Why preparation of Minutes of Board, General Meetings, and Committee Meetings important?

Why preparation of Minutes of Board, General Meetings, and Committee Meetings important?

Relevant Provisions;

-          Section 118 & 119 of Companies Act 2013

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

-          Secretarial Standards on General Meetings (SS-2)

-          Rule 25 of the Companies (Management and Administration) Rules, 2014

-          Rule 3 of Companies (Meeting of Board and Powers) Rules, 2014

Documents to be prepared mandatorily;

-          Minutes Book of all the meetings of members, Board of Directors and Committees of Directors

-          Minutes Book of General Meetings

Minutes can be maintained either in Physical form or electronic form. As per SS-1 & SS-2, Minutes can be prepared in electronic form if it bears time stamp. Time stamp means current time of an event that is recorded by a computer. Through mechanisms such as the Network Time Protocol (NTP) a computer maintains accurate current time, calibrated to minutes fractions of second.

In accordance to SS-1, the minutes of the proceedings of every Board Meeting and every committee meeting are to be recorded in separate books.

When to circulate Draft Board Minutes and to whom?

Draft Minutes are required to be circulated to each Board member within 15 days from the date of conclusion of the meeting in prescribed means. It is important to note that the comments, if any of the directors on said draft Minutes has to be communicated within 7 days from the date of circulation thereof.

As per Rule 25 of the Companies (Management and Administration) Rules, 2014 and SS-1, the minutes be recorded within 30 days of the conclusion of every Board / Committee meeting is concerned.

Whether Minutes Book to be maintained loose-leaf form?

If maintained in loose-leaf form, shall be bound periodically. There shall be a proper locking device to ensure security and proper control to prevent removal or manipulation of the loose leaves.

Whether signed by the Chairman or Directors?

The chairman of the said meeting at any time before the next meeting or chairman of the next meeting at the next meeting, Chairman shall initial each page, sign the last page along with the date and place where he has signed, If minutes maintained electronically, Chairman shall sign the minutes digitally. Minutes once signed cannot be altered.

What are the consequences if not maintained Minutes Book?

As per new Act, for non compliance of provisions of section 118, the company shall be liable for a penalty of Rs.25,000/- and every officer who is default shall be liable for a penalty of Rs.5,000/

Further if any person is found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable with an imprisonment for a term which may extend to 2 years and with a fine of not less than Rs.25,000/- but may extend to one  lakh rupees.

 For more details, contact CS Neha Seth at csnehaseth@gmail.com or call us at 9871903449