In this article we shall understand the purpose and importance of maintaining minutes of meetings with private companies and the regulations applicable therein.
Introduction
There are many advantages to operating your business as a private limited company. But everything comes at a cost. The advantages of privacy and autonomy come along with strict due diligence, scrutiny, and corporate governance. This includes mandatory notification of what happens during board meetings and shareholder meetings. The medium through which the Ministry Of Corporate Affairs keeps track of these meetings is through the Maintenance Of Minutes For Private Companies.
Minutes are nothing but formal notes of a particular meeting or an official hearing in a company. They are also called protocols. These minutes are a written record of all official and influential gatherings of a company. Minutes are a brief account of all the happenings and the attendees of the gathering. It is usually the company secretary, in general, who is responsible for the maintenance of the minutes.
Maintaining the Meeting Minutes
A register called the Book of Minutes is maintained to record all these minutes (usually records important meetings like board meetings and other influential events). Minutes are to be maintained properly and they are to be signed by the chairman of the company. A concerned authority reviews these minutes. These are to be maintained by following certain guidelines as per the provisions of the Companies Act. Given below are points on how to manage the minutes of your company.
- The minutes have to be recorded in a book. A separate book has to be maintained for the Board meetings and related Committees
- Minutes must be maintained in either electronic or physical form with Timestamp
- Minutes may be maintained in loose-leaf form but they must be bounded regularly
- The recording must be done systematically. General content is mentioned first and then the specific content is mentioned
- The minutes must be recorded according to the proceedings of the meeting and must be very accurate. The minutes are to be written in past tense and in a third-person form. Nonetheless, resolutions are recorded in the present tense
After a proper recording, the minutes are circulated amongst all the directors in a span of fifteen days. The Directors are allowed to make their comments. Then these comments are recorded in the minute’s book in a span of seven days from the circulation
The date of entry, as well as the date of the meeting, must be recorded before recording any other data. Furthermore, the Company Secretary makes all the recordings. The company, however, may appoint someone else in case of the absence of the CS. The minutes are to be signed by the Chairman of the specific or the next meeting along with the date and the place. If minutes are recorded electronically, then digital signing is to be done. The inspection of minutes by any Director, Auditor or Company Secretary of the Company is allowed.
Provisions Under Companies Act, 2013
The Companies Act, 2013 mandates the recording of minutes for all general, board, and committee meetings. According to Section 118, these minutes should be accurately summarised in dedicated books and signed by the meeting’s chairperson or the next chairperson.
The Act requires permanently preserving board and committee minutes, entrusted to the company secretary or an authorized director, at the registered office or a designated place. Failure to adhere to these provisions may lead to penalties and legal repercussions for the company, its directors, and officers.
Importance of Maintaining Minutes
Highlighting the significance of meticulous record-keeping, the ICSI underscores the importance of maintaining precise and comprehensive meeting minutes. These minutes not only act as dependable documentation of the company’s decision-making but also serve as evidence of legal compliance. Additionally, they serve as a valuable informational resource for both internal and external stakeholders, such as shareholders, regulatory bodies, and auditors.
Default in Maintenance of Minutes
The company faces a penalty of ₹25,000, and any defaulting company officer incurs a penalty of ₹5,000. If an individual is convicted of altering meeting proceedings’ minutes, they may be imprisoned for up to two years and a fine ranging from ₹25,000 to ₹1 lakh.
Legal Requirements for Maintaining Minutes for Private Companies
The legal obligations for maintaining minutes in private companies can vary based on jurisdiction and organizational type (e.g., corporation, nonprofit, LLC). Despite this, common legal standards typically include:
Mandatory Meetings: Legal requirements often necessitate recording minutes for essential meetings, such as annual general meetings for shareholders
Specific Content: Legal standards typically outline mandatory elements in minutes, including meeting details, attendee lists, and resolutions or decisions
Timing: Some jurisdictions stipulate a timeframe for recording minutes post-meeting, like within 30 days of a board meeting
Access and Inspection: Laws often grant shareholders and authorities the right to inspect minutes, promoting transparency
Dissent and Objections: Legal requirements may mandate recording dissenting opinions or objections to decisions made during a meeting
Signature and Approval: Minutes may need approval from participants, with specific individuals required to sign or acknowledge them
Storage and Retention: Regulations address where and how minutes must be stored, specifying formats and durations, with electronic storage increasingly accepted
Privacy and Confidentiality: Legalities may require certain meeting discussions to remain confidential, reflected in the minutes
Compliance with Entity Type: Different organizational types may have unique legal minutiae regarding meeting minutes.
Best Practices for Maintaining Minutes
Ensuring precise meeting minutes in private companies is vital for legal adherence, transparency, and efficient corporate governance. Here are comprehensive guidelines for crafting and handling meeting minutes:
Pre-Meeting Preparation
- Clarify Meeting Objectives: The minute-taker must grasp the meeting’s goals, agenda, and anticipated results beforehand
- Examine Prior Minutes: Review previous meeting minutes to maintain continuity and track action items before the meeting
- Collaborate with Chairperson: Coordinate with the chairperson before the meeting to understand the structure and any specific recording requirements.
During the Meeting
Capture Meeting Details
- Record the meeting’s date, time, and location
- List all attendees, noting names, roles, and distinguishing guests and remote participants.
Follow the Agenda
Organise notes using the agenda, capturing discussions, decisions, and action items for each agenda point.
