Corporate Secretarial Practice – Drafting of Resolution, … · Corporate Secretarial Practice...

15 Corporate Secretarial Practice – Drafting of

Resolution, Minutes, Notices And Reports A company secretary is one of the principal officers responsible for the secretarial work and management of the business of a company as per the policy and instructions laid down by the Board of Directors.

15.0 Definition Section 2(45) of the Companies Act, 1956 provides that, “secretary means Company Secretary within the meaning of Section 2(1)(c) of the Companies Secretaries Act, 1980 and includes any other individual possessing the prescribed qualifications and appointed to perform the duties which may be performed by a secretary under this Act and any other ministerial or administrative duties”. This definition reveals three important facts. Firstly, only an individual may be appointed as a company secretary and any firm or body corporate can not be so appointed. Secondly the company secretary should either be a person who is a member of the Institute of Company Secretaries of India or has requisite qualifications prescribed by the Central Government. Thirdly the duties of the secretary are ministerial or administrative, they are not managerial since he is not entrusted with the direction, control or management of the affairs of the company. The Companies Act, however, does not prevent a company from appointing a secretary enjoying – limited executive powers of management delegated by the Board of Directors in addition to his routine secretarial duties.

15.1 Certain Companies to have Secretaries Every company having such paid-up share capital as may be prescribed [Refer Companies (Appointment and Qualifications of Secretary) Rules, 1988] shall have a whole-time secretary, and where the Board of directors of any such company comprises only two directors, neither of them shall be the secretary of the company. [Section 383A(1)] However every company is not required to employ a whole-time secretary under sub-section (1) and having a paid-up share capital of ten lakh rupees or more shall file with the Registrar a certificate from a secretary in whole-time practice in such form and within such time and subject to such conditions as may be prescribed, as to whether the company has complied with all the provisions of this Act and a copy of such certificate shall be attached with Board’s report referred to in section 217.

© The Institute of Chartered Accountants of India

15.2 Corporate and Allied Laws

If a company fails to comply with the provisions of sub-section (1), the company and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues. [Section 383A (1A)] However in any proceedings against a person in respect of an offence under Section 383A (1A), it shall be a defence to prove that all reasonable efforts to comply with the provisions of section 383A(1) were taken or that the financial position of the company was such that it was beyond its capacity to engage a whole-time secretary. Where, at the commencement of the Companies (Amendment) Act, 1974,— (a) any firm or body corporate is holding office, as the secretary of a company, such firm or

body corporate shall, within six months from such commencement, vacate office as secretary of such company;

(b) any individual is holding office as the secretary of more than one company having a paid-up share capital of rupees twenty-five lakhs or more, he shall, within a period of six months from such commencement, exercise his option as to the company of which he intends to continue as the secretary and shall, on and from such date, vacate office as secretary in relation to all other companies. [Section 383A (2)]

Companies (Appointment & Qualifications of Secretary) Rules, 1988 [GSR 1105(E), DATED 29-11-1988]

In exercise of the powers conferred by clauses (a) and (b) of section 642 read with clause (45) of section 2 and section 383A of the Companies Act, 1956 (1 of 1956), and in supersession of the Companies (Secretary’s Qualifications) Rules, 1975, the Central Government hereby makes the following rules, namely :— Short title and commencement. 1. (1) These rules may be called the Companies (Appointment and Qualifications of Secretary) Rules, 1988. (2) It shall come into force on the 1st day of December, 1988. Appointment, etc., of whole-time secretary. 2. (1) Every company having a paid-up share capital of not less than rupees five crore rupees shall have a whole-time secretary. (2) No person shall be appointed as whole-time secretary under sub-rule (1) unless he is a member of the Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980). (3) A company having a paid-up share capital of less than rupees two crores may appoint any individual as its whole-time secretary to perform the duties of a secretary under the Companies Act, 1956, and any other ministerial or administrative duties : Provided that no individual shall be eligible to be so appointed unless he possesses one or more of the qualifications specified in sub-rule (4) :


Corporate Secretarial Practice- Drafting of Resolution, Minutes, Notice and Report 15.3

[(3A) A company having a paid up share capital of two crore rupees or more but less than five crore rupees may appoint any individual who possesses the qualification of membership of the Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980), as a whole-time secretary to perform the duties of a secretary under the Companies Act, 1956 : Provided that where a company has appointed under sub-rule (3) or this sub-rule, a whole-time company secretary, possessing the qualification of membership of the Institute of Company Secretaries of India, such a company is not required to obtain a certificate from a secretary in whole-time practice under rule 3 of the Companies (Compliance Certificate) Rules, 2001] (4) No individual shall be appointed as secretary pursuant to sub-rule (3) unless he possesses any one or more of the following qualifications, namely :— (i) membership of the Institute of Company Secretaries of India constituted under the

Company Secretaries Act, 1980 (56 of 1980); (ii) pass in the Intermediate examination conducted either by the Institute of Company

Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980), or by the earlier Institute of Company Secretaries of India incorporated on 4th October, 1968, under the Companies Act, 1956 (1 of 1956), and licensed under section 25 of that Act;

(iii) post-graduate degree in commerce or corporate secretaryship granted by any university in India;

(iv) degree in law granted by the any university; (v) membership of the Institute of Chartered Accountants of India constituted under the

Chartered Accountants Act, 1949 (38 of 1949); (vi) membership of the Institute of Cost and Works Accountants of India constituted under the

Cost and Works Accountants Act, 1959 (23 of 1959); (vii) post-graduate degree or diploma in management sciences, granted by any university, or

the Institutes of Management, Ahmedabad, Calcutta, Bangalore or Lucknow; (viii) post-graduate diploma in company secretaryship granted by the Institute of Commercial

Practice under the Delhi Administration or Diploma in Corporate Laws and Management granted by the Indian Law Institute, New Delhi;

(ix) post-graduate diploma in company law and secretarial practice granted by the University of Udaipur; or

(x) membership of the Association of Secretaries and Managers, Calcutta, registered under the West Bengal Registration of Societies Act, 1961 (26 of 1961) :

Provided that where the paid-up share capital of such company is increased to rupees five crore rupees or more, the company shall, within a period of one year from the date of such increase, comply with the provisions of sub-rules (1) and (2) of rule 2.



Explanation : In this rule, “University” has the meaning assigned to it in the University Grants Commission Act, 1956 (3 of 1956), and includes any university outside India which is recognised by the Union Public Service Commission for the purposes of recruitment to public services and posts in connection with the affairs of the Union or of any State. Provisions relating to existing secretaries. 3. (1) Notwithstanding anything contained in sub-rules (1) and (2) of rule 2, the qualifications possessed by a person holding the office of whole-time secretary of a company immediately before 30th October, 1980, in terms of the second proviso to clause (a) of rule 2 of the Companies (Secretaries Qualifications) Rules, 1975, shall be deemed to be the qualifications which he shall be required to possess in order to be eligible to continue as whole-time secretary in that company.

