Principles for convening and conducting Board Meetings

In
any nonprofit/charitable institution its board of directors/trustees is charged
with providing ultimate oversight over the activities and affairs of the organisation. Each director/trustee must discharge his/her fiduciary duty in
good faith, with due care, diligence and in a manner, he/she believes to be in
the best interest of the organisation.

How
often the board should meet, what it should discuss and how records of these
meetings should be maintained is also important because it is indicative of
what a board has accomplished over time as well as to hold directors/trustees
accountable for their discussions and decisions. Minutes of the meeting should include
major decisions made, follow-up steps and tasks, event information, etc.
Secretarial Standards
Companies
registered under the Indian Companies Act follow ‘Secretarial Standards’ issued
by the Institute of Company Secretaries of India (‘ICSI’). However, charitable
trusts and societies have no such standards or guidelines to fall back on. 
The
Trusts Act and Societies Registration Act offers little direction in terms of
number of meetings and how these should be conducted and records maintained.
Often trustees find only vague guidance under their own constitution (trust
deed or the by-laws or Rules).
The object of this write-up is two-fold:
a)
To give readers a flavor of the latest Secretarial Standards and
b)
To help directors/trustees of charitable organizations adopt or adapt some
corporate best practices with regard to board meetings.
Latest Amendments to Secretarial
Standards
The
Institute of Company Secretaries of India (‘ICSI’) has recently (30th
August, 2017) amended the Secretarial Standers which shall come into effect
from 1st October 2017. 
These Standards prescribes a set of
principles for convening and conducting Meetings of the Board of Directors and
matters related thereto.
Exemption to Section 8 Companies
These
Standards are not applicable to companies registered u/s 8 of the Indian
Companies Act 2013.
Highlights:

  • An adjourned Board Meeting can be held on
    a National Holiday.
  • Notice of the Meeting shall clearly mention a venue, whether registered office or otherwise, to be the venue of
    the Meeting and all the recordings of the proceedings of the Meeting, if
    conducted through electronic mode, shall be deemed to be made at such place. In
    other words, it has been made mandatory to mention the venue of the meeting in
    each and every notice of the meeting whether through electronic facility of
    participation through electronic mode provided or not.
  • Directors shall
    not participate through electronic mode in
    the discussion on certain restricted items.
  • Such restricted items of business include
    approval of the annual financial statement, Board’s report, prospectus and
    matters relating to amalgamation, merger, demerger, acquisition and takeover.
  • Similarly,
    participation in the discussion through electronic mode shall not be allowed in
    meetings of the audit committee for
    consideration of annual financial statement including consolidated financial
    statement, if any, to be approved by the board.
  • The Notice of
    meeting should inform the directors about the availability of such facility,
    and provide them necessary information to avail such facility.
  • Director may
    intimate his intention of participation through electronic mode at the beginning
    of the Calendar Year also.
  • Notice in writing
    of every meeting shall be given to every Director by hand or by speed post or
    by registered post or by facsimile or by e-mail or by any other electronic
    means. Where a Director specifies a
    particular means of delivery of Notice, the Notice shall be given to him by
    such means.
    However, in case of a Meeting conducted at a shorter Notice,
    the company may choose an expedient mode of sending Notice.
  • 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.
  • Proof of sending
    Notice and its delivery shall be maintained by the company for such period as
    decided by the Board, which shall not be less than 3 years from the date of the
    Meeting.
  • Any item not included in the Agenda may be
    taken up for consideration with the permission of the Chairman and with the
    consent of a majority of the Directors present in the Meeting.
  • The decision
    taken in respect of any other item shall be final only on its ratification by a majority of the
    Directors of the Company, unless such item was approved at the Meeting itself
    by a majority of Directors of the Company.
  • Company should
    hold at least four Meetings of its Board
    in each Calendar Year with a maximum interval of one hundred and twenty days
    between any two consecutive Meetings.
  • Director shall not be reckoned for quorum in
    respect of an item 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
    .
  • Leave of absence shall be granted to a Director only when a
    request for such leave has been received by the Company Secretary or by the
    Chairman.
  • Interested
    Director for the purpose of Quorum: For this purpose, a Director shall be
    treated as interested in a contract or arrangement entered into or proposed to
    be entered into by the company. If the
    item of business is related party transaction, then he shall not be present at
    the meeting, whether physically or through electronic mode, during discussions
    and voting of such item.
  • If an attendance register is maintained in
    loose-leaf form, it shall be bound periodically, at least in every three years.
    The attendance register shall be deemed to have been signed by the Directors
    participating through electronic mode, if their attendance is recorded in
    attendance registered and authenticated by the Company Secretary or where there
    is no Company Secretary, by the Chairman or by any other Director present at
    the Meeting, if so authorized by Chairman and the fact of such participation is
    also recorded in the Minutes. Where there is no Company Secretary, the
    attendance register shall be in the custody of any other person authenticated
    by the Board of this purpose.
  • The attendance register is open for inspection
    by the Directors
    . Even after a person cease to be a Director, he shall be
    entitled to inspect the attendance register of the Meeting held during the
    period of his Directorship.
  • Passing of Resolution by Circulation: Proof of sending and delivery of the draft of
    the Resolution and the necessary papers shall be maintained by the company for
    such period as decided by the Board, which shall not be less than three years
    from the date of the Meeting. An additional two days shall be added for the
    service of the draft Resolution, in case the same has been sent by the Company
    by speed post or by registered post or by courier.
  • Where the Minutes
    have been kept in accordance with the Act and all appointments have been
    recorded, then until the contrary is proved, all appointments of Directors,
    First Auditors, Key Managerial Personnel, Secretarial Auditors, Internal
    Auditors and Cost Auditors, shall be deemed to have been duly approved by the
    Board. All appointments made one level below Key Managerial Personnel shall be noted by the Board.
  • Wherever the
    decision of the Board is based on any unsigned documents including reports or
    notes or presentations tabled or presented at the Meeting, which were not part
    of the Notes on Agenda and are referred to in the Minutes, shall be identified
    by initialing of such documents by the Company Secretary or the Chairman.
  • Proof of sending draft Minutes and its delivery shall be
    maintained by the company for such period as decided by the Board, which shall
    not be less than three years from the date of the Meeting.
  • The Report of the
    Board of Directors shall include a statement on compliances of applicable
    Secretarial Standards.
  • Board of
    Directors has to mention a statement in its Directors’ Report that ‘Company is
    in compliance with applicable Secretarial Standards’. 
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