Board Processes through Secretarial Standards: formula sheet

Key formulas

Source and recognition test

Secretarial standards = standards issued by ICSI + approved by the Central Government

Both elements appear in the Explanation to section 205 and in section 118(10). Without approval, a standard does not carry this statutory status.

Duty on the company

Section 118(10): every company shall observe secretarial standards for general and Board meetings

Covers meetings of the Board and general meetings, which is why SS-1 and SS-2 are the core standards.

Duty of the company secretary

Section 205(1)(b): ensure that the company complies with applicable secretarial standards

Section 205(1)(a) also requires reporting to the Board on compliance with the Act, rules and other applicable laws.

Limit on the secretary's role

Section 205(2): sections 204 and 205 do not affect duties of the Board, chairperson, MD or WTD

Compliance remains a shared responsibility.

Penalty for default under section 118

Company: ₹25,000. Every officer in default: ₹5,000

Applies to default in complying with section 118 for a meeting, including the duty to observe secretarial standards under section 118(10).

Tampering with minutes

Imprisonment up to 2 years and fine of ₹25,000 to ₹1,00,000

Section 118(12). This is a separate and more serious offence than a simple default.

Number of meetings and gap

First meeting within 30 days of incorporation; then at least 4 meetings a year; gap between two consecutive meetings ≤ 120 days

Section 173(1). OPC, small company and dormant company are deemed to comply with section 173 if at least one Board meeting is held in each half of the calendar year and the gap between the two meetings is not less than 90 days (section 173(5)). An OPC with only one director is exempt from sections 173 and 174.

Notice period

Notice ≥ 7 days, in writing, to every director at the address registered with the company

Section 173(3). It may go by hand, post or electronic means. SS-1 also requires the agenda and notes on agenda to be sent at least seven days before the meeting.

Shorter notice

Urgent business + at least one independent director, if any, present

If no independent director attends, decisions are circulated to all directors and are final only on ratification by at least one independent director, if any (section 173(3) provisos). This independent director condition belongs to section 173. Do not apply it to a producer company, which is governed by section 378V (see below).

Quorum

Quorum = higher of (1/3 of total strength) or 2 directors; fractions rounded up to 1

Section 174(1). Directors on video conferencing count. Total strength excludes vacant places. For a producer company the quorum is fixed by section 378V(4) instead (see below).

Producer companies

Section 378V applies instead of sections 173 and 174: at least 4 meetings a year and not less than once in every three months; notice ≥ 7 days; quorum = 1/3 of total strength, minimum 3

Under section 378V the Chief Executive gives the written notice at least seven days before the meeting, and a failure attracts a penalty of ₹5,000 (section 378V(3)). A meeting may be called at shorter notice if the Board records the reasons in writing. There is no independent director condition for shorter notice in this section.

Interested directors

If interested directors ≥ 2/3 of total strength, quorum = non-interested directors present, not less than 2

Section 174(3). Interested director means one within section 184(2).

Want of quorum

Meeting stands adjourned to same day, time and place next week (or next non-holiday)

Section 174(4), unless the articles provide otherwise.

Vacancies

If directors fall below quorum, they may act only to increase numbers to quorum or to summon a general meeting

Section 174(2).

Resolution by circulation

Draft + papers to all directors, approved by a majority of those entitled to vote; if ≥ 1/3 of total directors ask, put it at a meeting

Section 175(1). It must be noted at the next Board or committee meeting and made part of its minutes (section 175(2)).

Minutes

Prepare, sign and keep in numbered books within 30 days of the meeting's conclusion

Section 118(1). Contents: fair and correct summary, directors present, and dissenting directors per resolution (section 118(2), (4)). The Chairman may exclude defamatory, irrelevant or detrimental matter (section 118(5), (6)).

Penalties

Notice default: ₹25,000 on the officer. Minutes default: ₹25,000 on the company and ₹5,000 on each officer in default. Tampering with minutes: up to 2 years and fine ₹25,000 to ₹1,00,000

Sections 173(4), 118(11) and 118(12).

Notice period for a general meeting

Notice = at least 21 clear days (excluding the day of sending and the day of the meeting)

Shorter notice is allowed only with written or electronic consent. For an AGM, 95% of members entitled to vote must consent. For other general meetings, a majority in number of members holding at least 95% of the voting power is needed.

