SECRETARIAL STANDARDS

Introduction:
The Institute of Company secretaries of India has become the pioneer institute in the world by issuing the Secretarial Standards. Till now, ICSI has issued a number of Secretarial Standards.

Importance of Secretarial Standards:

Companies follow diverse practices and hence there is a need to integrate, harmonize and standardize such practices. Such practices are important to promote uniformity and consistency. Secretarial standards also fill in the gaps between laws i.e., they provide adequate provisions for certain aspects where some law is required but our existing laws are silent.

Secretarial Standard Board:

The Secretarial Standards are developed and formulated by the Secretarial Standard Board. This Board comprises of:

Eminent members of ICSI Representatives of : -ICAI and ICWAI -MCA -SEBI -Stock Exchanges

-Industry association, CII, ASSOCHAM and FICCI. The main functions of SSB are: (i)Formulating Secretarial Standards; (ii)Clarifying issues arising out of the Secretarial Standards; (iii)Issuing Guidance Notes; and (iv)Reviewing and updating the Secretarial Standards / Guidance Notes at periodic intervals.

Procedure for issuing secretarial standards:

The following procedure shall be adopted for formulating and issuing Secretarial Standards: 1.Firstly areas where secretarial standards are needed are determined by the SSB. 2.SSB constitutes Working Groups to formulate preliminary drafts of the proposed Standards. 3.The draft then prepared by the working groups is circulated within the members for modification of the draft on the basis of discussions and suggestions. 4.The modified draft is then circulated to the members of various bodies to ascertain their view. These bodies include: -the Central Council -Chairmen of Regional Councils/ Chapters of ICSI -various professional bodies -Chambers of Commerce

-Regulatory authorities such as the Department of Company Affairs, the Department of Economic Affairs, SEBI, RBI, and Department of Public Enterprises and to such other bodies/organizations as may be decided by SSB. 5.A time frame is given to these bodies to give their views, comments and suggestions. A meeting of SSB with the representatives of such bodies / organizations may then be held, if considered necessary. 6.An exposure draft will be prepared and published in the Chartered Secretary and ICSI website to elicit comments from members and public at large. 7.After taking into consideration the comments received the draft of proposed Secretarial Standard will be finalised by SSB and will be submitted to the Council. 8.The Council will then finalize the standard in consultation with SSB and then issue the standard.

Secretarial Standards issued so far:

1.Secretarial Standard 1- Secretarial standard on meetings of the Board. 2.Secretarial Standard 2- Secretarial Standard on General meeting. 3.Secretarial Standard 3- Secretarial Standard on Dividend. 4.Secretarial Standard 4 - Secretarial Standard on Registers and Records. 5.Secretarial Standard 6- Secretarial Standard on Transmission. 6.Secretarial Standard 7- Secretarial Standard on Passing of resolution by circulation. 7.Secretarial Standard 8- Secretarial Standard on Affixing of common seal. 8.Secretarial Standard 9- Secretarial Standard on Forfeiture of shares. 9.Secretarial Standard 10- Secretarial Standard on Boards report.

Secretarial Standard 1[Board Meeting]:-

This Standard seeks to prescribe a set of principles for the convening and conduct of Meetings of the Board of Directors and matters related thereto. These principles relates to frequency of the meetings, quorum, attendance, resolutions, recordings and preservation of minutes. 1)Authority: - Unless the Articles provide otherwise, any Director of a company may, and the Manager or Secretary on the requisition of a Director should, at any time, summon a Meeting of the Board. 2)Notice of the Meeting: -Notice in writing of every Meeting should be given to every Director by hand or by post or by fax or by e-mail or by any other electronic mode. Where a Director specifies a particular mode, the Notice should be given to him by such mode. -Unless the articles prescribe a longer notice period, Notice should be given at least fifteen days before the date of the Meeting. -The Notice should specify the day, date, time and full address of the venue of the Meeting.