15.2 Position of Secretary Though the Companies Act, 1956 does not define the legal position of a company secretary, yet his position may be assessed and described from the nature of the duties he is required to discharge pursuant to his agreement with the company and in conformity with the statute. You have already read the statutory definition of the Secretary in Section 2(45) of the Companies Act. You should also note that according to Section 2(30) of the Act, the Secretary is the officer of the company, and his legal position is determined accordingly. For instance, he may be held liable for default in holding the statutory meeting and filing the statutory report under Section 165, for default in registering certain resolutions and agreements as required under Section 192. The Secretary, like any other officer of a company will be punishable with imprisonment if he falsifies the books of the company or if he wilfully and knowingly makes a material false statement in the balance sheet or in certain returns, reports, certificates, or other documents of a company which is being would up (Sections 539 to 541). Misfeasance proceedings may also be taken against him in a winding up if he has misapplied any money or property of the company or has been guilty of breach of trust (Section 543). Being a mere servant, he has no authority to represent anything at all. An agreement between him and the company does not prevent the company from appointing a general manager (Krishna vs. Indo Union ASS Limited, 1944). The Secretary has no authority to summon a general meeting himself. He has also no authority to strike-out a name from the register or to register a transfer before it is passed by the Board. The secretary of a company has no general authority to make representations to induce persons to take share in the company so that a person who is induced to take shares in then company by a fraudulent misrepresentation secretary of the company (not authorised by the officers of the company entitled to make the representation), is not entitled to maintain an action against the company for the recession of the contract or for damages for such misrepresentation (Diwan Chand vs. Gurjanwalla Sugar Mills 1937). In no circumstances can a Secretary of a company discharge the functions of the Board or act, on behalf of the company in matters of policy or take substantial steps which are not of an administrative or ministerial nature. He can not give consent on behalf of the company under



Section 399 to the filing of the petitions under Sections 397 and 398 (Mohan Lal Mittal vs. Universal Wires Limited 1983). He cannot also file a suit on behalf of the company, unless authorised to do so. So also the Secretary cannot issue notice without the Board’s authority or commence litigation in the company’s name without authority from the. However, the position of Company Secretary has undergone, a big change in modern times. He is now recognised as an important executive officer of a company with managerial duties and responsibilities. The Companies Act also permits the Board of Directors to delegate administration powers of management to the Company Secretary in addition to his routine managerial duties and responsibilities. He is no longer a mere clerk. He regularly makes representation on behalf of the company and enters into contracts on its behalf which come within the day to day running of the company’s secretariat. All such matters come within the ostensible authority of a Company Secretary. An accomplished Secretary acts as the brain of the company. His ability, his contacts with the commercial world and his administrative control over the whole office enable the Secretary to vitally influence the management. In all matters of policy and administration, the directors consult an experienced and well conversant Secretary. He is bestowed with ample discretionary powers which he can exercise without intervention of the Board of Directors. The Secretary, vis-à-vis the administrative set-up of a company, is in some cases next to the managing director. He, as an executive head, is empowered to supervise and control the secretarial and share department or other departments and may even have the powers to appoint and dismiss the staff working under him, depending upon the Board’s decisions in this respect. The Board, may, however delegate to him various other duties.

15.3 Appointment of Secretary The first Secretary of a company may be named in the Articles. He may be called upon to assist the promoters in all preliminary work before the incorporation such as holding the meetings, keeping the minutes the meetings, preparation of various documents and statements required for registration of the company. But a clause in the Articles naming the Secretary does not constitute a contract between the Secretary and the company. Articles constitute a contract between the members and the company. Outsides have nothing to do with the Articles. Even if the Articles say that Mr. AB shall be the first Secretary of the company for a fixed salary and a definite period, the secretary would not be able to sue the company if the directors appointed another Secretary after incorporation. Hence, the Secretary who has been acting-pro-tem in the preliminary stages of the company’s existence whether named in the Articles or nor, must immediately after incorporation, get his appointment confirmed by a Board resolution and should preferably enter into a separate service agreement with the promoters regarding his remuneration and guarantee of its payment; but all the work done by him in the pre-incorporation stage is in his unofficial status as the company itself is non existing and it cannot appoint any person as its secretary or solicitor. If he is associated with the promoters from the beginning he will get an opportunity to familiarise himself with the contents of the memorandum and the articles of association in view of his active participation in their drafting and preparation. He will also be familiar with the financial position of the company and its potentialities regarding future prospects and development.



The resolution of appointment of secretary may be in the following form: RESOLVED that Mr. P.R. Anandgiri be, and is hereby, appointed the Secretary of the Nav Bharat Engineering Works Limited, the appointment to be subject to six months notice on either side and the terms of salary and allowances will be as follows: 1. ` 60,000 per month salary, 2. ` 6,000/- per month as dearness allowance, 3. ` 6,000/- per month as house rent allowance, 4. ` 8,000/- per month as car allowance, 5. ` 20,000 per year as leave travel allowance, 6. Free medical help upto ` 20,000 per year and 7. ` 10,000 per month on company’s expense account. In addition to this resolution, he should enter into a written service agreement which will deal great length with the terms and conditions of service, such as period of appointment and probation, if any period notice of termination of service, mode of remuneration, provident fund or pension benefits, etc., it may be noted that his remuneration is not taken into account for purposes of calculating over all managerial remuneration under Section 198. The Secretary’s appointment has to be entered in the Register of Directors, etc., and it is also necessary to send a notice of his appointment to the Registrar (Section 303).

FORM NO. 1 Agreement for the Appointment of a Secretary An agreement made on the………. day of…… 20….. between…………. Ltd. (hereinafter called the Company) of the one part, and Mr………… of the other part whereby it is agreed as follows: (1) The said Mr…………. shall be the Secretary of the Company for a term of ten years from

the date hereof. (2) There shall be paid by the Company to the said Mr…………. as such secretary as aforesaid a

salary at the rate of ` ……….. per month beginning from 1st December, 2009. (3) Mr………….. shall, unless prevented by ill health, throughout the said term devote the whole of

his time, attention and abilities to the business of the Company shall obey the orders from time to time of the Board of Directors of the Company and in all respects conform to and comply with the directions and regulations made by such Board and shall serve the Company well and faithfully use his utmost endeavours to promote the interests thereof.

(4) The said Mr……………. shall, during the tenure of his office, be entitled to leave of absence for a period……………. in each year not exceeding one month and the said salary of Mr…………… shall continue not withstanding such leave of absence.

(5) Either of the parties hereto may at any time after the………….. day of……….. 20….. determine their agreement by giving to the other not less than three calendar months notice in writing and upon expiration of the period specified in such notice the said Mr………… shall cease to be secretary to the Company.

As Witness Etc. Day and Date Sd/- 1. Director 1…………. 2. Director 2…………. Seal 3. (appointee) A director can also act as secretary. But we must have special resolution for such an



appointment as it will be an office of profit. However, if a company has only two directors, none of them shall act as a Company Secretary.

15.4 Duties of A Company Secretary The duties of a Company Secretary are multifarious and these vary from company to company depending upon various factors, such as the size of the company, the nature of its business and the exact positions that he enjoys in the company. In a large concern, he is charged with the duty of ensuring that the affairs of the company are conducted in accordance with the provision of the Companies Act, the company’s articles and generally in accordance with the law. There the function as the head of the secretarial department. In small concerns the secretary may, in addition to his purely secretarial duties, be much more involved in the company’s administrative operations, organisation and control of the office and its staff. However, the duties of a Company Secretary can be broadly grouped under the following heads: 1. Statutory duties. 2. Duties towards directors. 3. Duties towards shareholders. 4. Duties towards public. 5. Duties towards the office and staff. 1. Statutory duties: The statutory duties of a Company Secretary are to ensure that the affairs of the company are conducted in accordance with the provisions of the Companies Act and other statutes pertaining to company management such as the Income tax Act, the Indian Stamp Act, the Monopolies and Restrictive Trade Practice Act, etc. The most important part of the statutory duties of a Company Secretary is concerned with the compliance of the provisions of the Companies Act, 1956 which are: (a) Maintenance of the statutory books and/or registers of the company. (b) Preparation, authentication and filing of resolutions, agreements, documents and return

with the Registrar of Companies. (c) Attending the meetings and recording their proceedings. (d) Allowing the members of the company to inspect the statutory books and to take copy

there of and to make all necessary communication to the members. (e) Assisting the directors in respect of the issue, allotment, transfer, transmission and

forfeiture of shares and debentures. (f) Keeping the common seal of the company in safe custody and using it where so

authorised by the articles or the Board of Directors. Some example of statutory duties are given as follows: (i) Filing with the Registrar a return in the prescribed form [Section 5(g)]. (ii) Statutory declaration as to compliance in respect of incorporation (Section 33).



