PROJECT REPORT

ON

SECRETARIAL STANDARDS

Authored By:

PUJA KUMARI

Reg. No. 140557691/04/2018

 INDEX

Serial Page
Content
No. No.
1. Preface to the Project Report 3

2. Acknowledgement 4

3. Evolution of Secretarial Standards 5-6

4. Legal Framework of Secretarial Standards 7

5. Introduction of Secretarial Standard – 1 8

6. Provisions of Secretarial Standard- 1 9-13

7. Introduction of Secretarial Standard – 2 14

8. Provisions of Secretarial Standard- 2 15-19

9. Introduction of Secretarial Standard – 3 20

10. Provisions of Secretarial Standard- 3 21-24

11. Introduction of Secretarial Standard – 4 25

12. Provisions of Secretarial Standard- 4 26-29

13. Advantages of Secretarial Standards 30

14. Conclusion 31

15. Bibliography 32

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 PREFACE TO THE PROJECT REPORT

I am pleased to present the project report on the topic-

‘Secretarial Standards’

This Project Report contains the provisions of Companies Act, 2013 and The
Secretarial Standards on Meetings of the Board of Directors (SS-1), General
Meetings (SS-2), Dividend (SS-3) and Report of the Board of Directors (SS-4)
issued by Institute of Companies Secretaries of India (ICSI).

Every effort has been made to present this project in the most authentic form
without any errors and omissions, but in spite of this, errors might have
inadvertently crept in. I am sorry for those errors.

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 ACKNOWLEDGEMENT

This Project is a part of my Training under the ICSI Training Structure. I

would like to express my deepest gratitude to all those persons who in one
way or the other helped me in making my project. No words can reflect my
thankfulness and respect towards these persons for their significant
contribution in the completion of this project.

First of all, I express my heartily gratitude towards THE INSTITUTE OF

COMPANY SECRETARIES OF INDIA (ICSI) which provided me an
opportunity to present my project.

I owe my sincere gratitude to my trainer Ms. Shweta Banerjee. She helped me

to complete the project and provided me required information and guidance.
She gave me moral support and suggestions during the making of the project.
In the last but not the least, I thank the almighty.

This Project has helped me in a better understanding of the changes

introduced through the Secretarial Standards and their applicability on the
Companies.

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 EVOLUTION OF SECRETARIAL STANDARDS

The concept of secretarial standards was originated by The Institute of

Company Secretaries of India (ICSI) in the year 2000. The Institute of
Company Secretaries of India (ICSI), recognising the need for integration,
harmonisation and standardisation of diverse secretarial practices prevalent
in the corporate sector, has constituted the Secretarial Standards Board (SSB)
with the objective of formulating Secretarial Standards. Besides eminent
members of ICSI, Secretarial Standards Board (SSB) comprises
representatives of major Industry Associations and professional bodies
having vast experience in their field. The purpose of constituting this Board
was for long-term benefits for the growth and enhanced visibility of the
profession and setting up international benchmarks in Secretarial Standards.

The SSB formulates Secretarial Standards after taking into consideration the
applicable laws, usages, business environment, practical applicability and the
best secretarial practices prevalent. Secretarial Standards are developed;
 in a transparent manner;
 after extensive deliberations, analysis, research; and
 after taking views of corporate, regulators and the public at large.

Meaning of Secretarial Standards:

 Secretarial Standards are a codified set of good governance practices

which seek to integrate, harmonize and standardise the diverse
secretarial practices followed by companies and play indispensable role
in enhancing the corporate culture and governance across the
organisations.

India is the pioneer in having Secretarial Standards as no other country in

the world has yet adopted the Secretarial Standards. Adherence to the
Standards also indicates that the company concerned is proactively alert to
recent developments and takes care to have it embedded in the organizational
practices and procedures.

The adoption of the Secretarial Standards by the corporate sector will have
substantial value addition to the quality of Secretarial practices followed
making them comparable with the best in the world.

Secretarial Standard on Meetings of the Board of Directors (SS-1) and

Secretarial Standard on General Meetings (SS-2) issued by the Institute of
Company Secretaries of India (ICSI) and approved by the Central Government
are applicable to all companies w.e.f 1st July, 2015(except One Person
Company in which there is only one Director on its Board).

