Preparation of Minutes under Companies Act, 1956: A brief
Preparation of Minutes under Companies Act, 1956
Meaning of Minutes:
A minute is a record of proceeding of a meeting of any company duly kept in pursuance of the law. The minutes have not been defined under the companies act. Minutes contain inter alia a description of the type of meeting to which they relate, its date, time and venue, mention about persons attended the meeting concerned, confirmation of minutes of previous meeting as a result of practice, decisions taken process at the meeting, discussions held, voting on resolutions, etc.
Section 193 imposes a statutory obligation on every company whether, public or private, to keep minutes of all proceedings of every meeting of the company.
Classification of minutes
Minutes can be classified into the following three types based on the kind of meeting to which they relate:—
(i) Minutes of Board meetings
(ii) Minutes of meetings of committee of the Board
(iii) Minutes of General meetings
Heading of the minutes
Minutes should start with the name of a company and it shall state the time, date, place, type of meeting, a record of the name of the members present in the meeting, etc. Minutes should contain summary of the discussions held leading to the resolution. The aforesaid statement is generally written in bold capital letters and it may be on the following style such as 'MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF ….. LIMITED AT THEIR MEETING HELD ON …..AT, THE …TH DAY OF …., …., AT THE REGISTERED OFFICE OF THE COMPANY, AT '……….', AT … A.M/P.M.'
Minutes may be kept in the loose leaf binders
The modern practice is to type out or obtain computerized printing of the minutes in loose leaves and then keep them in a binder. The Department has also confirmed that it has no objection to minutes being kept in that manner. The Department of Company Affairs vide File No. 8/16(1)/61 PR have prescribed that, in certain cases, minutes may be kept in loose leaf binder provided the following conditions are fulfilled:—
(i) the pages are serially numbered;
(ii) the loose leaves are bound up at reasonable interval, say not exceeding six months;
(iii) there should be proper locking device to ensure security and proper control to prevent irregular removal of the loose leaves.
Alteration and corrections of minutes
If the necessity for altering minutes arises before they are signed by the Chairman, but after they are written in the minute book, the alteration may be made and initialed by the chairman. Once minutes have been signed they should not on any account be altered. If it becomes necessary to vary a resolution previously adopted, that variation should always be carried out by means of a resolution passed at a subsequent meeting only. In the case if it is subsequently desired that a resolution previously passed should not be acted upon, the resolution should be formally rescinded by a separate resolution at a later meeting. The minutes of the first meeting being a correct record of what took place at that meeting will remain, but a marginal note in red ink may be made to the effect that the resolution is "Rescinded by resolution of the Board dated .........".
Signing of minutes by the chairman within 30 days from the date of the meeting
Section 193(1A) of the Companies Act, 1956 states that every page of the minutes book shall be signed and the last page of the record of proceedings of each meeting in such book shall be dated and signed by the chairman of the said meeting. However, it is not obligatory to wait for the next board meeting in order to have the minutes signed of the meeting already held. Such minutes may be signed by the chairman of the meeting at any time before the next meeting is held
Presumptions as to minutes as conclusive evidence
Minutes of the proceedings of meetings kept in accordance with the provisions of section 193, shall be an evidence of the proceedings recorded therein. This does not mean, however, that such minutes are conclusive evidence of the proceedings and cannot be brought into question. Meaning thereby, in the event of any legal proceeding, it will be accepted as evidence, and the onus of disproving them will be upon the person who is contesting their accuracy. Where the articles provide that the minutes are to be conclusive evidence of the facts stated therein, it is not open to the shareholders to dispute their accuracy unless the minutes were shown to have been written up fraudulently.
In C.R. Priyachandrakumar v Puraswalkam Permanent Fund Ltd. (1995) 83 Comp Cas 150 (Mad), it was held that if company is properly recording and maintaining the minutes which contain a resolution relating to appointment of a director and further if shareholders challenge the validity of the appointment, burden would be upon the shareholders that the appointment was not valid. The court would start with the presumption that the minutes constitute prima facie evidence of the proceedings recorded therein.
Place for keeping the minutes book
The minutes book must be maintained and kept at the registered office of the company. It cannot be taken to any other place except, for getting the same inspected from any authority prescribed under the Actor for the purpose of placing it before the meeting of the Board of directors when its meeting takes place at any place outside the registered office of the company. Minutes book instead of being kept at the registered office of the company, may be kept at any other place within the city, town or village in which the registered office of the company is situated if:—
(i) such other place has been approved for this purpose by a special resolution passed by the company in general meeting, and
(ii) the Registrar of Companies has been given in advance a copy of the proposed resolution electronically in an e-Form 23.
Penalty for defaults in keeping proper minutes
Section 193(6) provides that if a default is made in complying with the provisions for keeping proper minutes of the Board or general meetings then the company and every officer of the company who is in default, shall be punishable, in respect of each offence, with fine which may extend to five hundred rupees.
Publication of minutes
Minutes are private record of proceedings and therefore, cannot normally be published. Section 197 of the Companies Act, 1956 provides that no document purporting to be report of the proceedings of any general meeting of a company shall be circulated or advertised at the expense of the company, unless it includes the matters required by section 193 to be contained in the minutes of the proceedings of such meeting.If any report is published in contravention of the above provisions then the company and every officer of the company who is in default, shall be punishable, in respect of each offence, with fine which may extend to five thousand rupees.