(iii) To file Return of Allotment with the Registrar of Companies (Section 75). (iv) Giving notice to the Registrar of an increase of share capital (Section 97). (v) Issuing Certificates of Shares, Debentures and Debenture Stock (Section 113). (vi) Allowing inspection of the Debenture Register (Section 118). (vii) Delivering particulars of mortgages and charges for registration (Sections 125 to 127). (viii) Making the statutory declaration for commencement of business (Section 149). (ix) To maintain the Register of Members with prescribed particulars (Section 150). (x) To maintain Register of Debenture holders (Section 152). (xi) To sign the Annual Return and certify the documents annexed thereto and file it with the

Registrar (Sections 159 to 162). (xii) To Allow inspection of and furnish copies of Register of Members (Section 163). (xiii) To file copies of certain Resolutions and Agreements with the Registrar (Section 192). (xiv) To maintain minutes of general and board meetings (Section 193). (xv) To file three copies of the Balance Sheet and Profit & Loss Account with the Registrar

(Section 220). (xvi) To file the certificate as to compliance of requirements of Schedule XIII (Section 269). (xvii) To maintain Register of Directors, etc., with prescribed particulars (Section 303). (xviii) To allow inspection of the Register of Directors (Section 304). (xix) To maintain a Register of Directors, etc., with prescribed particulars (Section 307). (xx) Where a director’s liability is made unlimited, to give the notice required to be given to

him (Section 322). (xxi) To assist in the making of the Statement of Affairs of the company in a winding up

(Section 454). Under the Income-tax Act, he is required to deduct income tax from the salaries of the employees and officers of the company and from dividends and interest and deposit the same with the Government within the prescribed time. He must also furnish a certificate of income tax deducted at source to every shareholder receiving the dividend and to every debenture holder receiving interest. He is also required to submit a return of the income of the company to the income tax authorities in time. Under the Indian Stamp Act, it is the duty of the company secretary to see that documents such as letters of allotment, share certificates, share warrants, debentures, transfer forms mortgages and charges, etc., which are issued from his office, are affixed with stamps of requisite amount as required under the Act. Under the other allied laws, the Company Secretary is principal officer and is responsible to give notice and verify statements relating to various forms of expansion, establishment of new undertaking, merger and amalgamation and registration of an undertaking. Under the Sales Tax Act, he must endure timely submission of returns and payment of tax.



In addition, the Secretary must see that the provisions of the Foreign Exchange Regulation Act, Industries (Development and Regulation) Act, Securities and Exchange Board of India Act are duly complied with by the company. In the case of a manufacturing company, he must see that the provisions of the Factors Act, Payment of Wages Act, Minimum Wages Act, Industrial Disputes Act, and other industrial laws, are duly complied with. 2. Duties towards directors: In the eyes of law, the Company Secretary is no more than a mere servant of the Board. He should, therefore, carry out the instructions of the Board. He acts under authority of the Board which may be either express or implied. He is also responsible for providing necessary information to the Board for the formation of its policies. He should also advise the directors in respect of legal matters pertinent to company’s affairs. As the directors cannot act without a meeting, the Secretary has to arrange Board meeting, issue notices and prepare agenda of such meeting in consultation with the directors. He has also to record the minutes of the proceedings in consultation with the directors. He has also to record the minutes of the proceedings of their meetings. He acts as the mouthpiece of the Board and communicates its decisions to staff, shareholders and outsiders dealing with the company. He also deals with all correspondence in which the directors are interested and maintains all important files and records for them. He generally prepares the draft of the directors’ report at their instance to be presented before the annual general meeting. In addition, he keeps the common seal of the company and uses it as directed by the Board. It has been rightly said that “while the directors are the brains of the company the Secretary is its eyes, ears and hands.” 3. Duties towards shareholders: A Company Secretary serves as a link between the company and the shareholders. As the shareholders are the owners of the company, he owes to them the highest courtesy and consideration. It is the duty of the Company Secretary to safeguard the interests of shareholders as between themselves, as also vis-à-vis the company. He communicates the decisions of the Board to the shareholders. He also deals with all correspondence between the company and the shareholders and looks into their grievances and complaints. The shareholders will frequently seek from his information as to the company’s affairs and the Secretary should satisfy them with reasonable replies. His other duties towards shareholders are with regard to the following: (i) Issuing a prospectus. (ii) Receiving applications and allotment of shares. (iii) Issuing letter of allotment, share certificates and shares warrants. (iv) Sending all notices. (v) Transfer and transmission of shares. (vi) Payment of dividends. (vii) Sending notices of meetings of shareholders. (viii) Making arrangements for such meetings. (ix) Recording proceedings of the meetings in minutes book.



(x) Allowing shareholders to inspect various books and registers as permissible under the Act.

(xi) Supplying information and copies of documents to shareholders on demand as permissible under the Act.

The Secretary is in possession of certain confidential information and it is his duty to see that such information is not disclosed prematurely to a section of the shareholders thus prejudicing the rights of others. Such information should be released simultaneously to all the parties interested in the information. 4. Duties towards public: The Company Secretary acts as a liaison officer between the company and the general public consisting of debenture holders, bankers, creditors, customers, suppliers prospective investors and the public at large. He should be in constant touch with them, keep them informed of the company’s policies and programmes and supply necessary explanations and clarifications to the queries raised by them. His attitude towards them should be one of courtesy, tact and integrity. It is the Secretary who negotiates with third parties and the outside public in regard to settlement of contracts and bargains, etc. He is to look after the interests of creditors and debenture holders of the company. He has also to entertain the complaints of customers and suppliers and satisfy them. He should not divulge confidential information to the public prematurely, thus affecting the public opinion about the company. 5. Duties towards the office and the staff: The Company Secretary is the executive head at the registered office of the company and is solely responsible to the Managing Director or Manager and Directors for the smooth running of office work. In fact, the Company Secretary is the pivot around which the whole corporate machinery revolves. All the heads of various departments into which office is organised, viz., the share department, correspondence department, filing and records department, are directly responsible to the Secretary. It is the Secretary’s duty to see that these departments are properly organised, supervised, coordinated and adequately staged.

15.5 Company Correspondence & Reports 1. Company Correspondence: Correspondence in company matters is dealt with by or in the name of the Company Secretary these matters cover a wise range of subjects broadly, such correspondence may be classified as follows: ♦ Correspondence with members: The Secretary is the organ of the Board of Directors

and a vital link between the company and its members or the public. Being authorised by the Board, he has to convene meetings, notify declaration of dividends, deal with the issue, transfer, transmission and allotment of shares or debentures, further issue of shares, bonus issue, etc., and disclose the position of the company as required by the Companies Act. The Secretary’s correspondence with members relates mostly to statutory and formal matters. But, in special circumstances he is also required to reply letters of inquiries relating to prospectus of the company, rate of dividend, any irregularity on proceedings of meetings, loans and investments, any question arising out of transmission of shares, loss of share certificates or dividend warrants, any court proceedings, etc. In all



statutory or formal correspondence, the Secretary acts as the agent of the company or the Board as well as one subservient to the Act and the company’s articles. In other types of correspondence, he can, however, exercise some amount of discretion. But in view of his fiduciary relationship vis-à-vis the company and the general body of shareholders, he should exercise his discretion in the larger interest of the company.

♦ Correspondence with directors: The Secretary is the servant of the company under the control of the Board. He is required deal with all the correspondence in connection with the directors and record their deliberations and decisions. He must maintain written records of his dealings and communications with the directors. His dealing with them needs the utmost tact. His language should be polite and at the same time firm. He must observe decency and decorum in communicating with the directors to furnish or withhold any information or draw their attention to any matter in the interest of the company.

