and the shareholding of Mrs. I.J. in

the company was read and recorded.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

139

10. Share Transfers

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Share Transfer Register of the company was also placed before the

Meeting.

The Board, after discussion, passed the fol owing Resolution:

“RESOLVED THAT Share Transfers Nos ....... to ....... (both inclusive)

consisting of ................ Equity shares of the company, be approved and

the names of the transferees be entered in the Register of Members.

RESOLVED FURTHER THAT Mr. X, Secretary, be and is hereby authorised

to take necessary action with regard to the aforesaid transfer of shares

approved by the Board.”

11. Interim Dividend

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The payment of Interim Dividend for the year ending ...........................

was considered on the basis of the unaudited Financial Statements of

the company for the period from ……….. to …………….., as annexed

to the note under reference. The Directors opined that there were

adequate profits to permit payment of Interim Dividend.

The Board, after discussion, passed the fol owing Resolution:

“RESOLVED THAT an Interim Dividend of Rupee one per equity share

absorbing Rs. 10,00,000, be paid on the ..................... (date), out of the

profits of the company for the year ending ........, on 10,00,000 equity

shares, to those equity shareholders whose names appear in the

Register of Members of the company on the ........ of ........, and that the

transfer books and the Register of Members be closed from the

.......... ............ of ... .................. to the ........ of . ...., both days inclusive, for the purpose of payment of such dividend.”

12. Opening of a Bank Account for payment of Interim Dividend

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Board passed the fol owing resolution for opening a bank account

for the purpose of payment of Interim Dividend :-

140

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

“RESOLVED THAT a Bank Account be opened in the name and style of

‘…………………Limited - Interim Dividend ……….’ (Bank Account) with

the ……………………. for payment of Interim Dividend for the financial

year ……………..

RESOLVED FURTHER THAT the said Bank be and is hereby authorised

to honour cheques / bank advices etc. drawn, accepted or made on

behalf of the company and to act on any instruction(s) so given

concerning the said Account by any two of the fol owing signatories:-

. . . . . . . . . .. . . .. . . . . . . .. . . .. . . . . . . .. . . .. . . . . . . .. . . .. . . . . . . .. . . .. . . . . .

RESOLVED FURTHER THAT the said Bank be and is hereby authorised

to change the name and style of the Bank Account to ‘………………….

Limited - Unpaid Interim Dividend …………’ on and from …………….

RESOLVED FURTHER THAT the authorised signatories be and are hereby

authorised, in the manner stated above, to give instructions to the said

Bank to close the Bank Account on disbursement of the Interim Dividend.

RESOLVED FURTHER THAT the authorised signatories be and are hereby

authorised, in the manner stated above, to sign and execute such

documents, letters etc., as may be required by the said Bank.”

13. Constitution of Share Transfer Committee

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Chairman informed the Board that with the increasing number of

share transfers, it was impractical to wait for Board Meetings to approve

such transfers. He suggested that a Committee be constituted for this

purpose. The Board agreed with the same and passed the fol owing

resolution:

“RESOLVED THAT a Committee of Directors named the ‘Share Transfer

Committee’, consisting of Mr. C.D., Mr. G.H., and Mr. K.L. be and is

hereby constituted to approve registration of transfer of shares received

by the company and further to:

1. Approve and register transmission of shares.

2. Sub-divide, consolidate and issue share certificates in relation

thereto.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

141

3. Issue share certificates in place of those which are damaged, or

in which the space for endorsement has been exhausted, provided the

original certificates are surrendered to the company.

RESOLVED FURTHER THAT two Directors shall form the Quorum for a

Meeting of the said Committee.”

14. Availing Credit facilities from …………… Bank

Reference was made to Mr. …………….’s note dated ……….. on the

subject, as circulated.

