Secretarial Standards are the standards, which are issued by Institute of Company Secretaries of India constituted under the section 3 of the Company Secretaries Act 1980. This is also called ICSI Secretarial Standards. These Standards provide clear view of the various laws when the laws are not clear. Secretarial Standards are the more comprehensive, which provide Standard framework and guidelines to complete a task or to perform a particular function for proper compliance and good governance practices. In other words, these secretarial standards work like a benchmark for corporate to ensure legal and regulatory requirements.
Every company which is covered under the Companies Act, 2013 is required to comply with secretarial standards issued by ICSI. However, ICSI has given a few exemptions for certain classes of companies. For example, the Secretarial Standard on Meetings of the Board of Directors (SS-1) and the Secretarial Standard on General Meetings (SS-2) do not apply to one-person companies (OPCs) and small companies as defined in the Companies Act, 2013.
For instance, However, it is important to note that even if a company is exempted from certain Secretarial Standards, it should still follow the best practices laid down in the standards to ensure good corporate governance and compliance.
This is essential for ensuring good corporate governance and complying with legal requirements. Non-compliance with these standards can result in penalties or other legal consequences.
Aims and Benefits:
- The main aim of these Secretarial Standards is to ensure transparency and good governance in corporate affairs.
- These Secretarial Standards are very helpful to fulfill legal requirements and to maintain compliances.
- These Secretarial Standards also helpful to create trust among various stakeholders.
List of Secretarial Standards
Meetings of the Board of Directors: SS-1 prescribes detailed procedures for convening and conducting board meetings, including the preparation of agenda, circulation of notices, recording of minutes, and maintenance of minutes’ books. These standards aim to ensure that board meetings are conducted in a systematic and transparent manner, facilitating informed decision-making by the board of directors.
General Meetings/Disclosures: SS-2 lays down guidelines for the conduct of general meetings of shareholders, such as annual general meetings (AGMs) and extraordinary general meetings (EGMs). It covers aspects such as issuance of notices, preparation of agendas, conduct of meetings, recording of proceedings, and voting procedures. Compliance with these standards helps in safeguarding the interests of shareholders and promoting shareholder democracy. It includes many disclosures related to working of company.
Maintenance of Records and Registers: SS-3 provides requirements for the maintenance and preservation of various statutory records and registers by companies. This includes registers of members, debenture holders, directors, key managerial personnel, etc. These standards ensure that companies maintain accurate and up-to-date records as required by law, thereby facilitating regulatory compliance and corporate governance.
Compliance with Statutory Requirements: Secretarial Standards also emphasize the importance of compliance with statutory and regulatory requirements applicable to companies. This includes filing of various forms, returns, and documents with regulatory authorities such as the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI). By adhering to these standards, company secretaries can ensure timely compliance with legal obligations, thereby avoiding penalties and sanctions.
Conclusion:
In nutshell Secretarial Standards play a vital role in promoting transparency, accountability, and compliance within corporate governance frameworks. By providing clear guidelines for meetings, records management, disclosures, and compliance, these standards contribute to the efficient functioning of companies and enhance stakeholder confidence. While implementation challenges may exist, adherence to best practices can facilitate the effective integration of Secretarial Standards into corporate governance practices, thereby fostering sustainable growth and value creation.
If a company doesn’t follow secretarial standards, then it can face some bad consequences such as financial losses, legal action against company, disciplinary action, bad reputation in the market and ethical misconduct.
