Neha Singhi Practicing Company Secretary Add: D2/1, Block EP, Sector V, Salt Lake City, Kolkata-700091 Ph- 9133 40083385/9831402256 Email: email@example.com Setting the grounds for Corporate Governance
This Presentation is the property of Neha Singhi and no part of it can be copied, reproduced or distributed in any manner.
Topic Page Introduction 4 Objective 5 Impact of SS 6 SS & Corporate Governance 7 Recognition for SS 8 Secretarial Standards in brief 9-23 Corporates inline with SS 24 Conclusion 25
Standardisation of Secretarial Practices
Secretarial Standard Board formed with emminent members
In consultation with various professional bodies, Chamber of Commerce, DCA, DEA, SEBI, RBI
In conformity with existing laws
Standards supplement the law, rules and regulations
To integrate, harmonise and standardise diverse secretarial practices
Improve the compliance of corporate governance norms by India Inc
Sustained growth and enhanced visibility of the profession and members
Setting international benchmarks in secretarial practices
Clarity in legal provisions-where law is ambiguous and silent
Standard secretarial practices in Corporate India
Better understanding of existing laws
More transparency, more compliance
Rise in investors faith
More recognition to the ICSI and members
Increasing Professionalism in corporates
Noncompliance will be easily & readily located
INVESTOR IS KING
SS are guiding in the most compliant manner for executing corporate secretarial functions
Hence increasing compliance & unified practices
Transparent corporate environment
Stakeholders more aware and confident
Better control by regulators
Rise of standards of corporate India
Company Bill 2008
Recognition on cards
SS1 Meetings of the Board of Directors 13.12.2001 SS3 Dividend 22.05.2003 SS2 General Meeting 01.05.2002 SS4 Register and Records 20.10.2005 SS5 Minutes 20.09.2007 SS6 Transmission of Shares and Debentures 20.09.2007 SS7 Passing of Resolution by Circulation 06.11.2008 SS8 Affixing of Common Seal 06.11.2008 SS9 Forfeiture of Shares 06.11.2008 SECRETARIAL STANDARDS
Equally applicable to meetings of committee
Individual Director-no power unless authorised
15 days notice for calling a Board meeting (shorter notice possible; majority)
Notice when meetings are held on pre-determined dates or at pre-determined intervals
Draft Resolution in notice-where approval is required
Quorum should be present at every stage of the meeting
Story-A very substantive matter concerning the powers of the top two men in BOD, which required intensive discussion and consideration of the BOD was introduced through a supplementary agenda at the end of a board meeting, without proper and due notice. Vice chairman of the Company kept in dark.
Is it Justified??
Substantive items or unpublished price sensitive information cannot be introduced as ‘any other item’ without enough notice
Illustrative list of items requiring prior notice in BM
Calls on shareholders in respect of money unpaid on their shares.
Issue of debentures/Borrowing money otherwise than by issue of debentures.
Investing the funds of the company/Making loans.
Filling casual vacancies in the office of Directors.
Granting loans to Directors.
Sanction for specified contracts in which one or more Directors are interested and to sign the Register of Contracts.
Appointment or Resignation of Managing Director or Whole-time Director or Manager.
Appointment and removal of the Chief Financial Officer and the Company Secretary.
Making a declaration of solvency where it is proposed to wind up the company voluntarily.
Annual operating plans and budgets.
Material default in financial obligations.
Committee meeting: All members should be present
Annual Report to disclose the number of meetings of the Board and Committees held during a year and meetings attended by each Director
General Meeting should be convened on the authority of the Board
Notice also to Directors, Auditors, and PCS giving Compliance Certificate, Debenture Trustees
Explanatory Statement for special business.
Resolution for ordinary business when
Appointment of Auditor by special resolution
Appointment of Auditor or Director other than retiring
Notice and documents to be sent 25 days in advance of meeting (shorter notice possible; 100AGM:95EGM)
Listed company with more than 5,000 Members- an abridged version of the Notice should be published in a newspaper having a wide circulation within such States of India where more than 1,000 Members reside.