The Chairman informed the Board that the company had approached

.......... ................. .................. Bank for a loan facility of Rs. 25,00,00,000/-

(Rupees Twenty Five Crores only). The Bank had sanctioned the facility

vide its sanction letter dated ............................; a copy of the said letter

was placed before the Board. After discussion, the Board passed the

fol owing Resolution:

“RESOLVED THAT approval of the Board be and is hereby accorded to

avail Demand Loan facility of Rs. 25,00,00,000/- (Rupees Twenty Five

Crores only) sanctioned by................................................ Bank, (address)

as per the terms and conditions specified by the Bank vide its letter

dated ......................... placed before the Board and initial ed by the

Chairman for the purpose of identification.

RESOLVED FURTHER THAT Mr. A.B., Chairman of the company, be and

is hereby authorised to execute the necessary documents in favour of

...............Bank, to avail the aforesaid Demand Loan facility.

RESOLVED FURTHER THAT the Company Secretary be and is hereby

authorised to file the necessary forms with the Registrar of Companies

for the purpose of creation of charge, and also forward a copy of this

Resolution to. .. . . .. . .. . .. . .. . .. . .. . . .. . .. . Bank.”

15. Conclusion of the Meeting

There being no other business, the Meeting concluded at .... (Time)

with a vote of thanks to the Chair.

Date . . . .. .. .. .. . . .. ..

.. . . . . . .Chairman

Place .. . .. .. .. .. . .. .. .

Entered on

142

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

Annexure IX

Key functions and responsibilities of the

Board of Directors of Equity listed company

(i) Key functions

• Reviewing and guiding corporate strategy, major plans of action, risk

policy, annual budgets and business plans, setting performance

objectives, monitoring implementation and corporate performance, and

overseeing major capital expenditures, acquisitions and divestments.

• Monitoring the effectiveness of the company‘s governance practices

and making changes as needed.

• Selecting, compensating, monitoring and, when necessary, replacing

key managerial personnel and overseeing succession planning.

• Aligning key managerial personnel and remuneration of board of

directors with the longer term interests of the company and its

shareholders.

• Ensuring a transparent nomination process to the board of directors

with the diversity of thought, experience, knowledge, perspective and

gender in the board of directors.

• Monitoring and managing potential conflicts of interest of management,

members of the board of directors and shareholders, including misuse

of corporate assets and abuse in related party transactions.

• Ensuring the integrity of the company‘s accounting and financial

reporting systems, including the independent audit, and that appropriate

systems of control are in place, in particular, systems for risk

management, financial and operational control, and compliance with

the law and relevant standards.

• Overseeing the process of disclosure and communications.

• Monitoring and reviewing board of director‘s evaluation framework.

• Noting of the quarterly Statement of investor grievances.

• Noting of the report from the Share Transfer Committee, if any, on

transfer of shares.

• Review periodically compliance reports pertaining to al laws applicable

to the company.

• Noting of the quarterly compliance report on corporate governance.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

143

(i ) Other responsibilities

• The board of directors shal provide strategic guidance to the company,

ensure effective monitoring of the management and shall be

accountable to the company and the shareholders.

• The board of directors shall set a corporate culture and the values by

which executives throughout a group shall behave.

• Members of the board of directors shal act on a ful y informed basis,

in good faith, with due diligence and care, and in the best interest of

the company and the shareholders.

• The board of directors shall encourage continuing directors training to

ensure that the members of board of directors are kept up to date.

• Where decisions of the board of directors may affect different

shareholder groups differently, the board of directors shall treat al

shareholders fairly.

• The board of directors shall maintain high ethical standards and shall

take into account the interests of stakeholders.

• The board of directors shall exercise objective independent judgement

on corporate affairs.

• The board of directors shall consider assigning a sufficient number of

non-executive members of the board of directors capable of exercising

independent judgement to tasks where there is a potential for conflict

of interest.

• The board of directors shal ensure that, while rightly encouraging

positive thinking, these do not result in over-optimism that either leads

to significant risks not being recognised or exposes the company to

excessive risk.

