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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Governance Influencers

Mehul Steels Ltd's chairman says: 'Because ICSI Secretarial Standards are issued by a professional institute, our board may treat them as mere best-practice guidance and depart from them when convenient.' Under the Companies Act, 2013 framework, which response is correct?

The chairman is wrong. Secretarial Standards on board and general meetings, issued by ICSI and recognised by the Central Government, are mandatory for companies under the Companies Act, 2013. The obligation is not limited to unlisted companies or to companies above a capital threshold.

  1. ACorrect, since standards issued by professional institutes are always voluntary
  2. BIncorrect, because once the Central Government recognises them, compliance with the Secretarial Standards on meetings is mandatory for companiesCorrect
  3. CCorrect, but only for unlisted companies
  4. DIncorrect, because they are mandatory only for companies with paid-up capital above a prescribed amount

Explanation

The Act requires every company to observe Secretarial Standards on board and general meetings issued by ICSI and approved by the Central Government. They are therefore mandatory, not voluntary, and the obligation does not depend on listing status or capital size. Treating them as optional is wrong.

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