SS-1 and SS-2 were revised by ICSI and the same have been approved by the
Ministry of Corporate Affairs (MCA) vide its letter No. 1/3/2014-CL.I dated
14th June, 2017.

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“The revised SS-1 and SS-2 shall be applicable to all the companies (except
One Person Company in which there is only one Director on its Board and a
company licensed under Section 8 of the Companies Act, 2013) w.e.f. 1st
October, 2017 and accordingly all Board Meetings (including meetings of
committees of Board) and General Meetings in respect of which Notices are
issued on or after 1st October, 2017 need to comply with the revised SS-1 and
SS-2. The existing (old) SS-1 and SS-2 will be applicable to the Board Meetings
and General Meetings held on or before 30th September, 2017.”

In order to promote the uniform practices in distribution of profits by way of

“Dividend”, Secretarial Standard on Dividend (SS-3) was also issued by the
Council of the Institute of Company Secretaries of India in November, 2017
which is effective from 1st January 2018 for voluntary adoption by the
Companies.

In order to promote the standardised practices in preparation of the Board’s

Report, Secretarial Standard on Report of Board of Directors (SS-4) was also
issued by the ICSI which is effective from 01st October 2018 for voluntary
adoption by the Companies.

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LEGAL FRAMEWORK OF SECRETARIAL STANDARDS

 According to Section 118(10) of the Companies Act, 2013, every

company shall observe secretarial standards with respect to general
and Board meetings specified by the Institute of Company Secretaries
of India constituted under section 3 of the Company Secretaries Act,
1980 and approved as such by the Central Government.

 According to section 205(1)(b) of the Companies Act, 2013, the

Company Secretary shall ensure that the Company complies with the
applicable Secretarial Standards.

 According to section 204(1) of the Companies Act, 2013 read with Rule
9 of The Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014,
- Every listed company and
- Every public company having a paid-up share capital of 50 crore
rupees or more; or
- Every public company having a turnover of 250 crore rupees or
more; or
- Every company having outstanding loans or borrowings from banks
or public financial institutions of 100 crore rupees or more

shall annex with its Board’s report made in terms of sub-section (3) of
section 134, a secretarial audit report, given by a company secretary in
practice in the format MR-3.

 As per standard format of MR-3, the company secretary in practice

while conducting secretarial audit shall have to ensure that
company has complied with the applicable secretarial standards.

 According to Section 118(11) of the Companies Act, 2013, If any default

is made in complying with the provisions of this section in respect of
any meeting, the Company shall be liable to a penalty of twenty-five
thousand rupees and every officer of the Company who is in default
shall be liable to a penalty of five thousand rupees.

 ICSI vide notification dated 23rd April, 2015 notified that

“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.”

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 INTRODUCTION OF SECRETARIAL STANDARD – 1

The Secretarial Standard-1 prescribes a set of principles for convening and

conducting Meetings of the Board of Directors and matters related thereto.

The provisions of Secretarial Standard – 1 are applicable on:

 Meetings of Board of Directors and

 Meetings of Committee(s) of the Board of

all companies incorporated under the Companies Act, 2013 except One
Person Company (OPC) in which there is only one Director on its Board and
a company licensed under Section 8 of the Companies Act, 2013

Committee has been defined by the SS-1 to mean a Committee of Directors

mandatorily required to be constituted by the Board under the Companies
Act, 2013.

Secretarial Standard – 1 (SS-1) is thus applicable to Meetings of Committees

fulfilling the following conditions:

a) All the Members of the Committee are Directors and

b) The Committee has been constituted by the Board which has been
mandatorily required under the Companies Act, 2013

For instance, in case the company have voluntary constituted any committee
of the Board of Directors then the SS-1 shall not apply to such committee.