♦ Correspondence with the Public: In this connection, his dealings as mainly with customers, brokers, other companies or public bodies, creditors, etc. He must be courteous, tactful and must guard against disclosure of secrets or favouring anyone unduly, e.g. by disclosing some new development. His letters must be firm, dignified and convey a good impression, about the company.

2. Drafting and Preparation of Reports: A report is a statement containing an assessment of a situations and/or facts and data relevant thereto. It is based on one’s knowledge and a systematic style of the situation. For example, the marketing manager may prepare a report to the decline of sales in a particular area. The report may or may not contain the comments or conclusions of the writer. It is intended to enable the interested persons to form their judgement to take suitable action thereon. The success of a reporter depends upon the extent of his knowledge of the matter reported and his capacity to pick out from the mixed facts and figures the important significant and relevant ones, the ability to marshall the facts with lucidity, his capacity to see the picture as a whole and above all, his ability think logically. Preparation of a variety of statutory and non-statutory reports falls within the domain of the company secretary. With reference to the Companies Act, the following are some of the important statutory reports: (a) Statutory report prepared under Section 165 and sent to the members along with the

notice of statutory meeting as well as to the Registrar of Companies. (b) Auditors’ reports placed before the annual general meeting. (c) Director’s reports placed before the annual general meeting. (d) Annual returns submitted by the company to the Registrar. The returns as regards

allotment, statement in lieu of prospectus too are in the nature of reports. (e) Inspector’s reports submitted after investigation into the affairs of the company

concerned. (f) Registrar’s report relating to unsatisfactory affairs of the company. (g) Liquidator’s report in winding-up proceedings.



Non-statutory report, through beyond legal requirements, are nonetheless compiled in special circumstances by a director, secretary or accountant, committee or sub-committee or a special body with a view to aiding authorities in taking decisions. The following are some of the non-statutory reports: (a) Report of a committee of directors to be submitted to the Board after enquiring into the

exigencies of the business situation. (b) Report of the Board of Directors to shareholders, beyond the legal requirements. (c) Chairman’s speech at the annual general meeting. (d) Reports of special committees-standing or ad hoc-constituted by the Board, e.g. finance

committee report, share allotment committee report, project committee reports, etc. The reports of the ad hoc committee may relate to a special problems such as opening or closing a branch office, raising of additional capital, introduction to certain office routine or method, etc.

(e) Report to stock exchange. (f) Circular reports issued to customers, clients and general public. (g) Report of individual experts, or departmental managers or officers of the company such

as secretary, accountant, commercial manager, sales manager, works manager, personnel manager and the like.

♦ GENERAL HINTS ON DRAFTING REPORTS: Reports are too numerous to be governed by precise rules. However, a few general hints for drafting them are given below: (a) Collection of material or data being the foundation on which the report stands; the

writer must collect them by referring to office records, interviewing people, visiting different places, etc., as may be necessary.

(b) The material collected as aforesaid has to be marshalled in a logical sequence so that the report, when made out, may read like a narrative.

(c) The report should have a leading and a preface explaining its purpose and nature. (d) Its language has to be simple, clear and unequivocal short sentences are to be

preferred to long ones. It should be drafted in an impersonal manner, making use of ‘third person’.

(e) If the report is likely to be lengthy, it should be divided into parts and appropriate sub-heading should be used. The report must then contain a summary also. Many people adopt the practice of giving the gist in one page and the matter in detail later in the report.

(f) Where the directors are not technical persons, technical phraseology should be eschewed, yielding place to plain and simple phraseology, the idea being to make the report, as far as practicable, easily understandable by those for whom it is meant.

(g) The conclusions put forward should be founded on the material or data collected;



also these should be unbiased in character. 3. Specimen Directors’ Report of ‘Maruti Ltd.’ is given hereunder The Directors have pleasure in presenting the 13th Annual Report together with the audited accounts of Company for the year ended 31st March, 2006. ♦ Highlights of 2005-06: Your company concluded another year of growth in all areas of

operation setting several new records. The millionth vehicle was produced on 25th March, 2006. The profit for the year before tax increased to ` 1367 million (previous year ` 366 million) after providing depreciation of ` 730 million (previous year ` 364 million) and interest of ` 747 million (previous year ` 528 million). Production increased from 128138 vehicles in 1994-95 to record of 158109 vehicles representing an increase of 23%. Total income for the year was 29215 million as against ` 22195 million in the previous year. In continuation of our efforts to provide convenient and quality after sales service to our customers 5 dealer workshops and 55 Maruti Authorised Service Stations were added during the year. 100 Free Inspection Camps were organised for specialised check-up. As in the previous year All India Skill Competition was organised to motivate dealers’ mechanics in enriching their knowledge and diagnostic ability. During the year the company successfully cleared the COP audit as per EEC regulatory requirement.

♦ Outlook for 2005-06: The company expects to increase production to a 2,00,000 vehicles in the coming year. The new assembly shop and paint shop for the expansion of production would be operational during the year.

♦ Dividend: The directors recommend a dividend of 10% amounting to ` 132 million (previous year 6% amounting to ` 76 million) on equity shares, subject to deduction of tax.

♦ Exports: A total of 17187 vehicles (previous year 14566 vehicles) representing an increase of 18% over 2004-05 valued at ` 1982 million (previous year ` 1474 million) were exported during the year. In recognition of export performance in 1994-95 the company was awarded the status of Trading House by the Government of India. During the year 20 new markets for exports were developed. The sample units of new model ‘Alto’ were sent for obtaining homologation and national type approval in E.E.C. This model was also launched in the Geneva Motor Show. The company is actively pursuing further growth in exports.

♦ Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo: A statement giving details of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988, is annexed.

♦ Particulars of employees: The information required as per Section 127(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 forming part of this Report is enclosed.

♦ Environment: Modification of the existing effluent treatment plant was undertaken to take care of additional effluents generated due to capacity expansion. Data on non-methane



hydro-carbons in Paint Shop and Engine Testing Shop, ambient air quality, stack emissions and effluents are being regularly monitored and the parameters are maintained well within prescribed limits. Development of green belt around gasturbine and R&D areas was further augmented by plantation of 3000 additional saplings.

♦ Directors: Suzuki Motor Corporation nominated Mr. Y. Kakei as part-time director on the Board in place of Mr. S. Nakanishi w.e.f. 21.7.2006. The Board placed on record its deep appreciation of the valuable contribution and services rendered by Mr. S. Nakanishi as director of the company and otherwise to the company.

♦ Auditors: M/s Price Waterhouse, retire as auditors and being eligible, offer themselves for reappointment.

♦ Cost Auditors: The Central Government have issued a direction in regard to audit of cost accounts maintained by the Company pertaining to motor vehicles for the year ended 31.3.2006 and for every financial year thereafter. Accordingly, the company appointed M/s R.J. Goel & Co., as Cost Auditors for auditing cost accounts of the company for the year ended 31st March, 2006 with the approval of the Central Government.

♦ Acknowledgement: The Board of Directors would like to express its sincere thanks for the co-operation and advice rendered by various ministries of the Government of India, including the Department of Heavy Industry, and also the Haryana State Government and its concerned departments. The Board also expresses its gratitude to the statutory auditors, cost auditors and bankers for the co-operation and assistance rendered by them. Your directors also take this opportunity to place on record their appreciation for the valuable support and co-operation received from Suzuki Motor Corporation, Japan as well as from its employees including the Japanese staff, dealers, vendors and other suppliers, without which it would not have been possible for Maruti to achieve all-round progress.

For and on behalf of Board of Directors New Delhi (A.R. Halasyam) (R.C. Bhargava) 29th July, 2002 Director-Finance Managing Director

15.6 Record Maintenance and Filing of Documents Maintenance of different kinds of registers: A company secretary being administrative incharge of the company is responsible for the maintenance of registers, books of accounts and other documents required to be kept by the company as per statutory norms. A list of such documents is as follows:

Registers to be Maintained by the Company

Section(s) Registers 301(1) & (5) Register of contracts (referred to in Sections 297 and 299), with

companies and firms in which the directors are interested containing particulars mentioned in Section 301 to be kept at the registered office.