Be Concise and Objective
Summarise discussions objectively, avoiding personal opinions. Focus on key points and arguments.
Document Decisions and Resolutions
Record decisions, including proposer, seconder, specifics, and outcomes (e.g., passed, failed).
Objections and Dissents
Document raised objections or dissents with participant rationale, ensuring transparency and compliance.
Action Items
List action items with responsible parties, deadlines, and dependencies, maintaining a consistent and easily readable format.
Voting Record
Note the parties’ votes for, against, or abstention during voting on specific motions.
Attachments and Supporting Materials
Reference or attach presentations, reports, or relevant materials used during the meeting
Post-Meeting Actions
- Drafting Minutes: Promptly draft minutes post-meeting while discussions and decisions remain fresh
- Real-Time Review: If possible, share the draft with attendees for real-time review, correcting inaccuracies immediately
- Approval Process: Seek approval at the subsequent meeting, making corrections before finalizing the minutes
- Consistent Format: Utilize a standardized format across all minutes, incorporating a header with organisation details
- Storage and Organization: Maintain a dedicated minute book or electronic records, securely organized by meeting type and date
- Signature and Approval Log: Include a section for participant signatures, dates, or acknowledgment of approval, maintaining a log
- Retention and Accessibility: Adhere to legal retention requirements, ensuring accessibility for authorised parties, including regulators and shareholders
- Training and Compliance: Ensure minute preparers are well-versed in relevant laws, regulations, and internal company policies
- Digital Tools: Consider using digital tools for streamlined minute-taking and enhanced security
- Regular Auditing: Periodically audit minutes and processes to ensure compliance and consistency.
Content of the Maintenance of Minutes
The content of the Minutes are divided into two parts: General and Specific content.
General Contents
The general contents include the following:
-
The Beginning of the Minutes Will State the Following
- The serial number
- Type of the meeting
- Name of the company
- The day, date, venue and time of commencement of the meeting
- The conclusion of the meeting
2. Person Presents
- The names of the directors present physically
- The names of the directors present through the electronic mode
- Company Secretary who is in attendance at the meeting
- Invitees, if any, (this includes Invitees for specific items)
Note:
- Names of the directors start with the name of the person in the Chair
- Names of the Directors must be listed in alphabetical order but the name of the Chair at first
- Name of invitees in the capacity in which an Invitee attends the Meeting
- In case of an invitee attending on behalf of an entity, the name of the entity such Invitee represents and the relation, if any, of that entity to the company must also be recorded.
Specific Contents
After mentioning the general content in Minutes, given below are the specific contents:
Record of Election of Chairman of Meeting
- If there is a Chairman of the Board, then that person will be Chairman of the Board Meeting
- If there is no Chairman of the Board, and if there is a Chairman but he is absent then the directors must appoint any person from themselves as Chairman of the Meeting.
Granting of Leave of Absence
If a director is absent and is given leave of absence to the Company, the Chairman will record the Leave of Absence. The Company must receive a Letter of ‘Leave of Absence’ from the absent director.
Record the Mode of Attendance of Director
The Chairman will record the presence of the director along with the mode of presence i.e. Physical or electronic mode.
Record the Presence of a Quorum
The Chairman will check the quorum and record the quorum.
Record Details of the Director Present Through Video Conferencing
If any director participates through video conferencing then the Chairman will record the following: His particulars, his location and the Agenda items in which he participated. This is done by roll call. The Chairman will take a roll call of directors present through video commencing.
Noting of the Minutes of the Preceding Meeting
In the Board Meeting, the company will take note of the maintenance of the minutes of the last board Meeting by circulation of the signed copy of the minutes to all the present directors.
Noting the Minutes of the Meetings of the Committees
If any committee is merged by the Company, then in the board meeting of the Director Company will take note of the minutes of the Committee Meeting.
Noting of the Resolution Passed by the Circulation
- If the company has passed any resolution by circulation resolution then the company will take note of such resolution in the upcoming minutes
- If any Director participates only for a part of the Meeting, the Agenda items in which he did not participate
- If a director is interested in any resolution, then at the time of passing of that resolution mention about the interest of that director.
Conclusion
Besides maintaining the minutes of the meeting, there are several other such regulations and formalities that a company has to adhere to in the name of corporate governance. Given that a company allows the management to be divorced from the ownership of the company, the government needs to put provisions in place to protect the interest of the investors or owners as they are not the ones running the company but at the same time the functioning of the company affects them directly. If you want any more information with regards to the other formalities and regulations with regards to the company, then get in touch with us so we can connect you to our team of experts who will address any query you may have and help you out with your requirements.
Frequently Asked Questions
Who maintains minutes in a meeting?
The designated secretary or minute-taker typically maintains minutes in a meeting, recording key discussions, decisions, and action items for future reference.
Can minutes be maintained in loose-leaf?
While it's not common, minutes can be maintained in loose-leaf format. However, ensuring proper organisation and security is crucial to prevent loss or misplacement.
How should minutes be stored?
Minutes should be stored securely, either in physical or electronic form, with access restricted to authorised personnel to maintain confidentiality and prevent unauthorised alterations.
How long should minutes of meetings be kept?
Generally, minutes of meetings should be retained for a minimum of several years, varying based on organisational policies, legal requirements, or the nature of the discussed information. Regularly review and update retention periods to comply with regulations.