AGM timing

AGM within 6 months of financial year end; gap between two AGMs ≤ 15 months

Held between 9 a.m. and 6 p.m. on a day that is not a National Holiday, at the registered office or a place within the city, town or village where it is located (company-specific exceptions exist).

Proxy basics (section 105)

Proxy: in writing, signed; deposited ≥ 48 hours before the meeting; no right to speak; vote only on a poll

If the articles ask for a longer deposit period, it is treated as 48 hours. A proxy can act for not more than fifty members and, under the Rules, for not more than 10% of total voting share capital; a member holding more than 10% may appoint a proxy for his own holding only.

Proxy notice statement

Notice must state prominently that a member may appoint a proxy and that a proxy need not be a member

Default: every officer in default is liable to a penalty of ₹5,000 (section 105(3)).

Inspection of proxies

Window = 24 hours before the meeting until its conclusion; written notice ≥ 3 days

Members entitled to vote can inspect proxies lodged, during business hours of the company (section 105(8)).

Quorum (public and private company)

Public: 5 members if up to 1,000 members; 15 if 1,001 to 5,000; 30 if above 5,000. Private: 2 members. Members must be personally present.

Unless the articles provide a larger number. If quorum is absent within half an hour, a meeting called by requisition is cancelled; other meetings stand adjourned to the same day next week, same time and place.

Minutes: time limit and form

Minutes prepared and entered within 30 days of conclusion, in books with consecutively numbered pages (section 118(1))

SS-2 expects the chairman of that meeting to sign them within 30 days. Minutes of general meetings are to be preserved permanently.

Penalties under section 118

Company ₹25,000; each officer in default ₹5,000; tampering: up to 2 years and fine ₹25,000 to ₹1,00,000

Minutes kept properly are evidence of proceedings, and the meeting is deemed duly called and held until the contrary is proved.

Chairman's discretion in minutes

Omit matter that is defamatory, irrelevant or immaterial, or detrimental to company interests

Section 118(5) and (6): the chairman has absolute discretion on these grounds. Minutes must give a fair and correct summary and include all appointments made at the meeting.

Remote e-voting window

Open for at least 3 days; closes at 5 p.m. on the day before the meeting

Applies to companies required to give e-voting. Fix a cut-off date, appoint a scrutiniser, and keep the e-voting and poll results in the records.

Time limit for keeping minutes

Minutes entered in the minute book within 30 days of the conclusion of the meeting (or of passing a postal ballot resolution)

Section 118(1). Pages of the minute books must be consecutively numbered.

Content of Board and committee minutes

Fair and correct summary + all appointments + names of directors present + names of dissenting or non-concurring directors for each resolution

Section 118(2), (3) and (4).

Matters the Chairman may exclude

Defamatory, irrelevant or immaterial, or detrimental to the company's interests

Section 118(5). The Chairman has absolute discretion under section 118(6).

Evidentiary value of minutes

Minutes kept as per section 118 = evidence of the proceedings; meeting deemed duly called and held until the contrary is proved

Section 118(7) and (8).

Penalty for default

Company: ₹25,000. Every officer in default: ₹5,000

Section 118(11), for each meeting in default.

Penalty for tampering

Imprisonment up to 2 years and fine from ₹25,000 to ₹1,00,000

Section 118(12).

Duty of company secretary

Report to the Board on compliance + ensure compliance with Secretarial Standards

Section 205(1)(a) and (b).

Function 1: Reporting

Report to the Board about compliance with the Act, the rules made thereunder and other laws applicable to the company

Section 205(1)(a). Covers the Act, rules and other applicable laws, not only the Companies Act.

Function 2: Secretarial standards

Ensure the company complies with applicable secretarial standards

Section 205(1)(b). Standards are those issued by ICSI and approved by the Central Government.

Function 3: Other duties

Discharge such other duties as may be prescribed

Section 205(1)(c). The duties come from the rules, not from the section itself.

Savings clause

Sections 204 and 205 do not affect the duties and functions of the Board, chairperson, managing director or whole-time director

Section 205(2). The secretary does not take over Board responsibility.

Who must get it done

Every listed company + other prescribed classes of companies

Section 204(1). The prescribed classes are in the Rules, so state them only from the current Rules.

Who can be the auditor

Company secretary in practice

A company secretary in employment cannot give this report.

Where the report goes

Annexed to the Board's report under section 134(3), in the prescribed form (MR-3)

It is part of the Board's report package, not a separate filing in the exam answer.

