Secretarial Standard 2: Major Amendments Required

Secretarial Standard 2 is issued by the Institute of Company Secretaries of India (ICSI) and approved by the Central Government pursuant to the provision of the relevant section of general meetings. It also helps in increasing the compliance level of the company. 

The Secretarial Standard has brought many changes in the role and duties of the Company Secretary. The role of the Company Secretary in the terms of corporate governance has been made effective, organized, and widened scope. 

What is the Applicability of Secretarial Standard 2?

Secretarial Standard- 2 is mandatory for general meetings of all types of companies incorporated under the Companies Act, 2013 except One Person Company (OPC) and a Section 8 company.

SS2 ICSI is also applicable to the

• Debenture-holders’ meetings
• Creditors meetings
• Meeting of members or class of members or debenture-holders or creditors of a company under the directions of the Court or NCLT or CLB.

Secretarial Standards conform with the provision of the Act. Whenever there are amendments or any changes to the Companies Act, the standard automatically becomes inconsistent with the act, then the relevant provisions of the act will prevail over the Secretarial standard.

Guidance Note on Secretarial Standard 2

SS-2 prescribes a set of principles for conducting General Meetings and matters related thereto. The guidance note explains the practical aspects of the provisions contained in SS-2 to make proper compliance with the law. The key points given by the Institute at the General Meeting are as follows: -

1. Notice

• Issuance of notice
• Mode of sending a notice
• Entitlement to receive notice
• Date, time, and place of meeting
• Disclosure of interest of the director
• Notice Time period
• Calling the General meeting at shorter notice
• Documents to be attached with notice
• Cancellation of the general meeting convened upon due notice

2. Frequency of meetings

• Annual general meeting – As per Secretarial Standard 2, every company shall hold a meeting called the Annual general meeting.

3. Quorum

• Throughout the meeting for Private Company – A minimum of two members personally present
• Public Company –

5 members – Less than 1000

15 members – More than 1000 but less than 5000

30 members - More than 5000

4. Presence of directors and Auditors

5. Chairman

6. Proxy

• Members' right to appoint a proxy
• Signatures at form
• Deposit of proxies
• Mode of sending
• Record of proxies

7. E-Voting

• E-voting facility
• Who shall approve the E-voting process
• Mode of sending the notice

8. Adjournment of Meeting

• When an adjourned general meeting for 30 days or more
• Serving of notice of adjourned meeting

9. Minutes

• Maintenance of minutes
• Content of Minutes
• Recording of minutes
• Entry in the minute's book
• Signing and dating of minutes
• Inspection and extract of minutes
• Custody

The guidance notes seek to provide guidance in interpreting and implementing the Secretarial Standards by covering the procedural aspects in detail and addressing all possible issues which may arise in practical implementation.

What is the Major Amendment in Secretarial Standard 2?

The Revised Secretarial Standard- 2 has some alterations as compared to the former SS-2. The Institute has also issued the SS-2 Revised Guidance Note. The following list below mentions the major amendments:

1. Scope of SS-2: There is an exemption to the Section 8 company.

2. Notice on the website: Company has to publish the notice of the general meeting till the conclusion of the meeting.

3. Notice on Disclosure: No need to give the resolution in a notice in case of Ordinary business of each general meeting whenever the new auditor or director was being appointed other than the retiring Auditor/director.

4. Form of Proxy: As per the revision in Secretarial standard 2, An instrument appointing a proxy shall be in the form prescribed under the Act.

5. Deposit of Proxies and authorization: Insertion of a new clause for the president of India/ Governor of state for appointment of representative and for corporations to authorize their representative, so they can participate in a meeting till on or before the closure of e-voting.

6. Voting rights: A step towards ease of business, an exemption is being given to Private companies where participation in decision-making is being widened for Related party transactions.

7. Board Approval: A step towards showing the confidentiality of documents so the decision cannot be hampered.

8. Declaration of Results in case of e-voting: Time-bound is introduced for scrutinizes to submit a report and to maintain the integrity of decision-making directors are excluded to handle the scrutinizer report.

9. Adjournment of meetings: The adjourned meeting can be held on national holidays.

10. Notice for the postal ballot: Notice shall remain on the website till the date of the general meeting.

The Revised Secretarial Standard 2 has been discussed with the amendment.

What is the list of Secretarial Standards?

ICSI Secretarial Standards are as follows:

SS-1 - Secretarial Standard for Meeting of the Board of directors

SS-2 - Secretarial Standard on General Meeting

SS-3 - Secretarial Standard on Dividend

SS-4 - Secretarial Standard for Registers and records

SS-5 - Secretarial Standard on Minutes

SS-6 - Secretarial Standard for Transmission of shares and debentures

SS-7 - Secretarial Standard for Passing resolutions by circulation

SS-8 - Secretarial Standard on Affixing of the common seal

SS-9 - Secretarial Standard for Forfeiture of shares

SS-10 - Secretarial Standard on Board’s report

The Revised guidance notes are issued by the Institute for Secretarial standard 2.

What is the scope of Secretarial Standard 1?

This Secretarial Standard-1 is applicable on:

• Meetings of the Board of Directors
• Meetings of Committees of the Board.

Non- Applicable on:

• The one-person company has one director on its board.
• Section 8 companies
• Companies that are exempted by the Central government with notification are IFSC Public Companies, etc.

Secretarial Standards conform with the provision of the Act. In any situation, where there are amendments or any changes to the act, the standard automatically becomes inconsistent with the act, then the relevant provision of the act will prevail over the secretarial standard. 

The adoption of the standard by the companies has a substantial impact on the quality of services of secretarial practices followed by them.

Conclusion

Secretarial Standard 2 applies to all types of meetings incorporated under the Act. Except for One person company and Section 8 company. The Institute of Company Secretaries (ICSI) introduced the secretarial standard for reducing ambiguity in the law and its practice in the year 2000. It also helps in increasing the compliance level of the company. 

The guidance note is issued to analyse Secretarial Standard2 General meetings. The guidance note is issued for benefit of members of ICSI, corporates, and other users and to facilitate compliance with law and Standards. The SSB formulates Guidance notes which deal with procedural and practical aspects of a given subject along with relevant case laws.

Online XBRL is providing you all the relevant secretarial services which help you to promote your operational pace. Visit us for more info.