-Notice need not be given of an adjourned meeting other than a Meeting that has been adjourned sine die. However, notice of reconvened adjourned Meeting to a Director who did not attend the meeting, which had been adjourned. -No business shall be transacted at the meeting if Notice in accordance with this Standard has not been given. -The Agenda, setting out the business to be transacted at the Meeting, and Notes on Agenda should be given at least seven days before the date of the Meeting. -Notice, Agenda and Notes on Agenda should be given to all Directors or to all Members of the Committee, as the case may be, at the address provided by them, whether in India or in abroad. -Notice, agenda, and Notes on Agenda should also be given to the original Director, even when the notice, agenda, notes on agenda has been given to the alternate Director.

-Any supplementary item not originally included in the Agenda may be taken up for consideration with the permission of the Chairman and with the consent of the majority of the Directors present in the Meeting. However, no supplementary item, which is of significance or is in nature of unpublished price sensitive information, should be taken up by the board without prior Notice. 3)Frequency of Meetings: - The Board should meet at least once in every three months, with a maximum interval of 120 days between two meetings such that at least four meetings are held in each year. 4)Quorum: - Quorum should be present throughout the Meeting. No business should be transacted when the Quorum is not so present. The Quorum for a Meeting of the Board should be onethird of the total strength of the Board or two Directors, whichever is higher. However, if the Articles require more number of Directors to be present at the meeting then the Meeting should

be in conformity with that. If the number of Interested Directors exceeds or is equal to two thirds of the total strength, the remaining Directors present at the Meeting, being not less than two, should be the quorum during such time. 5)Chairman of the Board: - Chairman will be elected by the members of the Meeting. The Chairman should then conduct the proceedings of the Meeting. 6)Passing of Resolution by Circulation: - The resolution shall be deemed to have been passed on the date on which it is signed and dated as approved by all the Directors then in India, being not less than the quorum, or on the date on which it is approved by the majority of the Directors entitled to vote on the resolution, whichever is earlier.

7)Accounts: - The annual accounts of a company and unaudited quarterly financial results should be approved at a Meeting of the Board and should not be approved by means of a resolution passed by circulation. 8)Minutes :-Within fifteen days from the date of the Meeting of the Board or Committee or of an adjourned Meeting, the draft Minutes should be circulated to all the members of the Board or the Committee, as the case may be, for their comments. -Within seven days from the date of the Meeting of the Board or Committee or of adjourned Meeting the Directors should forward their comments on the draft Minutes. -The date of entering the Minutes should be specified in the Minutes Book by a Director or the Secretary. -Minutes, if maintained in loose-leaf form, should be bound at intervals coinciding with the financial year of the company.

9)Preservation of Minutes:-The Minutes of the Meetings should be preserved permanently.

-Where, under a scheme of arrangement, a company has been merged or amalgamated with any other company, the Minutes of all Meetings of the Board and Committees of the transferor company should be preserved permanently by the transferee company, notwithstanding the fact that the identity of the transferor company may not survive such arrangements.

Secretarial Standard 2 [General Meeting]:-

This Standard lays down principles which are to be confirmed by the companies when conducting General Meetings and matters related thereto. Every company is required to hold, every year, a Meeting of its Members called the Annual General Meeting The business to be transacted at an Annual General Meeting may consist of items of ordinary business as well as special business. The items of ordinary business specifically required to be transacted at an Annual General Meeting should not be transacted at any other General Meeting. 1)Authority: - The Board of its own accord or on the requisition of Members should, either at a Meeting of the Board or by passing a resolution by circulation, convene or authorize the convening of a General Meeting. 2)Notice :-Notice should also be given to the Directors, practicing Company secretary who has issued the compliance certificate and Debenture Trustee if any. -Notice and accompanying documents should be sent at least twenty-five days in advance of the Meeting. -Where the Notice also is to be published in a newspaper, it should appear at leasttwenty-one days before the date of the Meeting and such Notice need not be accompanied by an explanatory statement. -Notice and accompanying documents may be given at a shorter period of time if consent in writing of 95% of members entitled to attend and vote is given.

