New secretarial standards put additional compliance burden on companies

Niddhi Parmar 26 May 2015

Companies will have to ensure availability of documents at their Registered Office, Head Office as well as Corporate Office at the time of general meetings

The secretarial standards issued by Institute of Company Secretaries of India (ICSI), which are intended to ensure transparency and better governance, will surely result in additional administrative burden on the Secretarial team of Companies. Additionally, Companies will have to ensure timely availability of documents at the Registered Office and its Head Office as well as Corporate Office at the time of general meetings. Further, such Companies will also ensure maintaining Notice Board duly updated from time to time.

After a long wait, on 23 April 2015, the ICSI India issued Secretarial Standard - 1 on Meeting of the Board of Directors (SS1) and Secretarial Standard – 2 on General Meetings (SS2), as approved by the Central Government. Companies are required to comply with SS1 and SS2 by virtue of provisions of sub-section (10) of Section 118 and explanation under sub-section (1) of Section 205 of the Companies Act, 2013 (Act 2013). SS1 and SS2 are effective from 1 July 2015.

Among various other requirements, SS2 mandates companies having corporate office and Head office to display various matters as discussed in the latter part. Neither Act, 2013 nor the Companies Act, 1956 (Act, 1956) or any other Act or regulation defines the term Registered office, Corporate office and Head office. Further, Act, 2013 mandate companies to have a Registered Office where several statutory records are maintained. Documents are served on the Company or any of its Officer at the Registered Office.

In the era of green initiative Act, 2013 mandates uploading every information ranging from intimation of resignation of Directors to Financial Statement of the Company and its subsidiaries on the website. There seems to be a rare possibility of having large numbers foot falls of shareholders for any corporate matter. However, draftsmen of SS2 foresee such a situation.

Following requirements stipulated under SS2 with respect to Head office and Corporate Office:

a) Where reference is made in the notice of General Meeting to any document, contract, agreement, Memorandum or Articles of Association, then such documents shall also be made available for inspection in physical or electronic form during specified business hours at the Registered Office, Head Office as well as Corporate Office of the Company, if any and also at the Meeting.

b) The result of the e-voting/ poll/ postal ballot, with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not along with the scrutinizer’s report shall be displayed on the Notice Board of the Company at its Registered Office and its Head Office as well as Corporate Office, if any, if such office is situated elsewhere- ( Para 8.6.2, 9.5.2 and16.6.2 respectively of SS2)

(Nidhi Parmar works in Corporate Law Services Group at Vinod Kothari & Co)

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