To help businesses maintain and understand the value of minutes under the 2013 Companies Act, the Institute of Company Secretaries of India (ICSI) has released secretarial guidelines. By outlining best practices for keeping precise and thorough minutes of meetings, these guidelines seek to encourage effective corporate governance. Every business is required to keep minutes of all general meetings, committee meetings and board meetings under the 2013 Companies Act
Minutes are official records of a particular meeting or court hearing in a business. They may also be known as procedures. These minutes serve as a written record of all significant business meetings. Minutes are a concise summary of all the events and people present at the meeting. In most cases, the company secretary is in charge of keeping the minutes organized. In this article, the provisions of Section 118 of the Companies Act, 2013 (the Act 2013 or new Act) pertaining to minutes of meetings of members, boards of directors, and creditors are examined
What are the Minutes of Meeting?
Section 118 of the Companies Act of 2013 addresses the Minutes of Company Meetings. The term ‘Minutes’ refers to the formal record of a company’s meetings. The following is a summary of the meeting’s business, decisions, and resolutions. Minutes are more like a summary than a story. Simply said, minutes are a legal document that includes a record of the meeting’s events. It is all about keeping an orderly record of business transactions, choices taken, and resolutions reached at a company’s junction.
Importance of meeting minutes
Meeting minutes are essential for documenting meeting specifics such as what was talked about, discussed, reports that were examined, planned Actions, and future meeting topics. These particulars enable individuals who were there to recollect key information and plan for future meetings. Those who were unable to attend the meeting might read the meeting minutes to learn about the current state of the team or company-wide goals. Meeting minutes are also important for measuring corporate development.
Explanation of Section 118 of Companies Act, 2013
Every company must ensure that the minutes of every general meeting of any class of shareholders or creditors, as well as every resolution passed by the postal ballot and every meeting of the board of directors or committee of the board, are prepared, signed, and kept in books kept for that purpose with their signatures within thirty days of the conclusion of each such meeting concerned.
According to Section 118 of Companies Act, 2013 and the correspondingly formed rules, the criteria listed below.
- Within 30 days of the meeting date, minutes of every general meeting of any class of shareholders or creditors, every board meeting, and every committee meeting should be recorded in minute books that are kept individually for each class of meetings. [Sub Clause (1) of Section 118 of Companies Act]
- Each meeting’s minutes must include an accurate and fair description of the proceedings. [Sub Clause (2) of Section 118 of Companies Act]
- In the case of decisions passed by postal ballot, information such as the proposed resolution, a brief report on the postal ballot, a summary of the scrutinizer’s report, and the outcome must be entered within 30 days of each such meeting in the minutes of the book of members, as if they had been approved in the general meeting.
- Minutes ought to be numbered sequentially on each page. Each page of the minutes must be initialed or signed, and the last page of each proceeding’s minutes must be signed and dated. This is done as follows:
- In the case of the minutes of a general meeting, by the meeting’s chairman, or in the event of a director’s death or incapacity, by any other director designated by the board for the purpose at hand.
- In a situation where there is no chairman or the chairman is unable to Act, any authorized director may vote in favour of any resolution approved through postal ballot by the board chairman.
- When producing board or committee minutes, it is important to include all major managerial appointments as well as the names of the directors who were present at the meeting and those who dissented. [Sub Clause (3) and (4) of Section 118 of Companies Act]
- The Chairman has the authority to determine, in his sole discretion, whether any Section of the minutes should be deleted from the record where, in his judgment, the portion is not in the best interests of the company, is libelous of a third party, or is not pertinent to the proceedings. [Sub Clause (5) of Section 118 of Companies Act]
- Absolute discretion is to be exercised by the chairman in the matter of inclusion or exclusion of the matters on the grounds mentioned in Sub-Section (5). [Sub Clause (6) of Section 118 of Companies Act]
- Unless proven otherwise, minutes maintained in compliance with Section 118’s provisions are conclusive proof that1:
- Meetings are convened; the proceedings are accurately documented; and the resolution adopted by postal ballot is valid.