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 PROVISIONS OF SECRETARIAL STANDARD- 1
Secretarial Standard on Meetings of the Board of Directors

1. Convening a Board Meeting

Particulars Provisions
Who can call for a Any Director of a company may, at any time, summon a
Board Meeting? Meeting of the Board, and the Company Secretary shall
convene a Meeting of the Board, in consultation with
the Chairman or in his absence, the Managing
Director or
in his absence, the Whole-time Director.
When and Where? A Meeting may be convened at any time and place, on
any day (including National Holiday).
Can the Directors Yes, any Director may participate through Electronic
attend in Mode in a Meeting.
Electronic However, Directors shall not participate through
Mode? Electronic Mode in the discussion on certain restricted
items i.e. approval of the annual financial statement,
Board’s report, prospectus, matters relating to
amalgamation, merger, demerger, acquisition and
takeover and meetings of the Audit Committee for
consideration of annual financial statement.
Serial Number Every Board Meeting shall have a serial number.
When notice Notice convening a Meeting shall be given at least seven
should be given ? days before the date of the Meeting.
In case the company sends the Notice by speed post or
by registered post, an additional two days shall be added
for the service of Notice
What should be  Inform about the availability of facility to participate
the contents of through electronic mode.
Notice ?  Contact number, e-mail address of the person to
whom the Directors should confirm the participation
in electronic mode.
 Serial number, day, date, time and full address of the
venue of the Meeting.
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Circulation  The agenda, along with notes shall be given to the
Directors at least seven days before the date of the
of Agenda meeting.
 Proof of sending agenda notes and their delivery shall
be maintained.

2. Frequency of Board Meeting

Particulars Provisions
How much The company shall hold at least four Meetings of its
meetings need to Board in each Calendar Year with a maximum interval
be conducted ? of one hundred and twenty days between any two
consecutive Meetings.
Meeting of At least once in each Calendar Year.
Independent
Directors

3. Quorum

Particulars Provisions
Meetings of the The Quorum for a Meeting of the Board shall be one-
Board third of the total strength of the Board, or two Directors,
whichever is higher
Meetings of the All the members of the Committee should be present
Committees unless otherwise stipulated in the Act or any other law
or the Articles or by the Board
When it is to be  It shall be present throughout the Meeting.
present ?  It shall be present not only at the time of
commencement of the Meeting but also while
transacting business.
Participation Directors participating through Electronic Mode in a
through Electronic Meeting shall be counted for the purpose of Quorum,
Mode unless they are to be excluded for any items of business
under the provisions of the Act or any other law.

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Interested Director He/she shall neither be reckoned for Quorum nor shall
be entitled to participate in respect of an item of
business in which he is interested.
However, in case of a private company, a Director shall
be entitled to participate in respect of such item after
disclosure of his interest.

4. Attendance at Meeting

Particulars Provisions
Maintenance and  Separate attendance registers for the Meeting of
Authentication of Board and Committees shall be maintained.
Attendance  Attendance Register shall contain serial number,
Registers date, place, time of the meeting.
 Every Director, Company Secretary and every invitee
who is in attendance shall sign the attendance
register at that meeting.
 Entries shall be authenticated by the Company
Secretary if director participate through Electronic
Mode.
 The attendance register is open for inspection by the
Directors.
 Attendance register shall be preserved for a period of
atleast eight financial years from the date of last entry
made therein and may be destroyed thereafter with
the approval of the Board.

5. Chairman

Particulars Provisions
Who will be the  The Chairman of the company shall be the Chairman
Chairman? of the Board. If the company does not have a
Chairman, the Directors may elect one of themselves
to be the Chairman of the Board.
 The Chairman of the Board shall conduct the
Meetings of the Board.

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 6. Minutes

Particulars Provisions
Mode of May be maintained in physical or electronic form with
maintenance Timestamp.
Where to Preserve It shall be kept at the Registered Office of the company
? or at such other place as may be approved by the Board.
Time of It shall be permanently preserved.
Preservation
Serial Number All the pages of the it shall be consecutively numbered.
Contents  It shall state, at the beginning the serial number and
type of the Meeting, name of the company, day, date,
of Minutes venue and time of commencement of the Meeting.
 It shall record the names of the Directors present
physically or through Electronic Mode, the CS who is
in attendance at the Meeting and Invitees, if any,
including Invitees for specific items.
 If a Director is participating through Electronic Mode,
the location from where he participated shall be
stated.
 Time of conclusion of the Meeting.
Finalization  Within fifteen days from the date of conclusion of
meeting, draft minutes shall be circulated to all the
members of Board for their comments.
 The Directors whether present or not shall
communicate their comments, within seven days so
that the draft minutes can be finalized and entered
in minutes book within the limit of thirty days.
Entry in the The date of entry of minutes in the minutes book shall
minutes be recorded by the Company Secretary.
book
Signing and dating  Each page of minutes shall be initialed by the
of Chairman and the last page shall be signed,
minutes appending the date and the place of signing minutes.