-Notice is required to be served at the foreign address of the shareholders in the usual course. -Every general meeting should be called on a day which is not a public holiday. -Every general meeting shall be called at a time during business hours. -Every General Meeting shall be held either at the registered office of the company or at any other place within the city, town, or village in which the registered office of the company is situated. -Any amendment to the Notice, including the addition of any item of business , can be issued provided the Notice of amendment is sent within the time limit prescribed for giving of the original notice. 3)Quorum:- The quorum requirement of-Five members in case of public company will be fulfilled where a person acting as an authorized representative of five bodies corporate is present in the meeting along with at least one member who is present personally. -Two members in the case of private company will be fulfilled where a person acting as authorized representatives of two bodies corporate is present in meeting along with at least one member personally present. 4)Who is eligible to attend:-Directors -Chairman of Audit committee -Auditors -Practicing Company Secretary(who has given compliance certificate) 5)Chairman:-

-Where the Articles so provide, the Chairman of the Board should take the chair and conduct the Meeting. -If there is nothing provided in the articles then members of the Board will elect one amongst them. -The Chairman should not propose any resolution in which he is deemed to be concerned or interested nor should he participate in the discussion or vote on any such resolution. 6)Voting:-Every Resolution should be proposed by a Member and seconded by another member. -Every Resolution should, in the first instance, be put to vote on a show of hands. -Resolution may be done by poll if poll is demanded. -Poll has to also be recorded by the Chairman. -Chairman will have a casting vote if Articles provide.

7)Proxy:-In addition to the member appointing the proxy the proxy holders should also sign the instrument of proxy. -A Proxy Form, which is undated but otherwise complete in all respects and lodges within the prescribed time period, shall be considered as a valid proxy. -A member who has not appointed a proxy to attend and vote on hid behalf at a meeting may appoint a proxy for any adjournment of such meeting, provided it is filled within the prescribed time limit. 8)Distribution of Gifts: - No gifts, gift coupons, or cash in lieu of gifts should be distributed to members at any general meeting. 9)Minutes:-

-Minutes should contain a summary of the proceedings of the Meeting, recorded fairly correctly, completely and should be written in third person and past tense. -In case Meeting is adjourned, minutes should be prepared in respect of original meeting as well as adjourned meeting within 30 days from the date of respective meeting.

-Minutes once entered in the Minutes Book should not be altered. However, minor errors may be corrected and initiated by the Chairman even after the minutes have been signed. 10)Preservation of Minutes :-The Minutes of all Meeting should be preserved permanently. -Office copies of Notices and supporting papers relating to the Notice should be preserved in good order for as long as they remain current or for ten years, whichever is later, and may be destroyed thereafter, on the authority of the Board. - Where, under a scheme of arrangement, a company has been merged or amalgamated with any other company, the Minutes of all Meetings of the Board and Committees of the transferor company should be preserved permanently by the transferee company, notwithstanding the fact that the identity of the transferor company may not survive such arrangements.

Secretarial Standard 3 [Dividend]:The principles enunciated in this Standard for Dividend relate to Dividend under the Act. Such as declaration and payment of Dividend, revocation of dividend, preservation of dividend warrants, and maintenance of dividend registers, disclosure requirements and matters related thereto.

1)While the Companies Act specifies the minimum rates of depreciation companies may provide higher depreciation based on a technological evaluation of the life of the asset. 2)In case accompany has incurred a loss in previous financial years, the amount of loss or an amount, which is equal to the amount, provided for depreciation for those previous financial years , whichever is less, shall be set off against the profits of the company for the year for which the dividend is paid. 3)Dividend should not be declared out of following: a)Securities Premium Account

b)Capital Redemption Reserve c)Amalgamation Reserve d)Profit on re-issue of forfeited shares e)Pre- incorporated profits 4)The Companies (Transfer of Profits to Reserve) Rules, 1975 only apply to equity dividend and to that portion of dividend relating to participating preference shares, which is in excess of the fixed rate of preference dividend. 5)While final dividend may be paid out of accumulated profit of the previous years, in case of loss or inadequate profits in the current year, interim dividend cannot be pain in this manner. 6)The recommendation of final dividend and the declaration of the interim dividend should be made by the Board of Directors(i.e. this power can not be delegated to the Committee of Directors) by means of passing a resolution at a Board Meeting only (Circular resolution will not suffice). 7)Where a company has issued redeemable preference shares but has failed to redeem them on the due date , no dividend should be declared on equity shares until such failure has been rectified. 8)Preference shares carry a preferential right as to dividend over the equity shares, however, in the case of interim dividend, while preference shareholders need not necessarily be paid dividend before interim dividend is paid to equity shareholders the Board of Directors should set aside such sum as would be necessary to pay fixed rate of dividend to the preference shareholders.