303 Register of directors, managing director manager and secretary containing particulars mentioned in the section to be kept at the registered office.



307 Registers of director’s shareholdings and debenture-holdings containing particulars mentioned in the section to be kept at the registered office.

372(5) & (8) Register of investments made by the company in any shares or debentures of bodies corporate in the same group showing in respect of each investment, the particulars required by the section to be kept at the registered office.

Section(s) Books of accounts or other documents 209 Books of accounts containing the particulars required under the section

which must be kept at the registered office. 302(6) All contracts entered into by a company appointment of a manager,

managing director, managing agent or secretaries and treasurers, the which must be kept at the registered office.

The following documents must also be kept or maintained by a company (This follows from the provisions). 1. Copies of balance sheet and profit and loss account, and the documents to be annexed or

attached thereto (Sections 210, 212, 216 & 217). 2. Statements to be published by limited banking companies, insurance companies and

deposit provident or benefit societies (Section 223 & Form F in Schedule 1).

Notice of Board meeting Notice of Board meeting is required pursuant to Section 286(1). The length and form of notice of the Board meeting which have not been prescribed under the Companies Act usually follow such directions as are prescribed in the articles of the company. Table ‘A’ of Schedule I to the Act in clause 73(2) provides the procedure and authority competent to issue notice. Under the said clause, a director may, and the manager or secretary, on the requisition of a director, shall, at any time summon a meeting of the Board. Specimen notice

Board Meeting Section 286: ‘Notice’ convening a Board Meeting

Akash & Company Limited Palkaji, Bombay-900 012. Dated the..…… 20…. To Shri ABC, Nagpur-440 012.

Dear Sir, Notice is hereby given that a meeting of the Board of Director which will be held at the



registered office of the company at Palkaji, Bombay- 400 012 on……………… the…………… 20……… at….….a.m./p.m. You are requested to make it convenient to attend the meeting. A copy of the agenda of the businesses which are likely to be transacted at the meeting is enclosed for your perusal. Yours faithfully For AKASH & COMPANY LIMITED Secretary (each director should be individually addressed with a copy of agenda of the meeting)

Agenda The various items of business to be transacted constitute the agenda, literally “things to be done” for the meeting. Though it is common practice to send to directors or members an agenda or a list of items of business proposed to be transacted at the meeting, the Act does not lay down any such requirement. The current practice is, to lay down the agenda preferably in the form of proposed resolutions. It is usually prepared by the secretary but issued however, after it has been approved by the managing director or an executive of an equal rank. Preparation of agenda: The preparation of agenda requires considerable care. An ideal agenda is the one which is so worded that only by altering a few words of an item to convert it into past tense, it would form the minutes. It may be, and is often drawn up on loose sheets of foolscap Paper. However, it is also preferable to write in bond book specially kept for that purpose. The order in which various items appear in the agenda is generally the order in which the business is to be transacted at the meeting. As it is customary to discuss routine matters first such items as relate to it come first in the agenda. They are followed by important items which, it is expected would provoke discussion among members. At the end, the item which require only to be noted by the members listed. Such an order generally has the merit of dividing equitably the time of the meeting among various items according to their importance. It must be added, however, that the chairman has the discretion to take up item for consideration by the meeting in the order he considers convenient for the disposal of the business. The various items listed on the agenda are numbered serially for convenience of recording minute and for future reference. AGENDA for the Board Meeting Summary Form Agenda for Board Meeting to be held at………. one..…… day, the……. 20……. at……… [a.m.]

……………………………………….. Ltd. 1. The Chairman to announce that the quorum for the meeting is present. 2. The Chairman to address the meeting, and to move that, with the permission of the

members present, the notice of the meeting and the Directors’ Report be taken as read, and to call on the Secretary to read the Auditors’ Report.



3. The Chairman to make a statement commenting upon the working of the company. 4. The Chairman to propose: “Resolved that the audited Balance Sheet as at…………….. 20…… at the Profit and Loss

Account for the year ending…………….. 20……… together with the Directors’ Report and Auditors’ Report thereon, be and the same are hereby received and adopted”.

Mr…………….. to second. The Chairman to invite members to put questions regarding working of the company

under review. After the members have spoken and their queries answered, put motion to meeting and declare result.

5. Mr…………… a Director to propose: “Resolved that pursuant to the recommendation of the directors, divided at the rate of

Rupees……………… per share on the equity share capital of the company for the year ended……………… 20…… be and is hereby declare out of the current profits [or out of the accumulated profits] of the company and that the same be paid, after deduction of income-tax at source, to those shareholder whose names appear on the company’s register of members on……………… 20…… and that divided warrants be posted within 30 days hereof only to those shareholders who are entitled to receive payment”.

Mr.…………… to second. Put motion to meeting and declare result. 6. Mr……………… a Director to propose: “Resolved that Mr……………… who retires by rotation and is eligible for re-appointment,

be and is hereby re-appointment as a Director of the Company”. Mr……………… to second. Put motion to meeting and declare result. 7. Mr……………… a member to propose: “Resolved that the retiring Auditors, Messrs……………… Chartered Accountants, be and

they are hereby re-appointed Auditors of the company to hold office till the conclusion of the next Annual General Meeting at a remuneration of `………………”.

Mr……………… another member to second. Put motion to meeting and declare result. 8. Mr………………, who has given notice proposing candidature of Mr……………… for the

office of Director under Section 257 of the Companies Act, 1956, to propose: “Resolved that, due notice in writing signifying the intention of a member to propose: Mr……………… as a Director having been received pursuant to Section 257 of the

Companies Act, 1956, Mr……………… be and is hereby appointed as a Director of the company liable to retire by rotation”.



Mr……………… to second. Put motion to meeting and declare result. 9. The Chairman to propose as a special resolution: “Resolved that pursuant to the provisions of Sections 294 and 294AA and all other

provisions, if any, of the Companies Act, 1956, and subject to the approval of the Central Government, the company hereby approves the appointments of the following as sole selling agents of the company for a period not exceeding five years commencing from the dates of appointment and for the products and the areas respectively set out against each in the table appended below on the terms and conditions recorded in the relative draft agreement submitted to this meeting and initialed by the Chairman hereof for purposes of identification, and that the Board of Directors be and is hereby authorised to effect such modifications in the terms and conditions of the said draft agreement as may be approved by the Central Government and agreed to by the Board the said sole selling agents.” Name of the Agent Areas Period Products Commission Mr…………….. to second. Put motion to meeting and declare result.

10. The Chairman to declare the meeting closed.

Resolutions A meeting is an important instrument in the corporate decision-making process. The business at a meeting is preceded by a notice containing the agenda. The resolution is the event that takes place in the meeting. Dictionary meaning of the word ‘resolution’, is ‘a formal proposal put before a public assembly or the formal determination of such proposal on any matter’. Derived from this meaning, a resolution is a formal agreement as to adoption of proposal put before an assembly of persons or meeting. In the context of company management, it is either a Board meeting or a General meeting of the members. The passing of a resolution should be construed as the manner in which a meeting formally acts expressing the intent and purpose of the meeting and if it is a meeting of members, it means the will of the company, and if it is a meeting of the Board of directors, it means the exposition of the intent of the executive action initiated or to be initiated subject to the limiting and regulatory force of the different statute. Hints on drafting of resolution While framing resolution, it is to be ensured that: (i) They should be express clearly and in precise terms, and not vaguely, whether they

embody the decisions of the directors or are those passed at general meeting. (ii) All identification of instruments, persons, etc., referred to in the resolution are properly



made. (iii) If the resolution is being passed in pursuance to the provisions of the Act, it refers to

relevant section or sections. (iv) If the resolution is such as requires the approval of the Central Government/Company

