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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Processes through Secretarial Standards

Vistara Components Ltd's Board holds meetings regularly. The Managing Director says that secretarial standards are only ICSI's suggestions and the company may ignore them if it prefers its own practice. Under the Companies Act, 2013, which statement is correct?

Every company must observe the secretarial standards on general and Board meetings that ICSI specifies and the Central Government approves. They are not optional guidance, and they are not limited to listed companies or to general meetings, since the Act applies the duty to all companies and both meeting types.

  1. AEvery company must observe the secretarial standards on general and Board meetings issued by ICSI and approved by the Central GovernmentCorrect
  2. BSecretarial standards bind only listed companies and not unlisted companies
  3. CSecretarial standards are recommendatory guidance with no consequence for non-observance
  4. DSecretarial standards apply only to general meetings and not to Board meetings

Explanation

Section 118(10) states that every company shall observe secretarial standards with respect to general and Board meetings specified by ICSI and approved by the Central Government. It is not limited to listed companies and covers both kinds of meetings. So treating them as optional is wrong.

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