Key Amendments to ICSI Secretarial Standard-1 (2024) Explained

Introduction

The Institute of Company Secretaries of India (ICSI) has revised Secretarial Standard-1 (SS-1) on Board Meetings, effective April 1, 2024. The revision is to enhance corporate governance practices and align with recent amendments to the Companies Act, 2013.

Key Amendments in SS-1 (2024)

1. Quorum Rules for Private Companies

• Interested Directors Included in Quorum:
  • Interests directors are now part of the quorum subsequent to interests disclosure, with more flexibility of attendance at board meetings.

2. Relaxation for Start-ups

• Fewer Board Meetings:
• DPIIT-recognized start-ups (private companies) may conduct just one board meeting in every half-year, as compared to four previously per year. This relaxation makes it easier for new companies to comply.

3. Document Retention Period

• Evidence of Notices/Resolutions:
• Evidence of all resolutions and notices must be held by companies for three years from the date when circulated, instead of the meeting date.

4. Electronic Attendance in Restricted Items

• Treatment of Restricted Items:
  • Directors taking part electronically will only be permitted to discuss restricted items if an actual quorum is available to attend the meeting.

5. Meetings of Independent Directors

• Annual Requirement:
  • Independent directors are required to meet at least once during each financial year, without the presence of non-independent directors.

6. UPSI Definition Revised

• Alignment with SEBI’s Definition:
• The Unpublished Price Sensitive Information definition has been amended to disclude 'material events' as stated in the listing agreement, aligning it with the revised standards set by SEBI.

Compliance Checklist for Companies

• Section 8 Companies:

• Such organizations may be exempt from amendments only in the event that they are clear of default in filing but yet require compliance with board meeting rules prescribed in the Companies Act.

• Start-ups:

  • The identified start-ups may take advantage of the reduced frequency of meetings as required by DPIIT.

• Private Companies:

• quorum rules need to be updated with a view towards inclusion of interested directors following disclosure.

• Annual Report Disclosure:

  • There should be a secretarial compliance statement and not mere mention of meeting dates.

FAQs: SS-1 (2024) Updates

• Q: Can fewer board meetings be conducted by start-ups?

• Q: DPIIT-approved private start-ups are allowed to hold one meeting per half-year with an interval of 90 days between meetings.

• Q: How long must proofs of board resolutions be held?

• A: Such documents need to be retained for three years from the date of circulation and not the meeting date.

• Q: Are interested directors counted towards quorum?

• A: Yes, private companies may include interested directors in their quorum after making their interests known.

Summary Table: Key Changes in SS-1

Aspect	Pre-2024 Rule	2024 Amendment
Quorum (Private Companies)	Excluded interested directors	Included after disclosure
Start-up Meetings	4 meetings/year	1 meeting/half-year
Document Retention	3 years from meeting date	3 years from circulation date
UPSI Definition	Included material events	Excluded material events

These modifications to SS-1 are a major step towards streamlining and modernizing Indian corporate governance processes to enable companies to be more compliant and flexible.