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  Copy of signed minutes, certified by Company
Secretary shall be circulated to all directors within
fifteen days of signing.
Inspection of The Minutes of Meetings of the Board and any
Minutes Committee can be inspected by the Directors only.
Extraction Extracts of minutes can be provided only once they are
entered in minutes book, however certified copy of any
of Minutes resolution may be issued earlier.
Custody of It shall be under the custody of the Company Secretary.
Minutes Books

7. Disclosure

Particulars Provisions
Board Report The Report of the Board of Directors shall include a
statement on compliances of applicable Secretarial
Standards.

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 INTRODUCTION OF SECRETARIAL STANDARD – 2

The Secretarial Standard-2 seeks to prescribe a set of principles for the

convening and conducting of General Meetings and matters related thereto.

The provisions of Secretarial Standard – 2 are applicable to:

 All types of General Meetings whether it is

 Annual General Meeting (AGM) or
 Extra-Ordinary General Meeting (EGM)

of all companies incorporated under the Companies Act, 2013 except One
Person Company (OPC) and a company licensed under Section 8 of the
Companies Act, 2013.

The principles enunciated in this Standard for General Meetings of Members

are applicable mutatis-mutandis to Meetings of debenture-holders and
creditors.

Also, 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.

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 PROVISIONS OF SECRETARIAL STANDARD- 2
Secretarial Standard on General Meetings

1. Convening a General Meeting

Particulars Provisions
Who can call for a The Board of Directors (BOD) is the sole authority to call
General Meeting ? for a General Meeting.
However, if BOD fails to call Meeting on any day within
forty-five days from the date of receipt of requisition from
requisitionists, the requisitionists may themselves call
and hold the Meeting within three months from the
date
of requisition.

2. Notice of General Meeting

Particulars Provisions
Whom to give It shall be given to:
notice ?  Every Member of the Company,
 Every Director of the Company,
 Auditors of the Company including Secretarial
Auditor and
 Debenture Trustees, if any.
When and Where ?  AGM and a Meeting called by requisitionists shall be
held either at the registered office of the company or
at some other place within the city, town or village in
which the registered office of the company is situated,
whereas other General Meetings may be held at any
place within India.
 AGM and a Meeting called by the requisitionists shall
be called during business hours, i.e., between 9 a.m.
and 6 p.m., on a day that is not a National Holiday.
When notice Notice and accompanying documents shall be given at
should be given ? least twenty-one clear days in advance of the Meeting.

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 In case the company sends the Notice by post or courier,
an additional two days shall be provided for the service
of Notice.
Publish on website It shall also be published on the website of the company,
if any, till the conclusion of the meeting.
Contents of Notice  It shall specify the day, date, time and full address of
the venue of the Meeting.
 It shall specify nature of meeting and business to be
transacted thereat.
 It shall be accompanied, by an attendance slip and a
proxy form with clear instructions for filling,
stamping, signing or depositing form.
 In case of Special Business, each item shall be in
form of resolution accompanied by Explanatory
Statement.
 No business shall be transacted at meeting if notice
in accordance with this Standard has not been given.

3. Quorum

Particulars Provisions
General Meeting Unless the Articles provide for a larger number, the
Quorum for a General Meeting shall be:
a) in case of a public company, –
 5 Members personally present if the number of
Members as on the date of Meeting is not more
than 1000;
 15 Members personally present if the number of
Members as on the date of Meeting is more than
1000 but up to 5000;
 30 Members personally present if the number of
Members as on the date of the Meeting exceeds
5000;

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 b) in the case of a private company, 2 Members
personally present.
Proxies shall be excluded for determining the Quorum.
Authorised A duly authorised representative of a body corporate or
Representative the representative of the President of India or the
Governor of a State is deemed to be a Member personally
present and enjoys all the rights of a Member present in
person.

