Minutes of Meetings Under Companies Act, 2013
Minutes of meetings are an essential aspect of corporate governance under the Companies Act, 2013. They serve as official records of the discussions and decisions taken during various meetings of the company, including those of the board of directors, shareholders, and committees. Proper maintenance of minutes is crucial for legal compliance, transparency, and accountability in corporate operations.
Importance of Minutes
1. Legal Evidence:
a) Minutes act as a legal record of the proceedings and decisions made during meetings, providing evidence in case of disputes or legal challenges.
b) They ensure that the actions and resolutions passed are documented in accordance with the regulatory requirements.
2. Corporate Governance:
a) Accurate and detailed minutes promote good corporate governance by ensuring that decisions are made transparently and accountably.
b) They provide a historical record of the company’s decision-making process, aiding in continuity and strategic planning.
3. Regulatory Compliance:
a) Companies are required by law to maintain minutes of all meetings, ensuring compliance with the Companies Act, 2013.
b) Non-compliance with minute-keeping requirements can lead to penalties and legal repercussions for the company and its officers.
Types of Meetings and Their Minutes
1. Board Meetings:
a) Minutes of board meetings must capture all significant discussions, decisions, and resolutions passed by the board of directors.
b) The minutes should reflect the date, time, and venue of the meeting, the names of directors present, and the agenda items discussed.
2. General Meetings:
a) These include annual general meetings (AGMs) and extraordinary general meetings (EGMs).
b) Minutes of general meetings should detail the proceedings, including resolutions passed, voting results, and any discussions held on agenda items.
3. Committee Meetings:
a) Companies often have various committees such as the audit committee, nomination and remuneration committee, and corporate social responsibility (CSR) committee.
b) Minutes of committee meetings should record the specific discussions and recommendations made by the committee members.
Legal Provisions for Minutes
Section 118 of the Companies Act, 2013
Section 118 of the Companies Act, 2013, along with the Companies (Management and Administration) Rules, 2014, outlines the requirements for maintaining minutes of meetings:
1. Preparation and Signing:
a) Minutes must be prepared and signed by the chairman of the meeting or the chairman of the next meeting.
b) They should be signed within 30 days of the meeting and entered into the minute book.
2. Minute Books:
a) Companies are required to maintain separate minute books for each type of meeting (board, general, and committee meetings).
b) Minute books must be kept at the registered office or any other place approved by the board.
3. Contents of Minutes:
a) Minutes should include a summary of the proceedings, names of attendees, and details of any resolutions passed or decisions made.
b) They should also record any dissenting views or objections raised during the meeting.
4. Inspection and Access:
a) Shareholders and members of the company have the right to inspect the minute books of general meetings.
b) Copies of the minutes should be provided to members upon request, subject to payment of a fee.
Secretarial Standards
The Institute of Company Secretaries of India (ICSI) has issued Secretarial Standards (SS-1 and SS-2) on the conduct of board and general meetings. These standards provide detailed guidelines on the preparation and maintenance of minutes, including:
1. Format and Language:
a) Minutes should be written in clear and concise language, avoiding any ambiguity.
b) They should be drafted in the past tense and in the third person.
2. Serial Numbering and Pagination:
a) Pages of the minute books should be consecutively numbered, and each entry should have a unique serial number for easy reference.
3. Preservation and Custody:
a) Minute books should be preserved permanently, ensuring their safekeeping and protection from damage or loss.
b) The company secretary or any other authorized person is responsible for the custody of the minute books.
Process of Recording Minutes
1. Drafting:
a) The company secretary or a designated officer typically drafts the minutes, capturing all key points of discussion and decisions made during the meeting.
b) The draft is then reviewed and approved by the chairman or the relevant authority.
2. Approval:
a) The minutes are presented for approval at the subsequent meeting.
b) Any amendments or corrections are made, and the final version is signed by the chairman.
3. Entry into Minute Book:
a) Once approved and signed, the minutes are entered into the respective minute book, ensuring compliance with statutory requirements.
b) The entry should be made chronologically and in a timely manner.
Common Challenges and Best Practices
1. Accuracy and Completeness:
a) Ensuring that minutes accurately reflect the discussions and decisions made during the meeting is crucial.
b) Best practices include recording minutes in real-time and cross-referencing with meeting agendas and notes.
2. Timely Preparation:
a) Delays in preparing and signing minutes can lead to non-compliance and potential legal issues.
b) Establishing a standardized process and timeline for minute preparation and approval helps mitigate this risk.
3. Confidentiality and Disclosure:
a) Minutes often contain sensitive information that should be handled with confidentiality.
b) Companies must balance transparency with the need to protect proprietary or confidential information.
4. Training and Awareness:
a) Regular training for directors, officers, and company secretaries on the legal requirements and best practices for minute-keeping ensures compliance and enhances the quality of minutes.
Conclusion
The maintenance of minutes is a critical aspect of corporate governance under the Companies Act, 2013. Properly drafted and maintained minutes not only ensure legal compliance but also enhance transparency and accountability in corporate decision-making. By adhering to statutory provisions and best practices, companies can effectively manage their minute-keeping processes, thereby supporting robust governance frameworks and fostering stakeholder confidence.
Fri, 28-Jun-2024