Company's duty

Give all assistance and facilities for auditing secretarial and related records

Section 204(2).

Board's duty on remarks

Explain in full any qualification, observation or other remark

Section 204(3), in the Board's report.

Penalty

₹2,00,000 on the company, every officer in default, or the CS in practice in default

Section 204(4), as substituted by Act 29 of 2020. It is a penalty, not imprisonment.

Fraud reporting

Section 143(12) and 143(15) apply mutatis mutandis (section 143(14)(b))

Non-compliance by the CS in practice: ₹5,00,000 for a listed company, ₹1,00,000 for any other company.

Quick revision

• Secretarial standards are issued by ICSI and approved by the Central Government.
• Section 118(10): every company must observe the secretarial standards for general and Board meetings.
• Section 205(1)(b): the company secretary must ensure the company complies with applicable secretarial standards.
• Section 205(1)(a): the company secretary reports to the Board on compliance with the Act, the rules and other applicable laws.
• Section 205(2): Sections 204 and 205 do not reduce the duties of the Board, chairperson, managing director or whole-time director.
• Section 118(1): minutes must be prepared, signed as prescribed and kept within thirty days of the meeting or postal ballot, in books with consecutively numbered pages.
• Section 118(4): Board and committee minutes must name the directors present and any directors dissenting from a resolution.
• Section 118(5) and (6): the Chairman may leave out defamatory, irrelevant or immaterial matter, or matter detrimental to the company, at his absolute discretion.
• Section 118(7) and (8): properly kept minutes are evidence, and the meeting is deemed duly held until the contrary is proved.
• Section 118(11): default carries a penalty of ₹25,000 on the company and ₹5,000 on each officer in default.
• Section 118(12): tampering with minutes means imprisonment up to two years and a fine of ₹25,000 to ₹1,00,000.
• Section 204: listed companies and prescribed classes must annex a secretarial audit report by a company secretary in practice to the Board's report; the Board must explain any qualification in full; default attracts a penalty of ₹2,00,000.

Common mistakes

• Calling Secretarial Standards mere recommendations or best practice. Fix: Write that sections 118(10) and 205(1)(b) direct companies to observe the standards, which gives them statutory backing once approved by the Central Government.
• Leaving out Central Government approval. Fix: Always write the full test: issued by ICSI and approved by the Central Government.
• Counting vacant seats in total strength when calculating quorum. Fix: Section 174 says total strength does not include directors whose places are vacant. Use only the directors actually in office.
• Saying shorter notice is always allowed for urgent business. Fix: State both parts: at least one independent director, if any, must be present, or decisions are final only on ratification by at least one independent director, if any.
• Counting the day of sending and the day of the meeting in the 21 days. Fix: Use clear days. Exclude both the sending date and the meeting date. Then count the days in between.
• Saying a proxy can speak at the meeting or vote on a show of hands. Fix: Remember section 105: a proxy has no right to speak and can vote only on a poll.
• Saying Secretarial Standards are only recommendatory. Fix: Cite section 118(10): every company shall observe the standards on general and Board meetings once approved by the Central Government.
• Writing that minutes need only cover the Board meeting, not committees. Fix: Section 118(1) expressly covers every committee of the Board. Mention committees in your answer.
• Saying the secretary is personally responsible for all compliance of the company Fix: Section 205(1)(a) requires reporting to the Board. Section 205(2) keeps the Board's duties intact.
• Limiting the reporting function to the Companies Act only Fix: Write all three: the Act, the rules made under it and other laws applicable to the company.

Exam tips

• Write both conditions every time: issued by ICSI and approved by the Central Government.
• Quote sections 118(10) and 205(1)(b) by number, since the answer is provision-based.
• In case questions, name the correct standard (SS-1 for Board meetings, SS-2 for general meetings) before concluding.
• Give penalty figures only where you are sure: ₹25,000 on the company and ₹5,000 per officer in default under section 118(11).
• End with a practical step, such as reporting to the Board or correcting the minutes.
• Write the section number only where you are sure. Section 173 (meetings, notice), 174 (quorum), 175 (circulation) and 118 (minutes) are safe from the official text.
• Always show the quorum arithmetic: total strength after excluding vacancies, divide by 3, round up, compare with 2.
• For circulation questions, test three things: draft and papers sent to all, majority approval, and the one-third right to demand a meeting. Finish with noting it at the next meeting.