9)Arrears of dividend on cumulative preference shares should be paid before payment of any dividend on equity shares.

10)Before transferring any amount to the Investor Protection and Education Fund, the company should give individual intimation to the members, in respect of whose unclaimed dividend the amount is being transferred, at least 6 months before the due date of such transfer. 11)The Balance Sheet of the Company should disclose under the head Current Liabilities and Provisions the amount lying in the Unpaid Dividend Account together with the interest accrued thereon, if any. 12)The amounts lying in the Unpaid Dividend Account and the amounts transferred to the Investor Education and Protection Fund should be disclosed in the Directors Report.

Secretarial Standard 4 [Registers and Records]:-

A company is required to maintain various registers and records. This Secretarial Standard seeks to prescribe a set of principles in relation to such registers and records. Some of the registers and records are required to be kept open by a company for inspection by stakeholders. Government authorities have the right of access to all registers and records.Noncompliance with the provisions relating to maintenance, preservation and inspection of registers and records, to the extent they are statutory, creates punishable offences and leads to various penalties on the company, the directors and every officer in default. 1)Register of Investment in Securities not held in the name of the Company:-From the date of its registration a company has to maintain a register of investments in securities and enter therein the particulars of investments in securities made by the company on its own behalf but which are not held in its own name.

-The particulars shall include name of the company or body corporate in which investment is made, date of Board resolution, date of investment, kind and number of securities, purpose for making the investment, certificate number, distinctive number of securities, client ID number; cost of acquisition of, face value of securities, name of the person in whose name the investment is made, date of disposal, number of securities disposed of and sale consideration. -The register should be kept open for inspection by any member or debenture holder of the company without fee. Company may impose certain restrictions.

2)Register of Buy-Back of Securities:-Every company which buys back its shares or other specified securities should maintain a register of buy-back of such shares or other specified securities. -A separate register must be maintained for each buy- back. -The register should contain information relating to the date of Board or special resolution authorizing buy-back, quantum authorized to be bought back, date of completion of buyback, description of securities bought back and, in respect of each folio number/client ID number or certificate number of securities bought back, the date of buy-back; number of securities bought back; category to which they belong (preference/ equity/ employees stock option/ sweat equity, etc), name of last holder of securities; reference to entry in the register of members; mode of buy-back; nominal value of securities and consideration paid for buy- back, date of payment, date of cancellation of securities bought back, date of extinguishment and physical destruction of securities bought back. -The register should be maintained at the registered office of the company. 3)Register of Charges:-Every company should from the date of its registration maintain a register of charge created on the property of the company whether fixed or floating. -The register should contain the information in respect of each charge: serial number of the charge, date of creation of charge or the date of the resolution creating a series of debentures with description of instrument creating charge; date of completion of acquisition of properties subject to charge etc. -Such register must be maintained at the registered office of the company.

-Such register must be kept open for the inspection by members and debenture holders of the company. Entries in the register should be authenticated by the secretary of the company or by any other person authorized by the Board for the purpose.

-Instruments creating a charge should be preserved for a period of 8 years from the date of satisfaction of charge 4)Register and Index of members :-Every company from the date of its registration must keep a register of members.

-In such register all the information related to the shareholder must be mentioned such as name, fathers /husbands name, address (address of registered office in case the member is a body corporate) and occupation, name of guardian if shares are held by a minor and date of birth of minor, folio number, date on which the name of each person is entered in the register as a member; date on which any person ceased to be a member, allotment number or transfer number, number of shares allotted or transferred, date of allotment or transfer; nominal value of shares acquired, type of shares; number and date of issue of share certificate etc.

-Separate registers should be maintained for each class of equity and preference shares. -Every company having more than 50 members should keep an index of the names of the members of the company unless the register is in such form as in itself constitute index. -The register and index should be maintained at the registered office of the company unless, in a general meeting, a special resolution is passed to authorize the keeping of the register at any other place within the same city, town or village in which the registered office is situated.