4. Presence of Directors and Auditors

Particulars Provisions
Directors If any Director is unable to attend the meeting, the
Chairman shall explain such absence at meeting.
Auditors The Auditors including secretarial auditor, unless
exempted by the company, shall, either by themselves
or through their authorised representative, attend the
General Meetings of the company.

5. Chairman

Particulars Provisions
Explanation by The Chairman shall explain the objective and
Chairman implications of the resolutions before they are put to
vote at meeting.

6. Proxies

Particulars Provisions
Provisions relating  A member entitled to attend and vote can appoint
to Proxy proxy.
 Instrument of proxy must be duly filled, stamped
and signed.
 Proxy shall be submitted to the company, not later
than forty eight hours before the commencement of
meeting.

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 7. Voting

Particulars Provisions
Methods of voting There are various methods of voting:
in the General  Show of Hands
Meeting  Poll
 Remote e-voting

8. Distribution of Gifts

Particulars Provisions
Is it allowed? No gifts, gift coupons, or cash in lieu of gifts shall be
distributed to Members at or in connection with the
Meeting.

9. Minutes

Particulars Provisions
Maintenance  Minutes shall be recorded in books maintained for
that purpose.
 Minutes in electronic form shall be maintained with
Timestamp.
Serial Number  The pages of the Minutes Books shall be
consecutively numbered.
Where to Preserve It shall be kept at the Registered Office of the company.
?
Contents  Minutes shall state at the beginning name of
Company, serial number, type of meeting, day, date,
venue and time of commencement and conclusion of
the meeting.
 Minutes shall record the names of the Directors and
the Company Secretary present at the Meeting.
 The date of entry of minutes in the minutes book
shall be recorded by the Company Secretary.

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Signing and  Minutes shall be signed and dated by the Chairman,
Dating of Minutes within thirty days of the meeting.
 Each page of minutes shall be initialed by the
Chairman and the last page shall be signed,
appending the date and the place of signing minutes.
Inspection of Directors and Members are entitled to inspect the
Minutes minutes of all General Meetings.
Extraction of Extract of the Minutes shall be given only after the
Minutes Minutes have been duly signed. However, any
Resolution passed at a Meeting may be issued even
pending signing of the Minutes, if the same is certified
by the Chairman or any Director or the Company
Secretary.
Preservation of Minutes of all Meetings shall be preserved permanently
Minutes in physical or in electronic form with Timestamp.
Custody of It shall be under the custody of the Company Secretary.
Minutes Books

10. Disclosure

Particulars Provisions
In Annual Return The Annual Return of a company shall disclose the date
of Annual General Meeting held during the financial
year.

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 INTRODUCTION OF SECRETARIAL STANDARD – 3

Dividend is a return on the investment made in the share capital of a company,

as distinct from the return on borrowed capital, which is in the form of
interest.

In commercial usage, the term “Dividend” refers to the share of profits of a

company that is distributed amongst its Members.

The Secretarial Standard-3 prescribes a set of principles in relation to the

declaration and payment of Dividend.

The principles set out herein relate to declaration and payment of Dividend
on equity as well as preference share capital in accordance with the
provisions of the Act and are in respect of Dividend as it relates to a going
concern.

These are equally applicable to Final as well as Interim Dividend unless

otherwise stated.

Any provisions relating to dividend under the:

 Securities Contracts (Regulation) Act, 1956 and rules thereunder;

 SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 (specifically for Listed Companies);
 Income tax Act, 1961 and rules thereunder and
 Any other statue which is applicable to the company
shall also be applicable.

However, this secretarial standard shall not be applicable to:

a) Company limited by guarantee not having share capital;

b) Companies declare dividend during liquidation;
c) Companies licensed under Section 8 of the Companies Act, 2013 as they
are prohibited from paying any dividend.

As of now, Adherence to this Secretarial Standard is recommendatory

not mandatory.

