Beware..Rs 25 lakhs can be the cost of not maintaining Board Minutes. All the business houses, expect to have a transparent and uniform governance of all the activities of the company so Secretarial Standards was introduced which acts as a benchmark in resolving the governance issues.

As per the recent notification of Companies Act, 2013 . The Standard prescribes a set of principles for convening of the meetings.

Importance

The Secretarial Standards have laid down strict rules for the compliance of procedure for conducing the Board Meeting and Annual General Meeting (AGM) which will assist in strengthening the corporate governance practices, corporate disclosures which reduce non-compliance.

The Standard assists in good functioning of the company as a whole. The Standards attempts to have only one interpretation. 

Secretarial Drafting in consonance with Secretarial Standards as introduced by Companies Act, 2013

The points which cover the essential drafting that is to be undertaken throughout the year are-

1. Board Resolutions (minimum 4 in one FY),
2. Annual General Meetings Resolutions (minimum 1 in one FY),
3. Director’s report, director’s responsibility statement, statement of depreciation schedule, fixed assets, etc.
4. Maintenance and Updation of Statutory Shareholder’s Registers as per Companies Act, 2013

Frequency of Meetings

1. Every company shall in each calendar year hold a general meeting called the Annual General Meeting (AGM) within the prescribed time limit.
2. A Company shall hold at least 4 Board Meetings (BM) in each calendar year and the maximum time gap between two consecutive meetings is 120 days.
3. The Board shall hold its First Board Meeting within 30 thirty days of the date of incorporation of the company.

Further, it shall be sufficient if a One Person Company, Small Company or Dormant Company holds one Meeting of the Board in each of the half calendar year and the gap between the two meetings of the Board is not less than ninety days.

Maintenance of Statutory Registers as per Companies Act, 2013

 A company is required to maintain Statutory Registers which should be kept in the Registered Office of the company. Few of the registers are required to be kept open for inspection purposes for the Directors, Members and creditors of the company.

1. Register of Member – MGT-1,
2. Register for Debenture Holders- MGT-2,
3. Foreign Register of Members, Debenture holders, other security holders or beneficial owners residing outside India – MGT-3,
4. Register of Renewed and Duplicate Share Certificate – Form SH-2,
5. Register for Sweat Equity Shares- SH-3,
6. Register of Employees Stock Options- SH-6,
7. Register of Shares or Securities Bought Back- SH-10,
8. Register of Charges-Form CH-7,
9. Register of Loans/Guarantee/Security and Acquisition by Company – Form MBP-2,
10. Register of Investments not held in its own name – Form MBP-3,
11. Register of Contracts or Arrangements in which Directors are interested – Form MBP-4

Directors Report

A Directors’ Report is intended to explain to shareholders, the company’s affairs, including its subsidiaries and the nature and scope of company’s business. The report is a summation of activities of the company in the relevant financial year and an idea about possible future developments. The Board Report is signed by the Chairperson, if he/she is authorized by the Board and he/she is not so authorized, shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director.

Penalties for Non-Compliance

1. If the company contravenes the provision of Section 118 (proceeding of General Minutes of Board of Directors and other meetings) according to Companies Act, 2013, the company shall be punishable with a fine which shall not be less than Twenty-Five Thousand rupees and every officer of the company who is in default shall be punishable with a fine which shall not be less than Five Thousand rupees.

2. If the company contravenes Section 134 (Financial Statement and Directors Report) of Companies Act, 2013, then the company shall be punishable with a fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.

3. If the company contravenes Section 46 (Issue of Share Certificates) of Companies Act, 2013 then the company shall be punishable with a fine which shall not be less than twenty-five thousand rupees but which may extend to five lakhs rupees and every officer of the company who is in default shall be punishable with a fine which shall not be less than ten thousand rupees which may extent to One Lakhs rupees.

4. If the company contravenes Section 77-87 (Creation of Charge) of Companies Act, 2013 then the company shall be punishable with a fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.

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