-Members and debenture holders can inspect the register without any fee and any person with requisite fee. -This register should be preserved permanently. 5)Register and Index of Debenture Holders:-Every company which allots debentures must keep a register of debenture holders.

-The register should contain information relating to name, fathers /husbands name; address and occupation, if any, of each debenture holder; date of allotment, date of registration with the Registrar of Companies, the debentures held by each holder distinguishing each debenture by its number except where such debentures are held with a depository, distinctive number and certificate number of debentures, date on which any person ceased to be a debenture Holder, date of transfer of debentures.

-Every company having more than 50 debenture holders should also keep an index of the names of the debenture holders of the company unless the register is in such form as in itself constitutes an index. -The register and index should be maintained at the registered office of the company unless in a general meeting a special resolution is passed authorizing the keeping of the register at any other place within the same city, town or village in which the registered office is situated. -Where a company closes its register of debenture holders, it should give not less than 7 days previous notice by advertisement in an English newspaper or in a vernacular newspaper circulating in the district in which the registered office is situated. -The register and index should be preserved for a period of 15 years from the date of redemption of debentures.

6)Foreign Register of Members or Debenture Holders :-The foreign register of members or Debenture Holders resident outside India, if maintained, shall be deemed to be a part of the register of members or debenture holders of the company and should be maintained from the date of allotment of shares or debentures to foreigners, in an office located in the foreign country.

-Where a company closes its foreign register of members or debenture holders, it should give not less than 7 days previous notice by advertisement in a vernacular newspaper circulating in the district where the foreign register is kept. -The foreign register of debenture holders should be preserved for a period of 15 years from the date of redemption of debentures. 7)Register of Directors, Managing Director, Manager and Secretary:-Every company should, from the date of its registration, maintain a register of its directors, managing director, manager and secretary. -The register should contain the following particulars in respect of each director, managing director, manager or secretary: present name and surname in full, any former name or surname in full, fathers/husbands name and surname in full, date of birth, usual residential address; nationality including the nationality of origin, if different, business / occupation, committee membership/chairmanship in the company etc. -The register should be preserved permanently. 8) Register of Inter Corporate Loans and Investments:-Every company must maintain a register of inter corporate loans and investments.

-The register should contain in respect of each investment or loan made, the particulars of the name and address of the body corporate in which investment or loan is made; date of making such investment or loan; the amount, terms, period and purpose of the investment or loan; number and kind of shares or debentures or other securities in which investment is made; nominal value, paid-up value and cost of the investment made etc. -The register should be preserved permanently. 9)Other registers maintained by the company includes Register of Deposits, Register of Allotment, Register of Payment of Dividend, Register of Directors Attendance, Register of Postal Ballot, Register of Proxies, Register of Inspections, Register of Records and Documents Destroyed, Register of Investor Complaint, Register of Transfer of Shares/ Debentures, Register of Transmission of shares /debentures.

EFFECTIVE DATE:

This Standard shall come into effect from 20th October 2005.

Secretarial Standard 5 [Minutes]:Minutes are record of business transacted at a meeting. Every company must keep minutes containing a fair and correct summary of all proceedings of general meetings and those of Board meetings or those of Committees of Board, in books kept for that purpose. Minutes have evidentiary value. 1)Maintenance:-A separate Minutes book must be maintained for each type meeting. -The pages of Minutes book must be consecutively numbered. -Minutes Books should be kept at the Registered Office of the company. 2)Contents:-Minutes should begin with the number and type of the Meeting, name of the company, day, date, venue, time of commencement and conclusion.. -Minutes should contain:

(a)The names of officers in attendance and invitees for specific items. (b)The names of directors who sought and were granted leave of absence.

(c)If any director has participated only for a part of the Meeting, the agenda items in which he had participated.

(d) In case of a director joining through video or teleconference the place from and the agenda items in which he participated.

(e)The fact that an interested director did not participate in the discussion or vote. (f)The appointment of officers made by the Board.

(g)The fact of the dissent and the name of the director who dissented or abstained from the decision.

(h)The resolutions sent for passing by circulation along with the decisions thereon. 3) Recordings: - Minutes should be written in third person and past tense.