• The board of directors shal have ability to step back‘ to assist executive

management by challenging the assumptions underlying: strategy,

strategic initiatives (such as acquisitions), risk appetite, exposures and

the key areas of the company‘s focus.

• When committees of the board of directors are established, their

mandate, composition and working procedures shal be well defined

and disclosed by the board of directors.

144

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

• Members of the board of directors shall be able to commit themselves

effectively to their responsibilities.

• In order to fulfil their responsibilities, members of the board of directors

shall have access to accurate, relevant and timely information.

• The board of directors and senior management shall facilitate the

independent directors to perform their role effectively as a member of

the board of directors and also a member of a committee of board of

directors.

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

145

Annexure X

Corporate governance requirements with respect

to subsidiary of Equity Listed Company

• At least one independent director on the board of directors of the equity

listed company shall be a director on the board of directors of an

unlisted material subsidiary, incorporated in India.

• The audit committee of equity listed company shall also review the

financial statements, in particular, the investments made by the unlisted

subsidiary.

• The Minutes of the Meetings of the board of directors of the unlisted

subsidiary shal be placed at the Meeting of the board of directors of

the equity listed company.

• The management of the unlisted subsidiary shal periodically bring to

the notice of the board of directors of the equity listed company, a

statement of all significant transactions and arrangements entered into

by the unlisted subsidiary.

Explanation - For the purpose of this regulation, the term significant transaction or

arrangement shal mean any individual transaction or arrangement that exceeds

or is likely to exceed ten percent of the total revenues or total expenses or total

assets or total liabilities, as the case may be, of the unlisted material subsidiary

for the immediately preceding accounting year.

146

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

GLOSSARY

• Board

“Board of Directors” or “the Board”, in relation to a company, means the

col ective body of the directors of the company. [Sub-section (10) of

Section 2 of the Companies Act, 2013]

• Body Corporate

“body corporate” or “corporation” includes a company incorporated

outside India, but does not include –

(i) a co-operative society registered under any law relating to co-

operative societies; and

(i ) any other body corporate (not being a company as defined in this

Act), which the Central Government may, by notification, specify

in this behalf.

[Sub-section (11) of Section 2 of the Companies Act, 2013]

• Chief Executive Officer

“Chief Executive Officer” means an officer of a company, who has been

designated as such by it;

[Sub–section (18) of Section 2 of the Companies Act, 2013]

• Company

“company” means a company incorporated under this Act or under

any previous company law. [Sub-section (20) of Section 2 of the

Companies Act, 2013]

• Company Secretary

“Company Secretary” or “secretary” means a Company Secretary as

defined in clause (c) of sub-section (1) of Section 2 of the Company

Secretaries Act, 1980 (56 of 1980) who is appointed by a company to

perform the functions of a company secretary under this Act. [Sub-

section (24) of Section 2 of the Companies Act, 2013].

“Company Secretary” means a person who is a member of the Institute

of Company Secretaries of India constituted under the Company

Secretaries Act, 1980 [Clause (c) read with Clause (g) of sub-section (1)

of Section 2 of the Company Secretaries Act, 1980].

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

147

• Company secretary in practice

“Company Secretary in practice” means a Company Secretary who is

deemed to be in practice under sub-section (2) of Section 2 of the

Company Secretaries Act, 1980 (56 of 1980). [Sub-section (25) of Section

2 of the Companies Act, 2013]