- Key managerial appointments, auditor appointments, and company secretary appointments are legitimate in practice.
- Every company must adhere to the ICSI’s and the central governments established secretarial standards for general and board meetings. However, this rule does not apply to selected IFSC private or specified IFSC public companies.
Penalties of Section 118 of Companies Act, 2013
According to the new Act, if the company fails to comply with the terms of Section 118 of Companies Act, 2013 the company would be fined Rs.25,000 and each official who fails to comply will be fined Rs.5,000. Furthermore, anybody found liable of tampering with the recorded minutes of a meeting is penalized by imprisonment for a time may extending till two years and a fine not less than Rs.25,000 but can exceed till one lakh rupees.
Rule 25 of the Companies Management and Administration Rules, 2014
Rule 25 of the Companies Rules stipulates that minutes of all proceedings after meetings must be documented and kept in writing. The stated Rule improves on the provision contemplated by Section 118 of the Companies Act, 2013, and defines the terms and conditions applicable to the recording of Meeting Minutes. The formal terminology given above can be summarized as follows:
- Period of Recording: Within thirty days after the completion of the meeting, the minutes of the relevant meeting must be documented in a book kept exclusively for that purpose.
- Resolution Report Summary: A concise report of the reviewer’s summary of the report should be provided when a resolution passes by postal ballot, with the date of passage affixed to it. The goal of retaining a summary report on resolution is to record the problems, considerations, and choices of the involved parties for future reference.
- Meeting Location: Such meetings of the firm should be held provisionally in the registered office or, as an exception, at any other location determined by the board. The location of the meetings is significant in terms of keeping track of the company’s official operations and keeping the books of minutes from meetings safe.
- Custody of record: The requirements additionally specify a place of custody under the authority wherein the minute books are to be maintained, in addition to the venue. The Company Secretary or another authorized director as duly determined by the relevant board shall have custody of the property.
In conclusion the minutes of the meeting are not just a legal formality required to be done by the companies, but it Acts as a legal record that will ensure that all the accountability and transparency is maintained by the company in context of corporate governance. Minutes are the crucial documents of the company’s meeting, resolutions taken and decisions made. A clear guideline for the maintaining the accuracy, transparency, timeliness and recording of minutes is laid down in the Section 118 of Companies Act. The minutes of the meeting are often considered legal evidence in certain legal matters, which are important for measuring the progress of the company. [ Sub Clause (7) of Section 118 of Companies Act] All the rules and regulations that are outlined in the Section 118 of Companies Act are to be followed for ensuring the compliance. These minutes are essential to the organization’s memory since they help participants remember critical information and make it easier to arrange future meetings. Additionally, they give absent team members a way to keep updated on business developments. The importance is given to maintain complete and fair records as the non compliance can result into penalties. Meeting minutes play an essential role in the decision making of the company and ensure that all decisions taken are without any prejudice and are committed to transparency and accountability.
Frequently Asked Questions
The Section 118 talks about the formal way of maintain the minutes of the meeting and the process to follow that same in general meeting, committee meetings and board meeting.
If the company fails to comply with the terms of Section 118 of Companies Act, 2013 the company would be fined Rs.25, 000 and each official who fails to comply will be fined Rs.5,000.
The notes that are taken during a meeting are called meeting minutes. They highlight the important topics being addressed, the motions being made or voted on, and the upcoming tasks.
A general meeting may be convened (or “initiated”) by the corporate directors or by the shareholders of the firm. Depending on how a general meeting is called, the type of corporation calling it, and whether the meeting is an annual or special one, various amounts of notice must be given.
Mostly the company secretary (CS) is the person responsible for maintain and recording the minutes of the meeting.
Minutes are essential because they give the information about the specifics of the meeting, reports, planned actions, future meeting topics, important decisions taken etc. This helps in accountability and transparency.
Fair and accurate descriptions of the meetings, information of the directors, any major appointments if taken place, names of directors attending the meeting etc is included in the meeting minutes.
Read Our Article: Section 161: Appointment Of Additional Director