4) Meetings of the Board: - Where an earlier resolution or decision is superseded modified, Minutes should contain a clear reference to the earlier resolution or decision.

or

5)Finalisation: - Within fifteen days from the date of the conclusion of the Meeting of the Board or Committee the draft Minutes thereof should be circulated to all the members of the Board or the Committee for their comments.

6)Signing and Dating: - Minutes of the Meeting of the Board or Committee should be signed and dated by the Chairman of the Meeting or the Chairman of next Meeting.

7)Preservation: - Minutes of the Meeting should be preserves permanently.

EFFECTIVE DATE:

This Standard shall come into effect from 20th September 2007.

Secretarial Standard 6 [Transfer and Transmission of Shares and Debentures]:The word transmission means devolution of title to Shares otherwise than by transfer. On transmission of Shares, the person to whom the Shares are transmitted becomes the registered shareholder of the company and is entitled to all rights and subject to all liabilities attached to the Shares. This Standard lays down principles in relation to documentation and verification of legal claimants in case of physically and electronically held shares for smooth functioning. Transmission of Shares should be effected by the company on receipt of intimation of death of a Member and on production of necessary documents, such as (i)Death certificate;

(ii)Request for transmission signed by the legal heir(s) / Legal Representatives /claimant(s) with their specimen signature(s); (iii)Succession Certificate or Letter of Administration or Probate of Will; (iv)Original share certificate(s); (v)Orders of the Court or of competent authority, if applicable; (vi)Permission under the Foreign Exchange Management Act, 2000, if applicable. 1)Transmission of Shares held Singly:-With nomination: -Where a sole shareholder dies then his nominee can give a notice to the company along with evidence of death and original share certificate then company will register the shares in the name of the nominee in 30 days. -In case nominee has duly executed transfer deed, then company will have to register such shares in the name of any other person elected by him within a period of 30 days. -Without Nomination: -Where a share holder dies without nomination having a will then company has to register the shares in the name(s) of those mentioned in the will in 30 days. -Where a share holder dies intestate then the company has to register shares in the name of his legal heir in 30 days. Legal heir has to provide Succession Certificate and evidence of death to the company. 2)Transmission of shares Held Jointly :-With Nomination:

-When shares are held jointly and all the holders have appointed o nominee together then the company has to register shares in his name within 30 days. The nominee has to provide death evidences of all the share holders. -When shares are held jointly and all the holders have appointed o nominee together then the company has to register shares in the name of any person elected by him within 30 days. The nominee has to provide death evidences of all the share holders. -Without nomination: -When shares are held jointly and no nominee has been appointed then on the death of the last share holder who has left a will company will have to register shares in the name of that beneficiary within 30 days. -When shares are held jointly and the last shareholder dies intestate without appointing a nominee then on request of legal heir of such share holder company has to register shares in his name within 30 days. Legal heir has to provide certificate evidencing the death and Succession Certificate or Letter of Administration. -Where all the shareholders die simultaneously without appointing a nominee but the first holder has left a will then the beneficiary can request the company to register shares in his name. He has to provide Death evidence and copy of Probate will.

3)The register and records pertaining to transmission should be preserved permanently. 4)Every company should maintain a register containing particulars of all transmissions

EFFECTIVE DATE:

This Standard is effective from 20th September 2007.

Secretarial Standard 7 [Passing of Resolution By Postal Ballot]

This standard lays down the best practices to followed when passing a resolution by postal ballot; it gives light on the areas where law is silent.

1)Authority: - The chairman of the Board shall decide for a particular business should be obtained by means of a resolution by circulation. 2)Procedure: - Firstly, A resolution proposed to be passed by circulation should be sent in draft form, together with the necessary papers, individually to all the directors. The details of the business will be given in a note The draft of the resolution to be passed and the necessary papers should be circulated by hand, or by post, or by facsimile, or by email or by any other electronic mode. 3)Approval: - The resolution has to be passed by a majority of directors entitled to vote on the resolution other than interested directors. The resolution is deemed to have been passed on the date on which it is approved by the majority of the Directors. If the majority is not received until the last day mentioned then resolution shall be deemed as not passed.