Save as otherwise provided in the Company Secretaries Act, 1980, a

member of the Institute shall be “deemed to be in practice” when,

individually or in partnership with one or more members of the Institute

in practice or in partnership with members of such other recognized

professions as may be prescribed, he, in consideration of remuneration

received or to be received, –

(a) engages himself in the practice of the profession of Company

Secretaries to, or in relation to, any company; or

(b) offers to perform or performs services in relation to the promotion,

forming, incorporation, amalgamation, reconstruction,

reorganization or winding up of companies; or

(c) offers to perform or performs such services as may be performed

by –

(i) an authorised representative of a company with respect to

filing, registering, presenting, attesting or verifying any

documents (including forms, applications and returns) by

or on behalf of the company,

(i ) a share transfer agent,

(i i) an issue house,

(iv) a share and stock broker,

(v) a secretarial auditor or consultant,

(vi) an adviser to a company on management, including any

legal or procedural matter falling under the Capital Issues

(Control) Act, 1947 (29 of 1947), the Industries (Development

& Regulation) Act,1951 (65 of 1951), the Companies Act, the

Securities Contracts (Regulation) Act,1956 (42 of 1956), any

of the rules or bye laws made by a recognized stock

exchange, the Monopolies and Restrictive Trade Practices

Act,1969(54 of 1969), the Foreign Exchange Regulation Act,

148

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

1973 (46 of 1973), or under any other law for the time being

in force,

(vi ) Issuing certificates on behalf of, or for the purposes of, a

company; or

(d) holds himself out to the public as a Company Secretary in practice;

or

(e) renders professional services or assistance with respect to

matters of principle or detail relating to the practice of the

profession of Company Secretaries; or

(f) renders such other services as, in the opinion of the Council, are

or may be rendered by a Company Secretary in practice;

and the words “to be in practice” with their grammatical variations and

cognate expressions, shall be construed accordingly.

[Sub-section (2) of Section 2 of the Company Secretaries Act, 1980]

• Debenture

“debenture” includes debenture stock, bonds or any other instrument

of a company evidencing a debt, whether constituting a charge on the

assets of the company or not; [Sub-section (30) of Section 2 of the

Companies Act, 2013]

• Director

“director” means a director appointed to the Board of a company. [Sub-

section (34) of Section 2 of the Companies Act, 2013]

• Director Identification Number (DIN)

“Director Identification Number” (DIN) means an identification number

allotted by the Central Government to any individual, intending to be

appointed as director or to any existing director of a company, for the

purpose of his identification as a director of a company;

Provided that the Director Identification Number (DIN) obtained by the

individuals prior to the notification of these rules shall be the DIN for

the purpose of the Companies Act, 2013:

Provided further that “Director Identification Number” (DIN) includes the

Designated Partnership Identification Number (DPIN) issued under

section 7 of the Limited Liability Partnership Act, 2008 (6 of 2009) and

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

149

the rules made thereunder. [Rule 2(1)(e) of Companies (Specification of

definitions details) Rules, 2014]

• Electronic record

“electronic record” means the electronic record as defined under clause

(t) of sub-section (1) of Section 2 of the Information Technology Act,

2000. [Rule 2(1)(i) of Companies (Specification of definitions details) Rules,

2014] “electronic record” means data, record or data generated, image

or sound stored, received or sent in an electronic form or micro film or

computer generated micro fiche. [Clause (t) of sub-section (1) of Section

2 of the Information Technology Act, 2000]

• Independent director

An independent director in relation to a company, means a director

other than a managing director or a whole-time director or a nominee

director –

(a) who, in the opinion of the Board, is a person of integrity and

possesses relevant expertise and experience;

(b) (i) who is or was not a promoter of the company or its holding,

subsidiary or associate company;

(i ) who is not related to promoters or directors in the company, its

holding, subsidiary or associate company;

(c) who has or had no pecuniary relationship with the company, its

holding, subsidiary or associate company, or their promoters, or

directors, during the two immediately preceding financial years

or during the current financial year;

(d) none of whose relatives has or had pecuniary relationship or

transaction with the company, its holding, subsidiary or associate

company, or their promoters, or directors, amounting to two per

cent. or more of its gross turnover or total income or fifty lakh

rupees or such higher amount as may be prescribed, whichever

is lower, during the two immediately preceding financial years or

during the current financial year;