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 PROVISIONS OF SECRETARIAL STANDARD-3
Secretarial Standard on Dividend

1. Ascertainment of amount available for payment as Dividend

Particulars Provisions
From where to Dividend shall be paid out of-
pay?  the profits of the current financial year or/and
 the profits for any previous financial year(s) which
remains undistributed after providing for
depreciation in accordance with the provisions of the
Act, or/and
 from the money provided by the Central
Government or a State Government in pursuance of
a guarantee given by such Government for this
purpose.
When not to be A company shall also not declare any Dividend:
declared ? - if there is non-compliance of provisions relating to
the acceptance of deposits under the Act, till such
time the deposits accepted have been repaid with
interest in accordance with the terms and conditions
of the agreement entered with the depositors.
- if it has defaulted in-
 Redemption of debentures or payment of interest
thereon or creation of debenture redemption
reserve,
 Redemption of preference shares or creation of
capital redemption reserve,
 Payment of Dividend declared in the current or
previous financial year(s), or
 Repayment of any term loan to a bank or
financial institution or interest thereon,
till such time the default is subsisting.
Which account  the Securities Premium Account or
shall not be used ?  the Capital Redemption Reserve Account or

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  the Revaluation Reserve Account or
 the Amalgamation Reserve Account or
 the profits on re-issue of forfeited shares, or
 the profits earned prior to incorporation of the
company.
In case of no profit The following conditions are to be fulfilled:
or inadequate  The rate of Dividend declared by the company shall
profit, then ? not exceed the average of the rates at which
Dividend was declared by it in the three financial
years immediately preceding the financial year of
declaration of Dividend.
 Total withdrawal from the accumulated profits shall
not exceed one tenth of the sum of the paid up share
capital and free reserves of the company as per the
latest audited financial statements.
 The amount so withdrawn shall first be utilised to set
off the losses, if any, incurred in the financial year in
which Dividend in respect of equity shares is
proposed to be declared.
 The balance of Free Reserves after such withdrawal
shall not fall below 15% of the paid up share capital
of the company as per the latest audited financial
statements.

2. Declaration of Dividend

Particulars Provisions
Approving Dividend shall be declared only at Annual General
Authority To Pay Meeting subject to the recommendation of the Board,
? made at a meeting of the Board.
Members may declare a lower rate of Dividend than the
rate recommended by the Board or may decide not to
declare but have no power to increase the amount or
rate of Dividend recommended by the Board.

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Bonus share as Prohibited to issue Bonus shares in lieu of Dividend.
dividend ?

3. Entitlement to Dividend

Particulars Provisions
Whom to Pay Dividend shall be paid-
 in respect of shares held in electronic form, to those
Members whose names appear as beneficial owners
in the statement of beneficial ownership furnished
by the Depository as on the record date fixed by the
company for this purpose;
 in respect of shares held in physical form, to those
Members whose names appear in the company’s
Register of Members as on the record date.
Whom to be given Preference Shareholders shall be paid Dividend before
Priority ? equity Shareholders of the company.

4. Payment of Dividend

Particulars Provisions
How to Pay ?  Dividend shall be deposited in a separate bank
account within five days from the date of declaration.
 Dividend shall be paid within thirty days of its
declaration.
 Dividend, once declared, becomes a debt and shall
not be revoked.
Mode of payment ? Dividend shall be paid in cash/cheque/dividend warrant
and not in kind.
Proportionately Dividend shall be paid proportionately on the paid-up
value of shares.

5. Unpaid Dividend

Particulars Provisions

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Unpaid Dividend The amount of Dividend which remains unpaid or
Account unclaimed after thirty days from the date of its
declaration shall be transferred to a special bank
account titled as ‘Unpaid Dividend Account’, within
seven days from the date of expiry of above mentioned
thirty days period, to be opened by the company in that
behalf with any scheduled bank.
Investor Any amount in the Unpaid Dividend Account of the
Education and company which remains unpaid or unclaimed for a
Protection Fund period of seven years from the date of transfer of such
(IEPF) amount to the Unpaid Dividend Account, along with
interest accrued, if any, shall be transferred to the
Investor Education and Protection Fund (IEPF).

