Section 118: minutes — the 30-day rule and what can be left out

A director calls the company secretary three weeks after a board meeting. "Do we have the minutes ready? The Chairman also wants two heated exchanges kept out. Can he do that?" Both questions are answered by one section: section 118 of the Companies Act 2013. It sets a clock for writing the minutes, a rule on what they must say, and a short list of things the Chairman may leave out.

This article covers the clock, the signing, the omissions, and the cost of getting it wrong. It applies to board meetings, committee meetings, general meetings and postal ballots.

Which meetings need minutes

Section 118(1) of the Companies Act 2013 covers minutes of:

every general meeting of any class of shareholders or creditors;
every resolution passed by postal ballot;
every meeting of the Board of Directors; and
every meeting of a committee of the Board.

The minutes must be "prepared and signed in such manner as may be prescribed" and kept "within thirty days of the conclusion of every such meeting", or of passing the resolution by postal ballot. They go into books kept for the purpose, with pages consecutively numbered (s.118(1), Companies Act 2013).

The 30-day clock

Rule 25(1)(b)(i) of the Companies (Management and Administration) Rules, 2014 says the minutes of each meeting must be entered in the books "along with the date of such entry within thirty days of the conclusion of the meeting".

Three points readers often miss:

The clock starts when the meeting concludes. It does not start at the next meeting, or when someone finishes drafting.
The date of entry is itself part of the record. The rule asks for the date of entry. The Secretarial Standard on Meetings of the Board (SS-1) says the Company Secretary records that date, or, where there is no Company Secretary, a person authorised by the Board or the Chairman (para 7.5.2, SS-1).
Adjourned meetings run two clocks. Both the Standards say that if a meeting is adjourned, the minutes of the original meeting and of the adjourned meeting are each entered within thirty days of their own dates (para 7.5.1, SS-1; para 17.4.1, SS-2).

For a resolution passed by postal ballot, the clock is thirty days from the date of passing. A brief report goes into the minute book of general meetings: the resolution proposed, the result of the voting and a summary of the scrutinizer's report (rule 25(1)(b)(ii), Companies (Management and Administration) Rules, 2014).

Draft first: the fifteen and seven days in SS-1

Section 118(10) of the Companies Act 2013 says every company "shall observe secretarial standards with respect to general and Board meetings" specified by the Institute of Company Secretaries of India and approved by the Central Government. So the two Standards are not optional reading. SS-1 covers Board meetings. SS-2 covers general meetings.

For Board and committee meetings, SS-1 builds a draft cycle inside the thirty days (para 7.4, SS-1):

the draft minutes go to every member of the Board or committee within fifteen days of the conclusion of the meeting, by hand, post, courier, e-mail or other recognised electronic means;
directors, whether or not they attended, give written comments within seven days of circulation;
a director who does not comment is deemed to have approved the draft;
comments that arrive after the seven days may be considered by the Chairman only if the Board has authorised him to do so;
proof of sending and delivery is kept for a period the Board decides, not less than three years from the date of the meeting; and
a director who has ceased to be a director since the meeting is still entitled to receive the draft of a meeting held while he was on the Board.

The purpose is simple. The cycle is designed so that the minutes can be "finalised and entered in the Minutes Book within the specified time limit of thirty days".

Who signs, and by when

Rule 25(1)(d) of the Companies (Management and Administration) Rules, 2014 says each page of the book is initialled or signed, and the last page of the record of each meeting is dated and signed:

Board or committee meeting: by the chairman of that meeting or the chairman of the next meeting (rule 25(1)(d)(i)).
General meeting: by the chairman of that meeting within the same thirty days. If he has died or is unable to sign within that period, a director duly authorised by the Board signs (rule 25(1)(d)(ii)).
Postal ballot: by the chairman of the Board within thirty days, or, if there is no chairman or he has died or is unable to sign, a director authorised by the Board (rule 25(1)(d)(iii)).

SS-2 (the Secretarial Standard, not the Act) repeats the general meeting rule and adds that the substitute signatory must be a director who was present at the meeting and duly authorised by the Board: minutes are signed and dated "within thirty days of the General Meeting" (para 17.5.1, SS-2). The Chairman initials each page, signs the last page and adds the date and place of signing (para 17.5.2, SS-2).

For a general meeting, the signature must fall inside the thirty days. For a Board meeting, the rule lets the chairman of the next meeting sign.

What the minutes must contain

Section 118(2) of the Companies Act 2013: the minutes of each meeting "shall contain a fair and correct summary of the proceedings thereat". Not a transcript. SS-1 says minutes "need not be an exact transcript of the proceedings" (para 7.3.2, SS-1).

Three more content rules sit in the section:

Appointments. All appointments made at the meetings must be in the minutes (s.118(3)).
Board and committee meetings. The minutes must also give the names of the directors present, and, for each resolution passed, the names of any directors dissenting from or not concurring with it (s.118(4)(a) and (b)). The section asks for dissenters. It does not use the words "voted for".
Reports of general meetings. No document purporting to report the proceedings of a general meeting may be circulated or advertised at the company's expense unless it includes the matters the section requires in the minutes (s.118(9)).

What can be left out

This is the part founders and secretaries get asked most.

Section 118(5) says "there shall not be included in the minutes" any matter which, in the opinion of the Chairman of the meeting:

(a) is or could reasonably be regarded as defamatory of any person; or
(b) is irrelevant or immaterial to the proceedings; or
(c) is detrimental to the interests of the company.

