Decoding Secretarial Standards – Scope and Definitions


In my earlier post here I have raised some issues related to issuance of secretarial standards. As these are curable technical issues. I continue my study of these Secretarial Standards.

In this post, I will discuss scope of the Secretarial Standards namely SS – 1 and SS – 2 issued by Institute of Company Secretaries of India and interesting definitions.

SS – 1 is applicable to the Meetings of Board of Directors of all companies incorporated under the Act except One Person Company (OPC) in which there is only one Director on its Board. The principles enunciated in this Standard for Meetings of the Board of Directors are also applicable to Meetings of Committee (s) of the Board, unless otherwise stated herein or stipulated by any other applicable Guidelines, Rules or Regulations.

SS – 1 is not applicable to the meeting of Board of One Person Companies which has only one director, otherwise SS – 1 is applicable to One Person Companies Also.

SS – 2 is applicable to all types of General Meetings of all companies incorporated under the Act except One Person Company (OPC) and class or classes of companies which are exempted by the Central Government through notification. The principles enunciated in this Standard for General Meetings of Members are applicable mutatis mutandis to Meetings of debenture-holders and creditors. A Meeting of the Members or class of Members or debenture-holders or creditors of a company under the directions of the Court or the Company Law Board (CLB) or the National Company Law Tribunal (NCLT) or any other prescribed authority shall be governed by this Standard without prejudice to any rules, regulations and directions prescribed for and orders of, such courts, judicial forums and other authorities with respect to the conduct of such Meetings.

SS – 2 is not applicable to all One Person Companies and other class or classes of companies exempted by Central government through notification from the application of this secretarial standard. There is no such power to Central government under SS – 1 to exempt its application from any class of company.

SS – 2 is also applicable to general meetings of members, class of members, debenture holders, creditors, whether being convened under directions of the Court, CLB, NCLT or any other prescribed authority. SS – 2, in such cases are applicable without prejudice to any rules, regulations and directions prescribed for and orders of, such courts, judicial forums and other authorities with respect to the conduct of such Meetings.

Both standards, with caution, make it clear that these are in conformity of the Act.

This Standard is in conformity with the provisions of the Act. However, if, due to subsequent changes in the Act, a particular Standard or any part thereof becomes inconsistent with the Act, the provisions of the Act shall prevail.

Here, this is made clear that in case of any subsequent change in the Act, changed provision of the Act shall prevail. This may be noted that any subsequent change in rules, notification and circular shall have no effect on these secretarial standards. In other words, Secretarial Standards shall prevail over any change in rules etc.

Now, I will discuss some interesting definitions under the Secretarial Standards namely SS – 1 and SS – 2 issued by Institute of Company Secretaries of India.

Chairman:

For SS – 1, Chairman means the Chairman of the Board or its Committee, as the case may be, or the chairman appointed or elected for a meeting.

For SS – 2, Chairman means Chairman of the Board or the Chairman appointed or elected for a Meeting.

As a term “Chairman” always faces criticism being a sexist term and terms “chairperson” and “chair” are preferable substitutes. Though the Companies Act 2013 also use term chairman but secretarial standards may have take some lead.

Both these definitions has no respects in these secretarial standards. Please look these examples:

The Chairman of the company shall be the Chairman of the Board. [Paragraph 5.1 of SS – 1]

The Chairman of the Board shall take the chair and conduct the Meeting. [Paragraph 5.1 of SS – 2]

In paragraph 5.1 of SS – 1, it is not clear who is “chairman of the company” as term chairman is defined not “chairman of the company”. In paragraph 5.1 of SS – 2, simple statement, “the Chairman of the Board shall take the chair and conduct the Meeting” will suffice. Otherwise, definition of “chairman” may be removed from these standards.

Electronic Mode:

“Electronic Mode” in relation to Meetings means Meetings through video conferencing or other audio-visual means. “Video conferencing or other audio-visual means” means audio-visual electronic communication facility employed which enables all the persons participating in a Meeting to communicate concurrently with each other without an intermediary and to participate effectively in the Meeting. [SS – 1]

Terms “communicate concurrently” is most term in this definition. Most of these days video conferencing tools has such facility. One requirement, which is not given here but evident in the Rules and these standards are capability of being recorded for future reference. “Audio only conferencing” does not fall in definition of “electronic mode” for good reason.

Invitee:

“Invitee” means a person, other than a Director and Company Secretary, who attends a particular Meeting by invitation. [SS – 1]

This is significant as it make company secretary a permanent participant of board meetings. This is good governance practice. Otherwise Secretary may not fulfill its duties.

National Holiday:

“National Holiday” includes Republic Day i.e. 26th January, Independence Day i.e. 15th August, Gandhi Jayanti i.e. 2nd October and such other day as may be declared as National Holiday by the Central Government.

In absence of any other reliable source, I consider 14 holidays listed in government order available here as compulsory holidays for whole India by the Ministry of Personnel, Public Grievances and Pension. These 14 holidays has not been changed since long. As per government practice this list released almost 6 month in advance. Just for passing reference, three days mentioned in this definition are three national days of India.

Secured Computer System:

‘‘Secured Computer System” means computer hardware, software, and procedure that –

(a) are reasonably secure from unauthorized access and misuse;

(b) provide a reasonable level of reliability and correct operation;

(c) are reasonably suited to performing the intended functions; and

(d) adhere to generally accepted security procedures.

This is verbatim copy of Section 2(1)(ze) of the Information Technology Act 2000.

“Timestamp” means the current time of an event that is recorded by a Secured Computer System and is used to describe the time that is printed to a file or other location to help keep track of when data is added, removed, sent or received.

I have concern with this definition and use of term timestamp in the definition because timestamp help to keep track of when data is added, removed, sent or received. Usually all computer program creating some document has time stamp. You can check property of any file in your computer. What we need is not just time stamp but surety that nothing will be and have been changed after finalization of document say minutes.

At the end of this post, I want to mention that some provisions I criticised here may be taken from the Act or relevant Rules and in such case may be treated my suggestion for relevant changes the Act or these Rules.

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.

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3 responses to “Decoding Secretarial Standards – Scope and Definitions

  1. G V PANDURANGA GUPTA

    Is its compliance level is satisfactory as of now ?

    Like

  2. Why we need as when we have notification, removal of difficulties order etc .when act can override ss,what the purpose of having ss.pl advice me as to its importance.

    Like

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