CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Processes through Secretarial Standards
Kaveri Auto Ltd's Board wants to treat a set of standards as 'secretarial standards' for section 205. The company's legal team cites an internal governance manual drafted by the Audit Committee and a set of standards issued by the Institute of Company Secretaries of India and approved by the Central Government. Which of these qualifies as secretarial standards for the purpose of section 205?
Only standards issued by the Institute of Company Secretaries of India and approved by the Central Government count as secretarial standards under section 205. Internal manuals or Board-adopted guidelines, however good, do not meet the statutory definition.
- AOnly the internal manual, as the Audit Committee is closest to the company's affairs
- BBoth, because any written governance guideline adopted by a Board counts
- CNeither, because secretarial standards are defined only in the articles of association
- DOnly the standards issued by the ICSI and approved by the Central GovernmentCorrect
Explanation
The Explanation to section 205 defines secretarial standards as those issued by the ICSI constituted under section 3 of the Company Secretaries Act, 1980 and approved by the Central Government. An internal manual, however useful, does not meet this definition. The articles of association have no role in defining the term.
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