Secretarial Standard 2

Secretarial Standard – 2

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Secretarial Standard 2

Secretarial standard 2 is aimed at helping companies implement the provisions of the Companies Act, 2013 when conducting board meetings, general meetings and annual general meetings. These mandatory standards are issued by the Institute of Company Secretaries of India (ICSI), as per the provisions set under the Section 118(10) of the Companies Act, 2013, and approved by the Central Government of India. In this article, we look at Secretarial Standard 2 in detail.

Applicability of Secretarial Standard 2

Secretarial Standard 2 is mandatory for general meetings of all types of companies incorporated under the Companies Act, except One Person Company (OPC). Hence, all private limited companies and limited companies would be required to follow Secretarial Standard 2 while conducting general meetings.

Convening a Meeting

Under Secretarial Standard 2, a general meeting should usually be convened by or on the authority of the Board. If the Board fails to do so, the members of the company can approach the relevant authority to convene the meeting.

Notice of Meeting

It is necessary to provide a notice for every meeting in writing to every member, directors, auditors, secretarial auditor, debenture trustees, if any, and to other specified persons, if applicable. The notice should clearly specify the details of the meeting such as the day, date, time and full address of the venue. It should also specify the nature of the meeting and the business to be transacted thereat.

Sample notice to annual general meeting.

Frequency of Annual General Meetings

All companies should conduct an annual general meeting within six months from the date of closing of the first financial year or within 15 months of previous AGM, whichever is earlier. First AGM for new companies can be held within 6 months from the close of the financial year.

Quorum

A quorum must be physically present throughout the meeting. The size of the quorum depends on the nature of the company:

Public Company

  • 5 members of companies with up to 1000 shareholders.
  • 15 members if there are more than 1000, but less than 5000 shareholders
  • 30 members for companies with more than 5000 shareholders

Private company

In the case of a private company, minimum of two members should be present.

Know more about conducting board meeting through video conference.

Presence of Directors and Auditors

In case any Director is unable to attend the meeting, the Chairman should explain such absence at the meeting. The Auditors and Secretarial Auditor, unless exempted by the company, should either by themselves or through their authorized representative, attend the General Meetings of the company. They will have the right to be heard during the meeting.

Chairman

The Chairman of the Board must take the chair and conduct the meeting. In the absence of the Chairman, the Directors present at the meeting can elect one of themselves to be the Chairman of the meeting. If the directors are not willing to take the chair, the members present can elect, one of themselves to take the chair.

Voting

Every resolution should be proposed by a member and seconded by another member. The methods of voting include:

  • E-voting
  • Polls
  • Showing of hands at the meeting

Reading of Reports

Any remarks on the financial transactions or matters which have an adverse effect on the functioning of the company, if any, mentioned in the Auditor’s Report should be read at the Annual General Meeting.

Distribution of Gifts

No gifts, coupons, or cash in lieu of gifts should be distributed to members at or in connection with the meeting.

Minutes

Minutes should be recorded in books for all meetings of the members of the company conducted, according to the provisions of the Companies Act, 2013. It should contain a fair and correct summary of the proceedings of the meetings. It should be signed and dated by the Chairman of the meeting. Minutes of all meetings should be preserved permanently in physical or in electronic form with timestamp. All the books of minutes should be kept in the custody of the Company Secretary or any Director if there is no Company Secretary.

Know more about minutes of meeting.

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