4)Recording:- Resolutions passed by circulation should be noted at the next meeting of the Board or Committee

5)Validity: - Passing of resolution by circulation should be considered as if it had been passed at a duly convened meeting of the Board or of the Committee.
EFFECTIVE DATE: This Standard is effective from 6th November 2008.

Secretarial Standard 8[Affixing of Common Seal]

Common seal is the metallic seal of the company which has to be affixed only with the approval of Board of Directors. It is the signature of the company to any document on which it is affixed and binds the company for all obligations undertaken in the document. The Act provides that from the date of incorporation mentioned in the certificate of incorporation, the company shall have a common seal. This standard lays down manner in which the common seal of the company must be affixed.

1)Approval: - The common seal must be adopted by resolution of the board. The common seal must be made part of the minutes of the meeting in which it is adopted. 2)Form and Content: - The common seal must be made of metal. It must have name of the company and place of registered office. 3)Authority and mode of fixation: - The common seal must be affixed only by authority of the Board. The common seal should be affixed in the presence of Managing Director, or any two Directors, and company secretary or any other person authorized by the board. 4)Register of Documents executed: - Every company must maintain a register for documents affixed by common seal.

5)The common seal should be kept at the registered office or at any other office of the company authorized by the Board. 6)The official seal should be kept in the custody of the person as may be authorized by the Board. EFFECTIVE DATE: This Standard is effective from 6th November 2008.

Secretarial Standard 9 [Secretarial Standard on Forfeiture of shares]

Forfeiture is withdrawal of shares due to non-payment of any call by the shareholder or for any other ground as may be provided in the Articles. On forfeiture of shares the member loses the amount paid thereon and his interest in the ownership of the shares. The companies Act is silent on forfeiture. This standard lays down principles relating to authority and procedure for forfeiture. 1)Authority: - The Articles must provide for forfeiture of shares. Forfeiture requires authority of the Board. 2)Procedure:-Where a member does not pay call on the shares and interest accrued thereon till the day mentioned under the terms of the issue of shares. -A notice requiring the sum will be sent to him. Notice shall have amount of money due.

-If the member does not pay due sum even after date mentioned in the notice his shares will be forfeited. 3)Requirements :-

-The Board shall have to convene a meeting regarding this matter and should appoint a person for complying with forfeiture. -The date of approval by the Board is the date of forfeiture. -Upon forfeiture, any director or manager or the secretary, authorized by the Board of the company shall make a declaration specifying the particulars of shares forfeited.

-The declaration shall be conclusive evidence of forfeiture as against all persons claiming to be entitled to the shares of the company which have been forfeited. -The Board should issue individual notices to the defaulting members whose shares have been forfeited. -Share certificates in relation to forfeited shares shall stand cancelled upon forfeiture. 4)A person whose shares have been forfeited will cease to be member of the company in respect of those shares. 5)A forfeited share may be reissued or otherwise disposed of on such terms and in such a manner as the Board may think fit. 6)On reissue the transferee should be registered as the holder of the share. EFFECTIVE DATE: This Standard is effective from 6th November 2008.

Secretarial Standard 10 [Secretarial Standard on Boards Report]

The Boards Report is the most important means of communication by the Board of Directors of a company with its stakeholders. The companies Act requires the Board of Directors of every company to present annual accounts to the shareholders along with its report, known as the Boards Report.Generally, information relating to finances raised during the year, utilization of funds for the purpose for which it was raised, repayment of public deposits, liability for unclaimed deposits and long term agreements including with employees which have substantial financial impact are included in the Boards Report. The Report should also contain the information and explanations on every reservation, qualification or adverse remarks contained in the auditors report. This Standard seeks to lay down practices pertaining to the preparation and presentation of the Boards Report.

1)Disclosures pursuant to the Act :-Every company should attach the Report to the balance sheet of the company laid before its annual general meeting. The Report should deal with material changes in the company.

