Guidance Note on Meetings of the Board of Directors (Based on Revised SS-1)
Author: Unknown
Date: 2017-10-13T08:05:44+00:00

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

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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.

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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

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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)

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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

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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

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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

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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

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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:

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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.

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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

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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.

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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

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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.

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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.

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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.

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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.

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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,

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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.

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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.

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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)].

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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].

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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.

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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.

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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.

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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

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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.

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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.

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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.

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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

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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,

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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

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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.

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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.

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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)

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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.

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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;

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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.

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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]

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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.

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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.

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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

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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.

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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.

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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;

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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

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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;

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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.

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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.....).

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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

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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/

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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:

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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”.

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[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.”

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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.”

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“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:

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“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

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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 :-

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“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

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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.

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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.

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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,

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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,

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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

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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.

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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

Table of Contents

- Starting Pages.pmd.pdf

- Guidance note on Board of Meeting.pmd.pdf