Law Board or confirmation of the Court, it states that effect. (v) If the resolution is to be effective immediately, it is drawn to show that effect. (vi) The resolution is confined to one subject matter. Wherever possible, lengthy resolutions should be divided into paragraphs and arranged in their logical order having regard to the subject matter of the resolution. Members’ resolution Resolution that may be passed by a company are of two kinds: (i) Ordinary resolution and (ii) Special resolutions Specimen General Meeting Resolutions-Ordinary Section 269: Appointment/re-appointment of Managing/Whole-time Director-General Meeting-Ordinary Resolution I. “Resolved that Shri ABC who fulfills the conditions specified in Parts I and Part II of Schedule XII to the Companies Act, 1956 be and is hereby appointed as the Managing Director/Whole-time Director/ Manager of the company for a period of five years effective from……………….. and that he may be paid remuneration by way of salary, commission and perquisites in accordance with Part II of Schedule XIII of the Act. Resolved further that in the event of loss or inadequacy of profit the salary payable to him shall be subject to the limits specified in Schedule XIII”. II. Resolved that Shri ABC be and is hereby appointed as Managing Director/Whole-time Director/ Manager of the company subject to the approval of the Central Government for a period of five years effective from……………….. and that he may be paid remuneration as follows: (i) Salary (ii) Commission (iii) Perquisites: Housing, Medical reimbursement, Leave Travel Concession, Club fee Personal Accident Insurance, Gratuity, Provident Fund etc. Resolved further that the secretary of the company be and is hereby authorised to make an application to the Central Government seeking their approval to the above appointment. Section 433: Winding up by Court-Ordinary Resolution Whereas the company has been incurring continued losses for the past several years and WHEREAS the assets of the company are insufficient to meet the liabilities and WHEREAS it



is no longer possible to run the company except at a loss. Now therefore it is Resolved that the company be wound up by the Tribunal at Bombay, which will become effective from the date the Court declares the company to be wound up by such Court and that the Board of Directors be and is hereby authorised to make necessary applications therefor and take action for the winding up of the company by the said Court”. Section 394: Approval of scheme of arrangement between company and class of shareholders – Special resolution Resolved that, subject to sanction by the Tribunal at……………….., a scheme of arrangement in terms of the draft laid before this meeting and for the purpose of identification signed by the Chairman thereof, or with such alteration or modification thereof as may be directed by the said Tribunal, between the company and the holders of the promoters shares and the holders of the equity shares for the purpose of eliminating existing……………….. promoters shares of `…………… each by converting them into……………….. equity shares of `……………… be and is hereby approved. Section 433(a): Winding up of the company by the Court – General Meeting – Special Resolution “Resolved that consent of the company be and is hereby accorded to the Board of Directors of the company to present a petition to the Tribunal of Delhi for winding up the company by the Court from such date as it may determine.” Directors’ Resolutions Resolutions passed in a Board meeting. As a general rule, the directors act exercise their powers by resolutions passed at Board meetings. These resolutions may be resolution requiring: Adoption by majority: The articles usually provides (Articles 74 of table A) for a simple majority of votes to secure adoption of directors’ resolution. Unanimous adoption: The resolution must be passed unanimously where the Act as requires for example, Section 316(2) proviso and Section 372(5). It is not essential to the validity of directors’ resolution that the determination should be embodied in a formal resolution. Further, decision of the directors need not in all cases be formally recorded in writing and their intention may be incurred from conduct [H.L. Belton & Co. vs. T.J. Graham & Sons (1956)]. Resolution by circulation Sometimes it becomes impracticable to call a meeting of the board to discuss matters on which decisions are needed. To enable the directors to do so, the articles usually provide (Regulation 81 of Table A) that a resolution in writing, signed by all the members of the Board entitled to receive notice of a Board meeting, shall be valid and effective as if it were passed at a duly convened meeting. Such resolutions are called resolutions passed by circulation. When a resolution is passed by circulation, it should be recorded in the minutes of the next Board meeting to ensure its authenticity.



Section 289 provides that no resolution shall be deemed to have been duly passed by circulation unless: (a) the resolution has been circulated in draft together with the necessary papers to all the

directors in India at their usual address, and (b) it has been approved by all or majority of them as are entitled to vote on the resolution. Specimen Board Resolutions passed in the meeting Section 316: Appointment of Managing Director or a person who is already Managing Director of another company-Board Resolution “Resolved that subject to the approval of the Central Government to Sub-section (4) of Section 316, Mr. X.Y.Z. who is already the Managing Director of two companies, namely M/s ABC Limited and M/s BCD Limited, be and is hereby appointed as Managing Director of the company for a period of five years commencing from 1st October, 2002, with the consent of all the Directors present at the meeting of which meeting and the resolution to be moved there at specific notice was given to all the directors then in India, on the terms and conditions in the draft agreement tabled before the meeting and initialled by the Chairman for purposes of identification and that Shri SPM, the Secretary of the company be and is hereby authorised to apply to the Central Government for seeking their approval. Resolved further that Shri LMD, Director and Shri SPM the Secretary of the company be and are hereby authorised to execute the said agreement subject to such modifications/alterations made by the Central Government while giving their approval and to affix the common seal of the company thereon.” Section 318: Compensation for loss of office – Board Resolution “WHEREAS Mr. NBS was employed for a period of three years the Managing Director of the company from……………….. 20….. and Whereas the company wanted to dispense with the series of the said Managing Director, and WHEREAS the company has duly served notice to the said Managing Director in terms of clause……… of the agreement between the company and the said Mr. NBS governing his terms and condition as the Managing Director’ of the company, in term of clause……… of the agreement between the company and the said Mr. NBS, NOW THEREFORE IT IS HERE BY RESOLVED that an amount of `…………., be paid to Mr. NBS as compensation for the loss of his office the Managing Director of the company.” Section 372A: Purchase of shares etc., of other companies – Board Resolution “Resolved that pursuant to Section 372A of the Companies Act, 1956, the company do purchase 3,50,000 equity shares of ` 10 each to M/s MPC & Company Limited (not being under the same management as this company) and that the resolution be passed by all the directors present unanimously. Resolved further that Mr……………….., a Director of the company, be and is hereby authorised to sign/ execute the necessary documents in this connection.” Regulation 31 of Table A of Schedule I: Forfeiture of shares – Notice of default pursuant to articles – Board resolution



Resolved that pursuant to article…….. of the Company’s articles the undermentioned shares in the capital of the Company be and are hereby, forfeited for non-payment of the final call of `………… per share payable on or before………… 19….. due notice of which had been served upon the defaulting shareholders on…………… 19…..

Shares Nos. Registered holders

……………………………….... ……………….………………... ……………….…………… ……………………………….... ……………….………………... ……………….…………… ……………………………….... ……………….………………... ……………….……………

Specimen Board Resolution – Passed by Circulation ………………..Ltd.

To Mr………………., Director ……………….…………… (Address in India only). Dear Sir, The following resolution, which is intended to be passed as a resolution by circulation as provided in Section 289 of the Companies Act, 1956, is circulated herewith as per the provisions of the said section. If only you are Not Interested in the resolution, you may please indicate by appending your signature in the space provided beneath the resolution appearing herein below as a separate perforated slip if you are in favour or against the said resolution. The perforated slip may please be returned if and when signed within……………….. days of this letter. However, it need not be returned if you are interested in the resolution. Yours faithfully, (Secretary)

………………..Ltd. Resolution by circulation passed by the directors as per

circulation effected………… 19….. Resolved that………………..………………..………………..………………..………………..………………..

[Set out the resolution intended to passed] *For/Against Signature *Strike off whichever is inapplicable.