(e) who, neither himself nor any of his relatives –

(i) holds or has held the position of a key managerial personnel

or is or has been employee of the company or its holding,

150

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

subsidiary or associate company in any of the three financial

years immediately preceding the financial year in which

he is proposed to be appointed;

(i ) is or has been an employee or proprietor or a partner, in

any of the three financial years immediately preceding the

financial year in which he is proposed to be appointed, of –

(A) a firm of auditors or company secretaries in practice

or cost auditors of the company or its holding,

subsidiary or associate company; or

(B) any legal or a consulting firm that has or had any

transaction with the company, its holding, subsidiary

or associate company amounting to ten per cent. or

more of the gross turnover of such firm;

(i i) holds together with his relatives two per cent or more of

the total voting power of the company; or

(iv) is a Chief Executive or director, by whatever name called,

of any nonprofit organization that receives twenty-five per

cent or more of its receipts from the company, any of its

promoters, directors or its holding, subsidiary or associate

company or that holds two per cent or more of the total

voting power of the company; or

(f) who possesses such other qualifications as may be prescribed.

[Sub-section (6) of Section 149 of the Companies Act, 2013]

• Key Managerial Personnel

“key managerial personnel”, in relation to a company, means –

(i) the Chief Executive Officer or the managing director or the

manager;

(i ) the Company Secretary;

(i i) the whole-time director;

(iv) the Chief Financial Officer; and

(v) such other of icer as may be prescribed. [Sub-section (51) of Section

2 of the Companies Act, 2013]

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

151

• Manager

“Manager” means an individual who, subject to the superintendence,

control and direction of the Board of Directors, has the management of

the whole, or substantially the whole, of the affairs of a company, and

includes a director or any other person occupying the position of a

manager, by whatever name cal ed, whether under a contract of service

or not. [Sub-section (53) of Section 2 of the Companies Act, 2013]

• Managing Director

“Managing Director” means a director who, by virtue of the Articles of a

company or an agreement with the company or a Resolution passed

in its General Meeting, or by its Board of Directors, is entrusted with

substantial powers of management of the affairs of the company and

includes a director occupying the position of managing director, by

whatever name called. [Sub-section (54) of Section 2 of the Companies

Act, 2013]

• Memorandum

“Memorandum” means the memorandum of association of a company

as originally framed or as altered from time to time in pursuance of

any previous company law or of this Act. [Sub-section (56) of Section 2

of the Companies Act, 2013]

• Officer

“Officer” includes any director, manager or key managerial personnel

or any person in accordance with whose directions or instructions the

Board of Directors or any one or more of the directors is or are

accustomed to act. [Sub-section (59) of Section 2 of the Companies Act,

2013]

• One Person Company

“One Person Company” means a company which has only one person

as a member. [Sub-section (62) of Section 2 of the Companies Act,

2013]

• Promoter

“promoter” means a person –

(a) who has been named as such in a prospectus or is identified by

the company in the annual return referred to in Section 92; or

152

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

(b) who has control over the affairs of the company, directly or

indirectly whether as a shareholder, director or otherwise; or

(c) in accordance with whose advice, directions or instructions the

Board of Directors of the company is accustomed to act:

Provided that nothing in sub-clause (c) shall apply to a person who is

acting merely in a professional capacity. [Sub-section (69) of Section 2

of the Companies Act, 2013]

• Prospectus

“Prospectus” means any document described or issued as a prospectus

and includes a red herring prospectus referred to in Section 32 or shelf

prospectus referred to in Section 31 or any notice, circular, advertisement

or other document inviting offers from the public for the subscription or

purchase of any securities of a body corporate. [Sub-section (70) of

Section 2 of the Companies Act, 2013]

• Registrar or Registrar of Companies

“Registrar” or “Registrar of Companies” means a Registrar, an Additional

Registrar, a Joint Registrar, a Deputy Registrar or an Assistant Registrar,

having the duty of registering companies and discharging various

functions under this Act. [Sub-section (75) of Section 2 of the Companies

Act, 2013]

