Board members, better watch out. Next time, you are absent from a board meeting, it may be out there in the annual report of your company.
To ensure consistency in corporate practices, the Institute of Company Secretaries of India (ICSI) in its first secretarial standard (SS-1) on board of director meetings, has said the annual report of a company should disclose the number of board and committee meetings held during the year, indicating the number of meetings attended by each director.
The standard issued by the secretarial standards board (SSB) of the institute is for the time being only recommendatory in nature. However, ICSI will be requesting the government and other authorities to enforce these standards and make them mandatory in due course.
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As per the standard, the board resolutions can now be passed by circulation with the necessary information routed even via e-mails. This is, of course, in addition to the existing practice of circulating draft resolutions by hand, post or fax.
The first standard on board meetings, which has come into effect from December 13, 2001 but announced by ICSI today, dwells on the necessary notice period, frequency, quorum, attendance, accounts and recording of minutes for a board meeting.
The institute has said that companies should issue notices for a board meeting at least 15 days in advance, with the agenda to be circulated a week before the date of the meeting. Any additional item can be included only after the consent of a majority of directors present in the meeting.
The SSB has further said that a board should meet at least once every three months, with a maximum interval of 120 days between any two meetings. Also, for any business to be transacted, at least one-third of the directors should be present.
The SSB also said that the annual accounts of a company cannot be approved through a simple resolution by the directors but needs to be approved at a board meeting. Quarterly and half-yearly results also need to be passed in a similar manner.
ICSI has also prescribed that the draft minutes of a board meeting should be circulated to all directors within a week, with their comments to be forwarded in the next fortnight. The final minutes should be entered in the minutes book within a month of the board meeting.