Minutes The minute in a literal sense means a note to preserve the memory of anything. The minutes of a meeting are a written record of the business transacted, decisions and resolutions arrived at the meeting. Section 193 of the Act imposes a statutory obligation on every company to cause minutes of all proceedings of general meetings, board meetings and meetings of the committee of the board to be recorded. Section 194 of the Companies Act provides that minutes of meeting kept in accordance with the provisions of Section 193 shall be evidence of the proceedings recorded therein. This proceedings recorded therein. This provision does not mean that minutes are conclusive evidence of proceeding and can not be questioned but it means that they will be accepted as evidence in any legal proceedings. The statutory requirements relating to keeping of the minutes of meeting are: (1) There shall be separate minute books for Board, Committee and General meetings. (2) The pages of the minute books must be consecutively numbered. (3) The entries in the minute book must be made within 30 days of every meeting. (4) Each page shall be initialled or signed and the last page of the record of each meeting

shall be dated and signed. (5) For Board or committee meetings, the chairman of the same or the next succeeding

meeting shall sign the minutes and for general meetings, the chairman of the same meeting must sign within 30 days of the meeting.

(6) Minutes of a meeting in no case be attached to the book by pasting or otherwise. Minutes of Board meeting may be recorded in a loose-leaf binder or in a bound book.

Pages of the loose-leaf minute book must be serially numbered and duly typed and the loose leaves should be bound at reasonable intervals not exceeding six months. If minutes are maintained on loose-leaf binders appropriate safeguards against interpolation of the leaves in the books should be taken.

(7) In the case of minutes of Board meetings, besides the names of those present, the names of directors who refrained from voting on matters in which they were interested, should also be given.

Apart from these general considerations, Section 193 provides that: (a) the minutes of each meeting must contain a fair and correct summary of the proceedings; (b) all appointments of officers made at the meeting must be included in the minutes; (c) in the case of a meeting of the board of directors or a committee thereof, the minutes

must also state: (i) the names of the directors present at the meeting; and (ii) in the case of a resolution passed at the meeting, the names of those directors who

did not concur in the resolution. It is also provided that certain details will not be included in the minutes if, in the opinion of the



chairman of the meeting, any of them: (a) is, or could reasonably be regarded as, defamatory of any person; or (b) is irrelevant or immaterial to the proceedings; or (c) is detrimental to the interests of the company. Drafting of minutes: The minutes may be drafted in a tabular form or they may be drafted in the form of a series of paragraphs, numbered consecutively and with relevant headings. However, all minutes whether of general meetings, or board meetings, should contain the following particulars: Particulars of the Meeting (1) Name of the meeting. (2) Place, date and time of meeting. (3) How the meeting was constituted: Constitution of the Meeting - Present (a) name of person in the Chair. (b) names of directors and Secretary. (c) names of persons in attendance……. Solicitor,……….auditor (in a board meeting). (d) together with number of members (in general meeting). Contents of minutes (4) Serial number of the minute. (5) Brief subject heading or index of each minute. (6) Full terms of resolutions adopted. (7) All statistical figures, amounts, dates, rate of interest, disti. Nos. of Shares, etc. (8) Specific business upon which decisions were taken. (9) All appointments of officers, salaries, etc. (10) Financial and contractual transactions considered by the meeting. (11) In the case of special resolution number of votes for and against. (12) Objections and protests raised by members together with the Chairman’s rulings when

members insist on their recording in the minutes, e.g., Mr. A objected to the proposed motion on the ground that it was ultra vires, the Chairman ruled that the motion was in order.

(13) Names of directors dissenting or not concurring with any resolution passed at a Board Meeting.

(14) Reference about interested directors abstaining from voting is necessary. (15) The Chairman’s signature and date of verification of minutes as correct.



Specimen Minutes Minutes of……………….. meeting of the Board of Directors of ABC Limited, Kanpur

held on……………….. the……………….. 2002, at New Delhi Present: 1. ……………….. Chairman 2. ……………….. Director 3. ……………….. Director In attendance Secretary Item No. 1: Leave of absence: Leave of absence was granted to Saravashri……………….. directors. Item No. 2: Confirmation of minutes of the……………….. Board meeting: The minutes of the……………….. meeting of the Board of Directors held on……………….. were considered and confirmed. Item No. 3: Appointment of Managing Director: The Board noted the appointment of Shri……………….. director of the company as the Managing Director of the company. In this connection, the following resolutions were passed: “Resolved that Shri……………….. who fulfils the conditions specified in Parts I and II of Schedule XIII to the Companies Act, 1956, be and is here by appointed as the Managing Director of the company for a period of five years effective from……………….. and that he may be paid remuneration by way of salary, commission and perquisites in accordance with Part II of Schedule XIII of the Act. RESOLVED FURTHER that in the event of loss or inadequacy of profit the salary payable to him shall be subject to a cut of 10%. Resolved further that the Secretary of the company be and is hereby directed to file the necessary returns with the Registrar of Companies and to all acts and things as may be necessary in this connection.” Item No. 4: Statement of lieu of prospectus: Secretary informed the Board that pursuant to the provisions of Section 70 of the Companies Act, 1956, the company has to file a statement in lieu of prospectus with the Registrar of Companies so that the company may allot shares to the collaborators. The draft of statement in lieu of prospectus placed before the meeting was perused and approved by the Board. The following resolutions were passed: “Resolved that the draft of the statement in lieu of prospectus placed before the Board and duly initialled by the Chairman for purpose of identification be and is hereby approved. Resolved further that the Secretary of the company be and is hereby authorised to file the statement in lieu of prospectus duly signed by the Directors with the Registrar of companies.”



Item No. 5: Approval of the Statutory Report: The Board was informed that the Statutory Meeting under Section 165 of the Companies Act, 1956, has to be held within six months from the date the company was entitled to commence business. The draft of the Statutory Report placed before the Board was approved. In this connection the following resolution were passed: Resolved that subject to the approval of the shareholders pursuant to the provisions of Section 165 of the Companies Act, 1956, the draft of the Statutory Report placed before the Board and duly initialled by the Chairman for the purposes of identification be and is hereby approved. Resolved further that the Statutory Report be certified as correct on behalf of the Board by Shri……………….. Managing Director and Shri……………….. Director of the company for submission to the company’s Auditors for their report thereon. “Resolved further that the Statutory Meeting of the share holders of the company be convened on……………….. at………………….. the registered office of the company on…………………………….. the……………….. at……… hours. Resolved further that the Secretary of the company be and is hereby authorised to issue notice calling the Statutory Meeting of the shareholders of the company and circulate the Statutory Report along with the notice of the meeting to all the shareholders of the company and deliver a certified copy of the Statutory Report to the Registrar of Companies forthwith after sending copies thereof to the shareholders of other company for registration.” Item No. 6: Opening of a Branch Office: The Board was informed that for sale of the company’s products, it was suitable site for setting up the company’s plant, measuring 5000 sq. mt. Near Gurgaon. The owner of the land is willing to sell the same to the company at a total price of ` 10 lakhs. The site plan of the said plot of land placed before the Board was perused by the Board. The matter was considered by the Board and the following resolution was passed in this connection: “Resolved that Shri SPM, Director of the company be and is hereby authorised to finalise the deal with the owner of the land a total value of ` 10 lakhs and arrange registration and mutation of the title to such land in favour of the company.” Item No. 7: Next Board Meeting: The next meeting of the Board will be held on……………….. the……………….. 19…… at the registered office of the company. The meeting ended with a vote of thanks to the chair. Procedures Main task of a company secretary is to ensure that for doing any business company fulfils requirements of Companies Act and the rules thereunder and of any other relevant law in force so that the validity of the business transacted cannot be objected. On this line procedures for some important businesses to be untaken by a company are discussed hereunder:



Extension of Financial Year This can be done by a company in order to make its financial year end with its holding or subsidiary company under Section 213(1) or by any other company (irrespective of whether the company is a holding company or subsidiary or not) under Section 210(4). The procedure to be followed by the company in this regard is as follows: (1) Call a Board meeting of the company and at the meeting adopt a new financial year and

approve preparation of next accounts for the new period which may be more or less than a year.

