Secretarial Standards: Tool For Governance And Compliance
Secretarial standards have gained statutory recognition and have been made mandatory not only for the stakeholders but also for the regulators. The regulators have been brought into this horizon of observance of secretarial standards because they are the supporting systems for good governance. Secretarial standards would help in achieving better corporate governance and also to contribute in achieving the national schema of ease of doing commerce with improved transparency, governance norms, poise building in minds of investors and improved compliance level ultimately leading to customer satisfaction and development of our nation.
What is standard?
Standard is a published document, a reference point, an ideal in terms of which something can be judged, an established or well-known or widely recognized model of excellence or Authority. It is devised by harmony and approved by a recognised body. Standards establish conditions and processes designed to ensure the reliability of services to the stakeholders by establishing reliable practices that can be understood and accepted.
What is governance?
The persons who make up a body or purpose of administering or an Act of governing. Governance in terms of corporates refers to the adoption and practice of proper procedures and processes mentioned in the legislations and suitable.
Evolution of secretarial standard?
The Institute of Company Secretaries of India, (ICSI), recognized the need for integration, harmonization and standardization of diverse secretarial practices prevalent in the corporate sector, has constituted the Secretarial Standards Board (SSB) with the objective of formulating secretarial standards. The Secretarial Standards Board in consultation with the council has framed secretarial standard on Board Meeting and Secretarial Standard on General Meeting which has been statutorised by the ministry.
Whether mandatory requirement for all companies?
The Companies 2013 Act requires every company to observe Secretarial Standards specified by the Institute of Company Secretaries of India with respect to general and board meetings [Section 118 (10) of 2013 Act], which were hitherto not given cognizance under the 1956 Act.
In accordance with the requirement of the Section 118(10) of the Companies Act, 2013
Every company shall observe secretarial standards (‘SS’) with respect to general and Board meetings specified by the Institute of Company Secretaries of India (‘ICSI’). Insertion of this requirement in the Act is one of the landmark developments for the profession of the company secretaries and the ICSI. The rationale of mandating the compliance of non financial standard would ensure that all companies adopt uniform practice in convening the meetings, agenda items which should be placed before the board and finalization of minutes etc. Further, it is generally assumed that the minuscule compliance and good governance would be ensured if the companies follow the said secretarial standards effectively.
Secretarial standards and corporate governance
“Corporate Governance is the application of best Management Practices, Compliance of Laws in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders.”
“Corporate Governance is the way a company is organized and managed to ensure that all financial stakeholders receive a fair share of the company’s earnings and assets.”
After critical analysis of the secretarial standards, it can be concluded that secretarial standards make interpretation of law easier and stipulate uniform provisions, procedures and processes to avoid ambiguity and ensure better compliance of law. Standards also act as catalyst for better corporate governance. The Secretarial Standards act as an aid to the professionals of the country for discharging corporate responsibilities and for the development of corporate legal practices thereby increasing the involvement and participation of the Directors and members of a Company on the whole.
Corporate Governance has bought up new opportunities coupled with hard responsibilities. Professionals need to be cautious about the constraints and maintain extra vigilance and care while discharging their responsibilities.
By strengthening the Board procedures and establishing an effortless in governance of practices for conduct of general meetings, secretarial standards have made a significant impact paving way for best governance practices.