Board Meetings and its Compliances

Board meetings are crucial for a company’s development as these meetings are held to devise the policies, drive the management, strategize and evaluate the expectations of the stakeholders. Meetings of the board are significant in the light of running the company more efficiently and effectively

Section 110(18) of the Companies Act 2013, mandated every Company to observe Secretarial Standards-1 with respect to Board Meetings specified by ICSI 

Secretarial Standard 1 (SS-1) on Board Meetings, issued by the Institute of Company Secretaries of India (ICSI), provides comprehensive guidelines for conducting board meetings in a corporate setting. This standard aims to ensure transparency, accountability, and effective governance by outlining procedures for the convening, conduct, and documentation of board meetings. It covers aspects such as notice requirements, agenda preparation, quorum, and minutes recording, ensuring that meetings are conducted in a structured and legally compliant manner. By adhering to SS-1, companies can foster better decision-making processes and uphold robust corporate governance practices.

In its 306th meeting, the Council of the Institute of Company Secretaries of India (ICSI) approved revisions to SS-1 and Secretarial Standard 2 (SS-2), which came into effect on April 1, 2024.

The SS-1 are applicable to every Company incorporated under the Indian Companies Act. 

One-Person Companies and Section 8 Companies are exempted.

Frequency of the Meeting

• Every company shall hold the first meeting within 30 days of the date of its incorporation and a minimum number of four Board meetings to be held in each calendar year
• There should be a gap of not more than 120 days between two consecutive meetings In- the case of One Person Company, Small Companies, or Dormant Companies, one Board meeting is required to be held in each half of the calendar year and the gap between 2 meetings is  not less than 90 days [section 173(5)] 
• Specified IFSC shall hold the first Board meeting within 60 days of its incorporation and thereafter hold at least one meeting in each of the calendar year In case of Section 8 Company, shall hold at least one meeting within every six calendar months In a recent ruling involving Etsystore Private Limited vs ROC, the Registrar of Companies (ROC) Delhi levied a penalty of INR 45,000 on the company for failing to convene four board meetings during the calendar year 2020. 
• Similarly, in the case of CFS Netralaya Private Limited vs ROC, the ROC Mumbai imposed a penalty of INR 1,25,000 per year on both the company and its officers for not holding the required four board meetings in each of the calendar years 2021 and 2022. 

Notice of the Meeting

• Meeting should be held after giving a minimum of 7 days' notice [section 173(1)], in case the company sends the notice by speed post or by courier, an additional two days shall be added for the service
• The notice shall be given in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or post or by electronic means [section 173(1)]
• The notice shall specify the serial number, day, date, time and full address of the venue of the meeting
• Meeting can be called at a shorter notice if at least one Independent Director, if any, in the company shall be present at the meeting 
• Notice shall be issued by the Company Secretary or where there is no Company Secretary, any Director or any other person authorised by the board for the purpose
• In case on non-compliance, every officer whose duty is to give notice will be liable for a penalty of INR 25,000/- 

Agenda and Notes of the Meeting 

• The Agenda and Notes of the business to be transacted should be enclosed with notice
• It mentions details of proposals and business to be transacted
• Supplementary Notes on any of the Agenda items may be circulated at or before the meeting and shall be taken up with the permission of the Chairman and with the consent of the majority Director present in the meeting, which shall include at least one Independent Director, if any
• Any item not included in the Agenda may be taken up with the permission of the Chairman and with the consent of the majority Director present in the meeting, which shall include at least one Independent Director, if any.