(2) Make an application to the concerned Registrar of companies on plain paper giving full details.

(3) Attach an application to the concerned Registrar of companies on plain paper giving full details. (a) A certified true copy of the last balance sheet and profit and loss account of the

company and its subsidiary or holding company. (b) A certified true copy of the Memorandum and Articles of Association of the company

and its subsidiary or holding company. (c) A certified true copy of the resolution passed by the Board of Directors.

(4) Obtain the permission of the concerned Registrar of Companies. (5) Obtain, if necessary, the approval of the concerned Registrar of companies to the

extension of time for holding the Annual General Meeting beyond fifteen months. Step to be taken to make loans to other body corporates The Board’s power to make loans is governed by Section 292. 1. Verify that the Memorandum of Association contains the power to lend the funds to the

Company. If not, then amend it accordingly. 2. If the loan is to be given to bodies corporate under the same management under Section

370, then get the approval of the General meeting by special resolution. 3. If the aggregate of loans given to all bodies corporate, whether under the same

management or not, exceeds 30% of the aggregate of the subscribed capital of lending company and its free reserves, obtain prior approval of the Central Govt.

4. If a special resolution is passed for making the loan, then file it alongwith explanatory statement in Form No. 23 with the Registrar within 30 days of its passing alongwith prescribed fee.

5. If approval of the Central Govt. is required for loan, then: (a) make an application to the Central Govt. in Form No. 34AA. (b) Alongwith the application, the following documents should be furnished:

(i) A certified true copy of the special resolution. (ii) A certified true copy of the Board’s resolution.



(iii) A certified true copy of each of the Memorandum and Articles of Association of the lending company and the borrowing company.

(iv) Certified true copies of annual reports and annual accounts of both the lending and the borrowing company for the last three financial years.

(v) A receipt evidencing the payment of prescribed fee. 6. Forward three copies of the notice of General meeting in which said special resolution is

passed and a copy of the proceedings of the same to the concerned stock exchange. 7. For giving loans in other cases, place the proposal in the Board meeting, get it approved

by passing a resolution in the meeting. 8. Deliver simultaneously a copy of the application made to the Central Govt. alongwith

copy of each of the documents annexed to it. 9. Maintain a register to record particulars of every loan, guarantee or security within 3 days

of the making of such loan, giving of such guarantee or the provision of such security. Steps to be taken to borrow funds 1. Convene the Board meeting and place the proposal in it and get it approved by way of

resolution passed in the meeting. 2. If such borrowing exceeds the paid-up share capital and free reserves of the borrowing

company, then get it approved in the General meeting. [Section 293(1)(d)] 3. File the above resolution in Form No. 23 within 30 days of its passing with the Registrar

alongwith the requisite fee. [Section 192(4)(ee)(i)] 4. Forward three copies of notice and a copy of the proceedings of the General meeting to

the concerned stock exchange. 5. In case of a public company, check up whether the provisions of Sub-sections (4) to

(7) of Section 81 are applicable. It so, comply with them. Procedure to make investments in shares of other companies 1. See whether the investments in shares are to be made by the following:

(a) a private company, unless it is a subsidiary of a public company; (b) any banking or insurance company; (c) any company established with the object of financing whether by way of making

loans or advances to, or subscribing to the capital or, private industrial enterprises in India in any case where the Central Government has made or agreed to make to the company a special advance for the purpose or has guaranteed or agreed to guarantee the payment of moneys borrowed by the company from any institution outside India.

(d) by a holding company to its subsidiary other than a subsidiary within the meaning of clause (a) of Sub-section (1) of Section 4. [Section 372(14)(e)];

(e) any company in rights shares offered under Section 81(1) [Proviso to Section 372(4)].



2. Convene a Board meeting after giving notice to all the directors of the company as per Section 286 and place the proposal in a Board meeting and get it approved by passing a resolution. This power may also be delegated to others in accordance with Section 292.

3. In cases other than those mentioned in item 1 above, where the investment in shares is within (a) thirty per cent of the subscribed equity share capital of the company or (b) thirty percent of the aggregate of the paid-up equity and preference capital of the other company; (c) thirty percent of the aggregate of the subscribed capital and free reserves of your company together with all other investments already made; or (d) within thirty percent of the aggregate of the subscribed capital and free reserves of your company in respect of the investments both in shares and debentures in companies in the same group together with all such other investments already made (not applicable to an investment company)/then do the following: (i) Convene a Board meeting after giving notice to all the directors of the company as

per Section 286 by giving specific notice of the meeting and the resolution to be proposed in this regard in writing to every director in India and at his usual address in India to every other director;

(ii) Pass the resolution with the consent of all the directors present at the meeting and entitled to vote [Sections 372(2) & (5)] after paying requisite filing fee as prescribed under Schedule X of the Companies Act, 1956.

4. Where investments are made by a company together with its one or more subsidiary companies, the percentage specified in (a) and (b) of item 3 should be computed with reference to the aggregate of the investments made by the company and its subsidiaries.

5. In case other than those mentioned in items 1 and 3 above, where the investments in shares exceed the limits specified in item 3 above: (i) Convene a Board meeting after giving notice to all the directors of the company as

per Section 286 to approve the investment and to fix up date, place and agenda for a General meeting to pass an ordinary resolution there at in this regard, subject to approval of the Central Government [Section 372(4)].

(ii) Issue notice at least twenty-one days before the date of the general meeting proposing the ordinary resolution with suitable explanatory statement [Section 17(1) read with Section 173(2)];

(iii) Hold the General meeting and pass the resolution; (iv) Apply to the Central Government in Form No. 34B and enclose thereto the

following: (a) A copy of the resolution passed by the company in General meeting together

with a copy of the resolution of the Board approving the investments; (b) A copy of the memorandum and articles of association of the company and of

the other body corporate; (c) Copies of balance sheets of both of the company and the other body corporate



for the last three financial years; (d) A copy of balance sheets of both of the company and the other body corporate

for the last three financial years; (e) Receipt of treasury challan or demand draft evidencing payment of the

requisite fees. 6. Deliver simultaneously a copy of application and other documents mentioned in item 5

(iv) to the concerned ROC. 7. Forward to the concerned Stock Exchange, 3 copies of the notice and a copy of the

proceedings of the General meeting mentioned in item 5. 8. On receipt of the approval from the Central Government, make necessary investment. Procedure for entering into contract with interested parties As the paid-up share capital of the company is more than ` 1 crore, it is necessary to get prior approval of the Central Government under proviso to Section 297(1), besides complying with the other provisions of Sections 297, 299, 300 and 301 of the Companies Act, 1956. Further: 1. Hold a Board meeting and place the terms of the contract for consideration. The interested

director(s) must disclose the nature of their interest as required under Section 299. 2. Make an application to the Central Government in Form No. 24A and attach the following

documents with the application: (i) Certified copy of the Board resolution approving the contract. (ii) Certified copy of the agreement containing particulars of the contract. (iii) Challan for payment of prescribed fees.

3. If the contract entered into is for cash purchase on prevailing market price or the private company with whom the contract is entered into regularly deals with such raw materials, then no consent of the Board or the Central Government will be necessary provided that the value of such transaction does not exceed ` 5,000 in aggregate in any year comprising the period of contract or contracts [Section 297(2)].

4. It may be noted that the consent of the Board under Section 297(1) must be accorded only by a resolution passed at the meeting of the Board and not otherwise [Section 297(4)].

5. It must also be ensured that the interested director do not take part in discussion and vote in respect of the contract in which he is interested (Section 300). Such an interested or concerned director will not also be counted in quorum (Section 303).

6. The particulars of the contract must be entered in the register maintained under Section 301 of the Companies Act, 1956.


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