‘Withdrawal’ of Secretarial Standards 1 & 2


In post “Technical Fault in issuance of Secretarial Standards” posted long ago, I humbly made certain observations on notifications of two Secretarial Standards which was approved by Central Government and specified by the Institute of Company Secretaries of India (ICSI). A surprise notification of withdrawal published on 17th august 2017 come in support of my prima facie views. This withdrawal is effective with effect from 30th September 2017. Here, a discussion.

Earlier observations

Section 205(1) confers power to the institute to “issue” secretarial standards. Such standards may become practice but may not necessarily have legal force for want of “approval by” Government of India. Section 118(10) confers on the institute power to “specify” secretarial standards with respect to general and Board meetings. The term “specify” conveys a meaning of an act more than an act of “issue”. The institute may specify some of secretarial standards issued by it for the purpose of this section.

Under Section 205(1), flow is “Issued”, “approved” and “ensure compliance”. While under Section 118(10), flow is “issued”, “specified” “approved” and “observe”.

In original notification ICSI No. 1(SS) of 2015 dated 23rd April 2015, language used was “the Central Government has vide letter no. 1/3/2014/CL/I dated April 10, 2015 approved (emphasis added) the following Secretarial Standards, specified (emphasis added)by the Institute of Company Secretaries of India…”.

Same time booklets of these secretarial standards published in April 2015 claims that these secretarial standards was issued (emphasis added) by above said notification.

Hence, there was a mismatch of proper legal flow.

Withdrawal of Notification

Language of withdrawal is quite simple.

“The Notification ICSI No.1 (SS) of 2015 dated 23rd April, 2015, published in the Gazette of India, Part III, Section 4, with regard to (i) SS-1: Secretarial Standard on Meetings of the Board of Directors and (ii) SS-2: Secretarial Standard on General Meetings, stands withdrawn* w.e.f. 30th September, 2017 without affecting the enforceability of SS-1 and SS-2 during the period before such withdrawal.

[*Since there is no such statutory requirement for publication of the aforesaid Secretarial Standards in the Gazette of India]”

Unlike all legal notifications, both these notification do not have preamble. In withdrawal notification, the Asterisk tries to serve a short preamble and made catastrophic interpretation.

I agree that there was/is no statutory requirement for publication of the aforesaid Secretarial Standards in Gazette of India. However, alternate is also not clear.

As observed earlier, ICSI on face of its publication claimed issue of these standards by withdrawn notification. Hence, this withdrawal of notification withdrew any issue of these secretarial standards.

ICSI Communication

ICSI in its communications to members, wrote –

“Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) were approved by the Central Government under Section 118(10) of the Companies Act, 2013 on 10th April, 2015 and were published in the Gazette of India Extraordinary Part III -Section 4 on 23rd April, 2015 vide ICSI Notification No. (1) SS of 2015, making them effective from 1st July, 2015. It has been decided to withdraw such notification w.e.f. 30th September, 2017 without affecting the enforceability of SS-1 and SS-2 during the period before such withdrawal.

Now, the Secretarial Standards have been revised by the ICSI and approval of the Central Government, as required, under section 118(10) of the Companies Act, 2013 has been obtained for the revised SS-l and SS-2 vide Ministry of Corporate Affairs letter No. 1/3/2014-CL.I dated 14th June, 2017.

The revised SS-l and SS-2 shall be applicable for compliance by all the companies (except the exempted class of companies) w.e.f. 1st October, 2017 and will supersede the text of earlier SS-l and SS-2.

This communication has two important points –

  1. This withdrawal does not affect enforceability of these secretarial standards before such withdrawal, and
  2. Revised secretarial standards will supersede the text of earlier secretarial standards.

This communication also does not retain enforceability of earlier secretarial standards and replace the text not enforceability. It rightly so as there is no enforceability remains to replace.

New legal observation

Interestingly, there is no definition of terms “issue”, “specify” and “approve” is given in the Companies Act, 2013 and the Company Secretaries Act, 1980 which may be adopted in relation to Secretarial standards. Analogy cannot be adopted from Section 133 also. This issue may be taken care of by issue of removal of difficulty order.

Now, it will be interesting to see in which manner, revised secretarial standards are going to be issued and specified while they already have prior approval.

Advertisements

No professional query in comments (but in mail). Only academic discussion here. Comments moderated. Sometime, reply to your mail ID. To subscribe blog, check homepage.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s