-The Report should state the amount if any, which the Board proposes to carry to any reserves. *The Report should disclose the changes during the year *The nature of companys business *The companys subsidiaries

*The nature of the business carried on by subsidiaries *The class of business in which the company has an interest -The Report should indicate any such employee who is a relative of any director or manager and the name of such director. -The Boards Report should include a statement by the Board that the company has devised proper systems to ensure compliance of all laws applicable to the company. -The Report should include the particulars of specified employees of the company who were in receipt of remuneration beyond prescribed limits. -There should also be included a statement showing name of such employees who are receiving remuneration in excess of that of managing director or whole time director or manager. -The Report should also include detailed Report on Corporate Governance :-The composition of audit committee -The reason in writing that why the Board could not act upon recommendations by that audit committee -The reason of failure to not to act upon resolution passed by shareholders in the previous meeting 2) Disclosures pursuant to the Listing Agreements:-The Report should provide for the additional requirement required by the Listing Agreement and non compliance of the same. -The Report should include Directors Analysis and Discussion report. Such report will include-

*Industry structure and Development *Opportunities and Threats *Segment wise or product wise performance

*Outlook *Risks and concerns *The Report should also include detailed Report on Corporate Governance :*The composition of audit committee -The reason in writing that why the Board could not act upon recommendations by that audit committee -The reason of failure to not to act upon resolution passed by shareholders in the previous meeting 3)Disclosures pursuant to Employee Stock Option and Purchase Scheme:The Report should contain the following disclosures:

a)Options granted; b)the pricing formula; c)Options vested; d)Options exercised; e)the total number of shares arising as a result of exercise of Options; f)Options lapsed; g)variation of terms of Options; h)money realized by exercise of Options; i)total number of Options in force; j)Employee wise details of Options granted to (i)Senior managerial personnel (ii)any other employee who is issued shares in any one year amounting to 5% or more shares issued during that year

(iii)identified employees who were issued shares during any one year equal to or exceeding 1% of the issued capital of the company at the time of issuance k) Diluted Earning per Share (EPS) pursuant to issuance of shares under ESPS l)Consideration received against the issuance of shares. m)A description of the method and significant assumptions used during the year to estimate the fair values of options included the following weighted average information:

i.risk-free interest rate ii.expected life iii.expected volatility iv.expected dividends v.The price of the underlying share in market at the time of option grant 4)Additional Disclosures by Producer Company: - The Report should disclose the amounts to be paid as limited return on share capital and should disclose the amounts, if any, proposed to be disbursed as patronage bonus. 5)Disclosures pursuant to Reserve Bank of India:a.Non Banking Financial Companies: - The total number of accounts of public deposits by the company which have not been claimed by the depositors or not paid by the company and the total amount due under such accounts remaining unpaid or unclaimed. Such information should be as on the last day of the financial year.

b.Miscellaneous Non- Banking Companies:- The total number of depositors with the company whose deposits have not been claimed by the depositors or paid by the company after the date on which the deposit became due for repayment or renewal as the case may be according to the

contract with the depositor. The total amount due to the depositors and remaining unclaimed or unpaid beyond the due date for repayment. c.Residuary Companies:- The Report should include the Residuary Non-Banking Companies (Reserve Bank) Directions, 1987 , the total number of depositors with the company whose deposits have not been claimed by the depositor or not paid by the company and the total amounts due to the depositors and remaining unclaimed or unpaid beyond the due date for repayment. 6)Other Disclosures :-The Report should state that the consolidated financial statements are also presented in addition to the individual financial statement of the company. -The Report should specify projections made in the previous year and the current status related to the companys performance. -Must also state the reasons for failure of projections. 7)Explanations in Boards Report in response to Auditors Qualifications :The Report must have an explanation on every remark and disqualification by the auditors. The Report should also provide an explanation for each qualification contained in the auditors report along with the circumstances necessitating the qualifications, likely impact on the financial statements and the corrective measures that are proposed to be taken.

8)Explanations in Boards Report in response to Secretary in whole time practice: -

The Board should specify information and explanations in its Report on every reservation, qualification or adverse remark contained in the compliance certificate issued by the Secretary inwhole-time practice.

9)Approval of the Report: - The Report should be considered and approved at the duly convened meeting of the board.

10)Signing and Dating of the Report: - The Report should be signed by the Chairman of the Board, or any two Directors of the company, one of them should be Managing Director. If the Auditors Report is available for consideration at the time of approving the Boards Report, the Boards Report may bear the same date as that of the Auditors EFFECTIVE DATE: This Standard is effective from 31st July 2009.