19/03/2024
Summary of the ICSI Announcement dated 13/02/2024.
This announcement is integrated in our free-to-use website ca2013.com.
Revision in Secretarial Standard-1 (“SS-1”) and Secretarial Standard-2 (“SS-2”) w.e.f. 1st April, 2024
The key highlights of the amendments in SS-1 are as follows:
1. Under the applicability clause of SS-1, the exemption to a Section 8 Company and the specific exemptions given to a private company shall be provided only if the company has not committed any default in filing its Financial Statements or Annual Return with the Registrar of Companies.
2. For discussion on restricted matters, the participation of Directors through electronic means shall not be permitted unless there is a Quorum in the Meeting through physical presence of Directors.
3. In cases where the Director intimates his/ her intention of participating in meetings through electronic means at the beginning of the calendar year such intimation shall not debar him/ her from participating in the Meeting in person provided an intimation is given to the company sufficiently in advance.
4. The definition of UPSI now stands revised to the extent that it no longer includes “material events in accordance with the listing agreement”.
5. The requirement of holding only 1 (One) Board meeting in each half of a Calendar Year and the gap between the two Board Meetings not being less than 90 (Ninety) days, is now extended to private company which is recognized as start-up. Further the definition of “start-up” has also been inserted in the said standards.
6. The revised SS-1 has put forth that the Independent Directors will hold their meeting at least once in the Financial year, as opposed to the Calendar year, and that too in the absence of Non-Independent Directors and members of management.
7. A Director is neither reckoned for Quorum nor he is allowed to participate in respect of an item of business in which he is interested. However, an exception has been provided for private companies, wherein a Director is entitled to participate in respect of such item after disclosure of his interest. The revised SS-1 further extends this exemption and states that such a Director shall also be reckoned for Quorum.
8. Directors participating through Electronic Mode in a Meeting are counted for the purpose of Quorum. Earlier the Directors were excluded for any items of business if any Act or any other law stated so. However, this has now been revised and the physical presence of Directors is mandated for ascertaining the quorum for discussing the restricted items.
9. The Chairman of a private company, along with continuing the Chair, will also be reckoned for quorum in addition to being allowed to participate in the proceedings of any item of business that he is interested in.
10. The companies are required to maintain the proof of sending and delivery of the draft of Circular Resolutions and the necessary papers for a period which is not less than 3 years from the date of circulation of such Resolution instead of date of the Meeting.
11. All the companies, as opposed to only the Public companies, are required to approve the appointment of Director(s) in casual vacancy in the immediate next general meeting.
The key highlights of the amendments in SS-2 are as follows:
1. Under the applicability clause of SS-2 the exemption to a Section 8 Company and the specific exemptions given to a private company shall be provided only if the company has not committed any default in filing its Financial Statements or Annual Return with the Registrar of Companies.
2. The definition of the term ‘Ordinary business’ earlier included appointment and ratification of auditors. However, now ordinary business includes only appointment of auditors and not their ratification.
3. Earlier, Annual General Meetings (AGMs) were permitted to be held either at the registered office of the company or at some other place within the city, town, or village in which the registered office of the company is situated. With the amendment, Annual General Meetings of an unlisted company may be held at any place in India, if prior consent is given by all the members either in writing or by Electronic Mode and it is to be made sure that such consent shall be received before the Meeting. In case of a wholly owned subsidiary of a company incorporated outside India, Extra-Ordinary General Meetings may be held outside India.
4. Now, the SS-2 allows sending of Financial Statements and other documents required to be annexed to the General meeting at a shorter notice if the following conditions are satisfied:
a. In case of Annual General Meeting for company with share capital: Consent is to be given by majority in number of members entitled to vote and represent not less than 95% of such part of the paid-up share capital.
b. In case of Annual General Meeting for company without share capital: Consent is to be given by Members having not less than 95% of the total voting power exercisable at such Meeting.
c. In case of Extraordinary General Meeting for Company with share capital: Consent is to be given by majority in number of members entitled to vote and represent not less than 95% of such part of the paid-up share capital of the company.
d. In case of Extraordinary General Meeting for Company without share capital: Consent is to be given by the Members having not less than 95% of the total voting power exercisable at such Meeting.
5. Earlier, none of the members who were related party were allowed to vote on a resolution relating to approval of any contract or arrangement in which such Member is a related party. Vide the amendment, the standard allows voting by related party in case ninety percent or more Members, in number, are relatives of promoters or are related parties. Further in case of wholly owned subsidiary, the resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between wholly owned subsidiary and holding company.
6. The SS-2 provides for a list of items that shall be passed only by way of postal ballot. This is applicable to companies with less than or equal to 200 members wherein such items shall be passed only by way of postal ballot instead of transacting such business at a General Meeting. However, with the amendment, such item of business may be transacted at a General Meeting by a company which is required to provide e-voting facility to its Members.
7. Earlier, a Resolution passed by postal ballot could be rescinded only by way of a Resolution passed subsequently through postal ballot. Now, it can also be rescinded by way of resolution passed at General Meeting by a company that is required to provide e-voting facility to its members.
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