India: Revised Secretarial Standards, SS-1 And SS-2 To Be Applicable From October 1, 2017

Last Updated: 30 August 2017
Article by S.S. Rana & Co. Advocates

The Institute of Company Secretaries of India has announced that the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) have been revised and the revised Secretarial Standards have received approval from the Central Government. The revised Secretarial Standards shall be applicable for compliance by Companies (except the exempted class of companies1) from October 1, 20172.

History of Secretarial Standards

The Secretarial Standards are formulated by the Institute of Company Secretaries of India (hereinafter referred to as "ICSI") which was constituted under Section 3 of the Company Secretaries Act, 1980. The Secretarial Standards once formulated are then approved by the Central Government through the Ministry of Corporate Affairs. Earlier, the Companies Act, 1956 provided that the Secretarial Standards were "recommendatory" in nature but the enactment of the Companies Act, 2013 made implementation of the Secretarial Standards in a Company "mandatory".

The Secretarial Standards are developed to be in conformity with the provision of the Companies Act, 2013 and in case any amendment in the Companies Act, 2013 leads to a Secretarial Standard to be inconsistent with the provisions of the revised Act, then the provisions of the revised Act shall prevail.

Relevant Provisions of the Companies Act, 2013

  • Section 118 of Companies Act, 2013
    (10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.
  • Section 205 of Companies Act, 2013
    (1) The functions of the company secretary shall include: (b) to ensure that the company complies with the applicable secretarial standards; Explanation- For the purpose of this section, "secretarial standards" means secretarial standards issued by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 and approved by the Central Government.

Original Notification for Implementation of SS-1 and SS-23

The Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) were approved by the Central Government under Section 118(10) of the Companies Act, 2013 on April 10, 2015 vide letter No. 1/3/2014-Cl/I4 and were published in the Official Gazette on April 23, 2015 vide ICSI Notification No. (1) SS of 2015. Companies were required to use the Secretarial Standards with effect from July 1, 2015.

What is Secretarial Standards on Meetings of the Board of Directors (SS-1)

This Standard prescribes a set of principles for convening and conducting Meetings of the Board of Directors and matters connected to the convening and conduct of the Meetings. This Standard is also applicable on Meetings of the Committees of a Company's Board, unless stipulated otherwise. The Standard is applicable to all Companies incorporated under the Companies Act, 2013 except One Person Company in which there is only one Director on its Board.

What is Secretarial Standards on General Meetings (SS-2)

This Standard prescribes a set of principles for convening and conducting General Meetings of the Company and matters connected to the convening and conduct of the Meetings. The Standard also deals with the conduct of e-voting and postal ballot. SS-2 is applicable to all types of General Meetings of all companies incorporated under the Act except One Person Company (OPC) and class or classes of companies which are exempted by the Central Government through notification.

Why are Secretarial Standards Required

Companies follow diverse secretarial practices which have evolved over time through varied usages and as a response to differing business cultures. For example, the Companies Act, 2013, does not specifically provide for when Agenda and Notes on Agenda for a Board Meeting should be sent to members of the Board. SS-1 provides that the Agenda & Notes on Agenda for a Board Meeting must be sent at least 7 days prior to the Board Meeting thereby giving the Directors sufficient time to prepare and arrive at informed decisions. The Secretarial Standards help to integrate, harmonize and standardize such corporate governance practices across all Companies providing better monitoring of compliances and strengthening the Board processes.

Footnotes

1. Such as private companies being set up in International Financial services Centres. They have exempted by the Central Government vide Notification No. GSR 9(E) dated January 4, 2017.

2. https://www.icsi.edu/WebModules/Announcement_on_Revised_Secretarial_Standards.pdf

3. https://www.icsi.edu/docs/Website/Gazette%20of%20GOI.pdf

4. https://www.icsi.edu/docs/Website/Approval%20of%20Central%20Government.pdf

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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