6. Interim Dividend

Particulars Provisions
Form where to pay Interim Dividend, if declared, shall be paid out of-
?  The surplus in the profit & loss account and/or
 The profits of the financial year in which such
Dividend is sought to be declared.
Approval of Interim Dividend shall be declared at a meeting of the
Members ? Board. Approval of Members is not required for
declaration of Interim Dividend.
When not to be Interim dividend shall not be declared/paid out where
paid ? profits are inadequate or no profits.

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 INTRODUCTION OF SECRETARIAL STANDARD – 4

According to section 134(3) of the Companies Act, 2013, the Board of

Directors of every company to attach its report to the financial statements to
be laid before the members at the annual general meeting. The Board’s
Report is an important means of communication by the Board of Directors of
a company with its stakeholders.

The Secretarial Standard-4 prescribes a set of principles for making

disclosures in the Report of the Board of Directors of a company and matters
related thereto.

In case, a particular disclosure which is required to be made as per this

Standard is not applicable to a particular company, the company need not
disclose the same in the Board’s Report except where the Standard requires
specific disclosure in this respect.

The Board’s Report of all the companies may be prepared in accordance with
this standard except One Person Company (OPC) and Small Company for
which the Board’s Report shall be prepared in the abridged form as
prescribed by the Central Government.

As of now, Adherence to this Secretarial Standard is recommendatory

not mandatory.

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 PROVISIONS OF SECRETARIAL STANDARD-4
Secretarial Standard on Report of the Board of Directors

Part I: Disclosures

The Board’s Report shall, inter alia, include the following:

1. Company Specific Information

Particulars Provisions
Financial Data Financial summary and highlights/Financial Results.
Transfer to The amount which the Board proposes to carry to any
Reserves reserves, if any.
Dividend  The amount of dividend per share;
 The percentage based on face value of share;
 dividend distribution tax;
 The total amount of dividend for the year.
Major events  State of the company's affairs/Business Overview;
occurred during  Change in the nature of business;
the year  Material changes and commitments, if any, affecting
the financial position of the company, having
occurred since the end of the Year and till the date of
the Report

2. General Information

Particulars Provisions
What disclosure Overview of the industry and important changes in the
need to be made? industry during the last year.

3. Capital and Debt Structure

Particulars Provisions
What disclosure Any changes in the capital structure of the company
need to be made? during the year by:
 Issue of shares whether it is equity or preference
without/with differential rights, Sweat Equity

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 Shares, Employee Stock Options or other convertible
securities;
 Issue of debentures, bonds or any non-convertible
securities;
 Issue of warrants.

4. Investor Education and Protection Fund (IEPF)

Particulars Provisions
What disclosure  details of the transfer to the IEPF made during the
need to be made? year, if any;
 details of the resultant benefits arising out of shares
already transferred to the IEPF;

5. Management

Particulars Provisions
What details are The following disclosure regarding management of the
to be disclosed ? company are to be made in Board’s Report:
 Name of Directors including Independent Director
and Key Managerial Personnel and any changes
among them;
 Declaration by Independent Directors and statement
on compliance of code of conduct;
 The number and dates of meetings of the Board and
Committee held during the year;
 Company's Policy on Directors' appointment and
remuneration;
 A statement of formal annual evaluation of Board;
 Remuneration received by Managing/Whole time
Director from holding or subsidiary company, if any;
 Directors' Responsibility Statement;
 adequacy of internal financial controls;
 Detail of frauds reported by the Auditor, if any.

6. Other Disclosures

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 Particulars Provisions
What are those The following disclosure are to be made in Board’s
disclosure ? Report:
 Detail relating to Subsidiaries, Associates and Joint
Ventures and changes, if any;
 Full details of particular of deposits;
 Particulars of Loans, Guarantees and Investments
 Particulars of Contracts or Arrangements with
Related Parties
 Detail regarding Corporate Social Responsibility
(CSR) policy and initiatives taken during the year;
 Detail regarding Conservation of Energy, Technology
Absorption, Foreign Exchange Earnings and Outgo;
 A statement on Risk Management Policy;
 Details of Establishment of Vigil Mechanism;
 Detail of Material Orders of Judicial Bodies
/Regulators, if any;
 Details regarding Auditors (Statutory Auditor, Cost
Auditor and Secretarial Auditor)
 A statement on compliance of applicable Secretarial
Standards
 Reason for failure to Implement any Corporate
Action, if any
 Web-link of annual return
 A statement on compliance of Sexual Harassment of
Women at The Workplace (Prevention, Prohibition
and Redressal) Act, 2013

Part II: Other Requirements

7. Approval of the Report

Particulars Provisions

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 Who will approve ? Board of Directors by means of a resolution passed at a
duly convened meeting.

