Section 118: minutes of meetings and postal ballot resolutions

Introduction

Properly kept minutes are evidence of the proceedings and, until the contrary is proved, the meeting is deemed duly called and held. Section 118 also makes the Secretarial Standards approved by the Central Government mandatory.

Section 118 came into force on 1 April 2014 under S.O. 902(E). It has not been amended.

Key takeaways

What must be minuted and when

Minutes are required for every general meeting, every meeting of any class of shareholders or creditors, every resolution passed by postal ballot, and every meeting of the Board or a Board committee. They are prepared and signed as prescribed and kept within thirty days of the meeting or postal ballot, in books with consecutively numbered pages (sub-section (1)). Rule 25 of the Companies (Management and Administration) Rules, 2014 deals with the manner of keeping minutes.

• India Code — consolidated Companies Act, 2013, section 118
• eGazette — Companies Act, 2013 (18 of 2013), as enacted
• eGazette — S.O. 902(E), 26 March 2014 (commencement from 1 April 2014)
• eGazette — Companies (Management and Administration) Rules, 2014, G.S.R. 260(E)
• eGazette — G.S.R. 466(E), 5 June 2015 (exemptions for section 8 companies)
• eGazette — G.S.R. 584(E), 13 June 2017 (amending G.S.R. 466(E))

Content and Chairman’s discretion

Minutes contain a fair and correct summary of the proceedings, and all appointments made at the meeting (sub-sections (2) and (3)). Board and committee minutes also record the directors present and, for each resolution, any directors dissenting from or not concurring with it (sub-section (4)). Matter that the Chairman considers defamatory, irrelevant or immaterial, or detrimental to the company’s interests is excluded, at the Chairman’s absolute discretion (sub-sections (5) and (6)).

Evidentiary value and reports

Minutes kept under this section are evidence of the proceedings (sub-section (7)). Where minutes are kept under sub-section (1), the meeting is deemed duly called and held, proceedings and postal ballot resolutions duly taken and passed, and appointments of directors, key managerial personnel, auditors or company secretary in practice valid, until the contrary is proved (sub-section (8)). A company cannot circulate or advertise at its expense a report of a general meeting unless it includes the matters required in the minutes (sub-section (9)).

Secretarial standards and penalties

Every company must observe secretarial standards on general and Board meetings specified by the Institute of Company Secretaries of India and approved by the Central Government (sub-section (10)). For default in respect of any meeting, the company is liable to a penalty of twenty-five thousand rupees and every officer in default to five thousand rupees (sub-section (11)). A person found guilty of tampering with minutes is punishable with imprisonment up to two years and a fine of not less than twenty-five thousand rupees, up to one lakh rupees (sub-section (12)).

Practical preparation

Draft minutes promptly and finalise them within thirty days. Record attendance, appointments and dissenting directors. Use consecutively numbered minute books. Protect finalised minutes against alteration. G.S.R. 466(E) of 5 June 2015 contains a section 118 entry for section 8 companies about recording minutes within thirty days where the articles provide for confirmation of minutes by circulation; read its exact wording. G.S.R. 584(E) of 13 June 2017 did not change that entry. Paragraph 2A, inserted by G.S.R. 584(E) of 13 June 2017, applies the exceptions in G.S.R. 466(E) only to a section 8 company that has not committed a default in filing its financial statements under section 137 or its annual return under section 92 with the Registrar.

Practical checklist

Glossary

Minutes

The written record of proceedings required by section 118.

Secretarial standards

Standards on general and Board meetings specified by ICSI and approved by the Central Government, made mandatory by section 118(10).

Frequently asked questions