• Related party

“Related Party”, with reference to a company, means –

(i) a director or his relative;

(i ) a key managerial personnel or his relative;

(i i) a firm, in which a director, manager or his relative is a partner;

(iv) a private company in which a director or manager or his relative

is a member or director;

(v) a public company in which a director or manager is a director

and holds along with his relatives, more than two per cent. of its

paid-up share capital;

(vi) any body corporate whose Board of Directors, managing director

or manager is accustomed to act in accordance with the advice,

directions or instructions of a director or manager;

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

153

(vi ) any person on whose advice, directions or instructions a director

or manager is accustomed to act:

Provided that nothing in sub-clauses (vi) and (vi ) shal apply to

the advice, directions or instructions given in a professional

capacity;

(vi i) any company which is –

(A) a holding, subsidiary or an associate company of such

company; or

(B) a subsidiary of a holding company to which it is also a

subsidiary;

(ix) such other person as may be prescribed. [Sub-section (76) of

Section 2 of the Companies Act, 2013]

• Relative

‘ Relative’ , with reference to any person, means any one who is related

to another, if –

(i) they are members of a Hindu Undivided Family;

(i ) they are husband and wife; or

(i i) one person is related to the other in such manner as may be

prescribed.

[Sub-section (77) of Section 2 of the Companies Act, 2013]

A person shall be deemed to be the relative of another, if he or she is

related to another in the fol owing manner, namely:-

(1) Father:

Provided that the term “Father” includes step-father.

(2) Mother:

Provided that the term “Mother” includes the step-mother.

(3) Son:

Provided that the term “Son” includes the step-son.

(4) Son’s wife.

(5) Daughter.

154

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

(6) Daughter’s husband.

(7) Brother:

Provided that the term “Brother” includes the step-brother;

(8) Sister:

Provided that the term “Sister” includes the step-sister.

[Rule 4 of Companies (Specification of definitions details) Rules, 2014]

• Securities

“securities” means the securities as defined in clause (h) of Section 2 of

the Securities Contracts (Regulation) Act, 1956. [Sub-section (81) of Section

2 of the Companies Act, 2013]

• Securities include

(i) shares, scrips, stocks, bonds, debentures, debenture stock or other

marketable securities of a like nature in or of any incorporated

company or other body corporate;

(ia) derivative;

(ib) units or any other instrument issued by any col ective investment

scheme to the investors in such schemes;

(ic) security receipt as defined in clause (zg) of section 2 of the

Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002;

(id) units or any other such instrument issued to the investors under

any mutual fund scheme;

(i ) Government securities;

(i a) such other instruments as may be declared by the Central

Government to be securities; and

(i i) rights or interest in securities;

[Clause (h) of Section 2 of the Securities Contracts (Regulation) Act,

1956]

• Share

“Share” means a share in the share capital of a company and includes

stock. [Sub–section (84) of Section 2 of the Companies Act, 2013]

GUIDANCE NOTE ON MEETINGS OF THE BOARD OF DIRECTORS

155

• Smal company

“small company” means a company, other than a public company, –

(i) paid-up share capital of which does not exceed fifty lakh rupees

or such higher amount as may be prescribed which shall not be

more than five crore rupees; [and]4

(i ) turnover of which as per its last profit and loss account does not

exceed two crore rupees or such higher amount as may be

prescribed which shall not be more than twenty crore rupees:

Provided that nothing in this clause shal apply to –

(A) a holding company or a subsidiary company;

(B) a company registered under section 8; or

(C) a company or body corporate governed by any special Act;

[Sub–section (85) of Section 2 of the Companies Act, 2013]

NOTES

Document Outline

Starting Pages.pmd.pdf

Guidance note on Board of Meeting.pmd.pdf