8. Signing of the Report

Particulars Provisions
Who will sign ?  Chairman of the company, if authorised in that behalf
by the Board
 two Directors one of whom shall be the Managing
Director or
 one Director(One Person Company)

9. Dissemination

Particulars Provisions
Whom to send ? It shall be sent to every member at least twenty-one clear
days in advance of the Annual General Meeting
(AGM)along with its financial statement.
Website It must be placed on the website of the company, if any.

10. Filing and Submission of the Report

Particulars Provisions
Whom to file ?  The resolution for approving Board’s Report shall be
filed with the Registrar of Companies. (Except Private
Companies);
 The Board’s Report alongwith its financial
statements shall be submitted to the stock exchanges
on which its securities are listed within twenty one
working days of it being approved and adopted in
the Annual
General Meeting (AGM).
ADVANTAGES OF SECRETARIAL STANDARDS

The following are the advantages of adoption of Secretarial Standards by the

companies:

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a) Disclosures and Transparency: The secretarial standards provide for
better disclosures and transparency to shareholders and equips them
for healthier interaction with the management of the company.

b) Corporate Governance: The secretarial standards consist of a set of

principles which allow companies to adhere to in discharging their
corporate responsibility, leading to better corporate governance.

c) Professionalism: The secretarial standards provide for enhanced

Professionalism in corporate by the following the world class practices
of governance.

d) Supplementary: Secretarial Standards supplement the Companies Act

and the Rules in case of any ambiguity in the latter.

e) Supervision and Monitoring: The secretarial standards provide for

improved compliance system which creates confidence on corporate
sector and enables better supervision and monitoring.

f) Comprehensive and Timely Information: The secretarial standards

provide for comprehensive and timely information to the Directors
facilitating informed decision making. This enables the Directors to
contribute effectively and efficiently at Board Meetings.

g) Uniformity: The secretarial standards provide for uniform corporate

disclosures which also support the regulators to ensure the Companies
are functioning in fair and transparent manner.

h) Reduction in Non-Compliances: The secretarial standards provide for

detailed set of practices and procedure which in turn help the
companies to increase its compliance culture. They reduce the chances
of any non-compliances in the Company.

i) Confidence: Adherence to secretarial standards increases the

confidence of investors such as Private Equity Players and Foreign
Investors who want to invest in Private Limited Companies.

The adoption of secretarial standards by the corporates will have

substantial impact on the quality of secretarial practices being
followed by the companies, making them comparable with the best
practices in the world.

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 CONCLUSION

Secretarial Standards will create enormous confidence in the minds of

investors as they are very much concerned about good governance
practices and sound procedure. At the same time, there would be greater
transparency and accountability by the Board of Directors. In this regard
there is no merit in adding or piling up of new legislations, but rather it would be
considered wise to fill up the gaps in the existing laws by these secretarial
standards and to make the present company law regime fool- proof and flawless
towards attaining the ideal goal of having an effective compliance system and
governance process. It shall be the duty of every Company to adhere to all of the
secretarial standard issued by ICSI whether it is mandatory or recommendatory.
It is also the duty of Professionals specially company secretary to assist and
guide the management of the company in adherence to these secretarial
standards. Ultimately, secretarial standards will go a long a way in solidifying the
foundation of a healthy company secretarial practice and value creation by the
professionals associated with the corporate sector.

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 CERTIFICATE

Certified that this Project Report on “Secretarial Standards” is the

bonafide work of “Ms. Puja Kumari” Student Registration No.
140557691/04/2018 who carried out the project work under my
supervision.

For M/S Sourabh Agarwal

Sourabh Agarwal

Practicing Company Secretary

ACS 42254

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THANK YOU

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