Minutes

• Every company shall keep Minutes of all Board and Committee Meetings in a Minute Book
• Minutes help in understanding the proposals and decisions taken at a meeting
• A company may maintain its Minutes in physical or electronic form with a Timestamp
• Minute shall state the type of meeting, name of the company, date, day, time, venue, the name of the Director, the Company Secretarial Standard 2 and any invitees for specific items
• The Draft Minutes should be circulated within 15 days of the Board meeting by hand or by speed post by registered post by courier or by electronic means to all the members of the Board
• Minutes shall be entered in the Minutes Book within 30 days of the Board meeting
• A copy of signed Minutes shall be circulated within 15 days after these are signed

Convening of a Meeting

• Generally, the Company Secretary or a Director on the direction of the Chairman/Managing Director shall call a Board Meeting

Cancellation of Convened Board Meeting

• When the items of business for which the Board Meeting was convened have been altered or become non-existent then the Board Meeting convened may be cancelled by notice to the directors

Quorum of the Meeting

• The Quorum for the Board meeting shall be one-third of the total strength of the Board or 2 directors, whichever is high [section 174(1)]
• Any fraction contained in the one-third shall be rounded off to the one
• Total strength shall not include Directors whose places are vacant
• 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 [section 174(3)]
• If a Meeting of the Board could not be held for want of Quorum, then, the Meeting shall automatically 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 [section 174(2)]
• If there is no Quorum at the adjourned Meeting also, the Meeting shall stand cancelled.
• Quorum shall be present not only at the time of commencement of the Meeting but also while transacting business.
• Directors participating through Electronic Mode in a Meeting shall be counted for Quorum unless they are to be excluded for any items of business under the provisions of the Act or any other law [section 174(1)]
• Interested Directors may also be counted towards Quorum in case of Private Company after disclosure of his interest
• The continuing Director can act to increase the number of Directors to obtain a Quorum [section 174(2)]
• The quorum for Section 8 company is either 8 members of the Board or 25% of his total strength whichever is less
• For Listed entities, the quorum of the Board meeting from April 1, 2020, shall be one-third of its total strength or three directors whichever is higher including one Independent Director for the Top 2000 Listed Companies

Day, Time and Place of the Meeting

• It should be held only on working days excluding Public Holiday
• It may be held during business hours or outside the business hours
• It can be held at any place in India or outside India 

Adjournment of Meeting

• If a Meeting of the Board could not be held for want of Quorum, then, unless otherwise provided in the Articles, the Meeting shall automatically 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 [section 174(2)]
• If there is no Quorum at the adjourned Meeting also, the Meeting shall stand cancelled
• Fresh notice is not necessary, it is however desirable to give notice

Additionally, the policy's structured and thorough implementation is akin to the compliance required under Section 139 of the Companies Act, 2013, ensuring accountability and systematic progress.

Proxy

• A director cannot appoint a proxy or his representative to attend and it is necessary to attend the meeting personally [section 173 (2)]
• Nominee directors are allowed to appoint the observer as per the terms of the loan agreement
• A director may appoint an observer with the consent of the Board to observe the proceedings of the Board meeting if he is not available to attend the meeting
• An observer has no right to speak or vote.

Attendance Registers

• Every company shall maintain separate attendance registers for the Meetings of the Board and Meetings of the Committee.
• Every Director, Company Secretary who is in attendance and every Invitee who attends a Meeting of the Board or Committee thereof shall sign the attendance register at that Meeting.
• The attendance register shall be kept in the custody of the Company Secretary. Where there is no Company Secretary, the attendance register shall be kept in the custody of any Director authorised by the Board for this purpose.
• Leave of absence shall be granted to a Director only when a request for such leave has been received by the Company Secretary or by the Chairman. 

Chairman of the Meeting

• The Chairman of the company shall 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.
• It would be the duty of the Chairman to check, with the assistance of the Company Secretary, that the Meeting is duly convened and constituted per the Act or any other applicable guidelines, Rules and Regulations before proceeding to transact business
• If the Chairman is interested in any item of business, he shall, with the consent of the members present, entrust the conduct of the proceedings in respect of such item to any Disinterested Director and resume the Chair after that item of business has been transacted.

Conclusion

Board meetings are essential assemblies of a company's senior management, making it vital to adhere to the highest standards and comply with statutory regulations. Ensuring that these meetings are conducted properly helps prevent legal issues related to non-compliance and guarantees that all significant topics and concerns are methodically covered.

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