No other items which are not included in Agenda
Quorum five & two; proxies to be excluded for the purpose of quorum
Every Resolution should be proposed by a Member and seconded by another Member entitled to vote thereon.
Resolutions for items of business which are likely to affect the market price of the securities of the company should not be withdrawn.
No gifts, gift coupons, or cash in lieu of gifts
Minutes should mention the brief background of the proposal, summarise the deliberations and the rationale for taking the decisions.
Within 30 days of the meeting
Language: Third person; past tense
Separate minutes book should be maintained for each type of meeting
Kept at registered office
Registers and documents were available for inspection
Interested director did not participate in the discussion or vote
Appointment of officers made by the Board
Dissent and the name of the director who dissented or abstained from the decision.
Minutes dated, signed and pages numbered
Articles should authorise
Business that does not require detailed discussion or which are urgent decisions
Authority: Chairman/Managing Director
Resolution is deemed to have been passed on the date on which it is approved by the majority of the Directors
Resolutions passed by circulation should be noted at the next meeting of the Board or Committee, as the case may be, and the decision recorded in the minutes of such meeting
Validity: same as a resolution passes in a duly convened meeting
Signature of the company; Binds the company for all obligations undertaken in the document
Only with the approval of the Board of directors of the company
Only one common seal
Affixed in the presence of managing director or any two directors, and the company secretary or any other person as the Board may authorize for the purpose
Official seal is a facsimile of common seal; to be adopted by board resolution
On receipt of notice from nominee along with documents, register the name of the shares in 30 days
Request for transmission signed by the legal heir(s)/Legal
Representatives/claimant(s) with their specimen signature(s);
Succession Certificate or Letter of Administration or Probate of Will;
Original share certificate(s);
Orders of the Court or of competent authority, if applicable;
Permission under the Foreign Exchange Management Act, 2000, if applicable.
Nonpayment of any call
Other ground as stated in Articles
Forfeiture requires approval of Board
Director’s Report should refer to the forfeiture details
Listed companies: notice of forfeiture of shares and actual forfeiture should be intimated to the stock exchange;
Board can annul the forfeiture by passing a resolution before the reissue of forfeited shares
Shares forfeited-liability of the defaulting member does not cease
Reissue of forfeited shares is TRANSFER and does not amount to allotment
Listed Company: Reissue of shares as per guidelines of preferential issue and listing agreement
Interim Dividend should not be declared out of reserves
Final Dividend recommended by Board; declared by members. Interim dividend declared by Board
To be paid in cash within 30 days of declaration
Duplicate dividend warrant to be issued after expiry of 3 months validity of original
Call in arrears or any amount due to members may be adjusted with dividend (listed company-give notice)
Annual Return to disclose: Unpaid Dividend Acc/ IEPF
Dividend amount till 30 days after declaration Investor who claims within 7 years Unpaid Dividend Account till 7 years Within 7 days Investor Education and Protection Fund* Within 30 days *Individual notice atleast 6 months before the due date of transfer to IEPF
Companies are voluntarily adopting SS
Report the compliance in Annual Reports
Reliance Industries Ltd
Tata Metaliks Ltd
Reliance Energy Ltd
Ashok Leyland Ltd
Kotak Mahindra Finance
Complying with good governance practices should not be regarded as a regulatory requirement but rather as an opportunity and value proposition for organisations competing in a de-regulated milieu.
International markets and investors notice companies that upheld clean governance and this appreciation leads to higher valuation for such organisations
A synergy between hardware (systems and structures) and software (values) in organisational culture of companies is possible if the top management, Board of Directors and executives “walk the talk” in value-based governance
It is better to bring an irregularity into the open than get a shock along the road when it is least expected
Courtesy: Ranjana Kumar, Vigilance Commissioner, Government of India