From 01 July, 2015, every meetings of Board and committees thereof as well as General meetings need to comply with Secretarial Standards – notified by the Institute of Company Secretaries of India, after approval of the Central Government. It is applicable to all companies incorporated / registered in India. SS-1 on Board meetings can be downloaded from here and SS-2 on general meetings can be downloaded from here.
[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#eeee22″ txt_color=”#000000″]Following provisions of Secretarial Standards (1 & 2) are not applicable to private companies in view of exemptions granted by MCA vide notification dated 05 June 2015 from the provisions of the Companies Act, 2013.[/mks_pullquote]
It may be noted that Secretarial Standards itself provides (under ‘Scope”) that “This Standard 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 shall prevail.”
Here is summary on applicability of Secretarial Standards to private companies.
| SS-1 | Secretarial Standard 1: Meetings of the Board of Directors |
|---|---|
| 2.3 | Private companies need not appoint independent directors on their Board and hence need not conduct mandatory one meeting of all the independent directors in one calendar year. |
| 3.2 | In case of private company, Notice can also be sent to Interested directors and they can attend (whether physically OR through Video conferencing) as well as vote in the meetings after disclosing his interest. However he shall not be counted for the quorum, as section 174(3) of the Companies Act, 2013, quorum for Board meeting shall be non-interested directors. |
| 6.4 | In case of private company, even interested director is entitled to take part in board meeting, after disclosure of his interest.And fact that interested director participated in meeting after disclosure of his interest shall be included in the Minutes Book. |
| 1.3.7 | In case of private company, Rule 15 of the Companies (Meetings of Board and its Powers) Rules, 2014 is not applicable. Hence the agenda of the Board Meeting if contains matter of related party transactions, then the notes to agenda need not be include “specified matters” as per the said Rule 15.Here, specified matters means: a. The name of the Related Party and nature of relationship b. The nature, duration of the contact and the particulars of contract or arrangement. c. The material items of the contract or arrangement including the value, if any. d. Any advance paid or received for the contract or arrangement, if any. e. The manner of determining the pricing and other commercial terms, both included as part of contract and not considered as part of the contract. f. Whether all factors relevant to the contract have been considered, if not, the details of factors not considered with the rationale for not considering those factors. g. Any other information relevant or important for the Board to take a decision on the proposed transaction.
Interested directors can remain present during the discussion of the Related Party Transactions and where it’s value is beyond prescribed limits, such transactions does not require prior approval of shareholders by way of a special resolution. |
It is to be noted that private companies may take benefits of such exemptions as notified by the Central Government from time-to-time after ensuring that such exemptions are in the interest of its shareholders and other stakeholders.
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