Section 118(6) then gives the Chairman "absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in sub-section (5)". SS-1 and SS-2 say the same in nearly the same words (para 7.3.1, SS-1; para 17.3.1, SS-2).

Read this carefully, because it is narrower than it sounds.

What it allows. The Chairman may keep out a remark that attacks a named person, an aside that has nothing to do with the agenda, and discussion whose recording would harm the company. For example, a candid view on a rival's weak finances that the company would not want repeated. The decision is his, and the test is his opinion.

What it does not allow.

The discretion is limited to the three grounds in section 118(5). It is not a power to drop anything inconvenient.
It cannot remove the content that sections 118(2) to 118(4) require: a fair and correct summary, appointments, the names of directors present, and the names of dissenters.
A director who wants his view recorded word for word does not get it as of right. SS-1 says the Chairman's decision "whether or not to do so shall be final" (para 7.3.2, SS-1). That is a separate matter from the section 118(4) duty to name dissenters.

Once minutes are entered in the book, they cannot be quietly changed. SS-1 says minutes "shall not be altered" after entry. Any alteration is made only with the express approval of the Board at a later meeting where the minutes are noted, and the alteration is recorded in the minutes of that meeting (para 7.5.3, SS-1). SS-2 also says that minutes, once entered, shall not be altered (para 17.4.3, SS-2). Section 118(12) punishes tampering (see below).

Where the book is kept and what it is worth

Rule 25(1)(a) requires a distinct minute book for each type of meeting: general meetings, creditors' meetings, Board meetings and each committee. Minute books are preserved permanently, in the custody of the company secretary or an authorised director (rule 25(1)(e) and (f), Companies (Management and Administration) Rules, 2014). Section 120 of the Companies Act 2013 permits electronic form in the prescribed manner.

Section 118(7): minutes kept in accordance with the section "shall be evidence of the proceedings recorded therein". Section 118(8): where minutes have been kept in accordance with section 118(1), then "until the contrary is proved" the meeting is deemed to have been duly called and held, all proceedings are deemed to have duly taken place, postal ballot resolutions are deemed duly passed, and all appointments of directors, key managerial personnel, auditors or company secretary in practice are deemed valid.

If minutes are not kept as the section requires, the company loses that presumption.

Members can ask for general meeting minutes

Section 119 of the Companies Act 2013 requires the books of minutes of general meetings and postal ballots to be kept at the registered office and makes them open to inspection by any member without charge during business hours, subject to reasonable restrictions in the articles or a general meeting, with at least two hours on each business day (s.119(1)). A member can also ask for a copy, to be furnished within seven working days (s.119(2)). The fee is the sum specified in the articles, "but not exceeding a sum of ten rupees for each page or part of any page". A member who asks for a soft copy of the minutes of general meetings held in the three financial years immediately preceding is entitled to it free of cost (rule 26 and its proviso, Companies (Management and Administration) Rules, 2014).

Refusal of inspection, or failing to supply the copy in time, draws a penalty of ₹25,000 on the company and ₹5,000 on every officer in default, for each refusal or default (s.119(3)). The Tribunal can also order immediate inspection (s.119(4)).

The cost of getting it wrong

Default under section 118. If any default is made in complying with the section for a meeting, the company is liable to a penalty of ₹25,000 and every officer in default to a penalty of ₹5,000 (s.118(11), Companies Act 2013). Note the words "in respect of any meeting": the penalty attaches meeting by meeting.
Tampering. A person found guilty of tampering with the minutes is punishable with imprisonment for a term that may extend to two years and with a fine of not less than ₹25,000 and up to ₹1 lakh (s.118(12)).

What to do now

Next step: list every Board, committee and general meeting since the start of the financial year and check each has a dated entry in the minute book (rule 25(1)(b)(i), Companies (Management and Administration) Rules, 2014).
Deadline: thirty days from the conclusion of each meeting, or from passing a postal ballot resolution (s.118(1), Companies Act 2013).
Consequence of default: a penalty of ₹25,000 on the company and ₹5,000 on each officer in default, per meeting (s.118(11)); tampering is punishable with up to two years' imprisonment (s.118(12)).

Have a CA review your facts before you act or file.

FAQ

Can the Chairman leave out a director's objection from the minutes?
No, not on the ground that it is inconvenient. For Board and committee meetings, the minutes must name directors dissenting from or not concurring with each resolution passed (s.118(4)(b), Companies Act 2013). The discretion in section 118(5) and (6) covers only defamatory, irrelevant or immaterial, and company-detrimental matter.

Do the minutes have to be a word-for-word record?
No. Section 118(2) asks for a fair and correct summary, and SS-1 and SS-2 say minutes need not be an exact transcript (para 7.3.2, SS-1; para 17.3.2, SS-2).

Who signs the minutes of an AGM if the Chairman has died?
A director duly authorised by the Board, within the thirty days (rule 25(1)(d)(ii), Companies (Management and Administration) Rules, 2014). The Secretarial Standard on General Meetings adds that this director should be one who was present at the meeting (para 17.5.1, SS-2).

Does a postal ballot need minutes?
Yes. A brief report on the ballot is entered in the minute book of general meetings within thirty days of passing the resolution (rule 25(1)(b)(ii)), and signed by the chairman of the Board or an authorised director (rule 25(1)(d)(iii)).

Can a member get copies of AGM minutes?
Yes. Copies are due within seven working days of the request, at a fee set in the articles and capped at ten rupees a page, except that a soft copy of minutes of general meetings held in the three preceding financial years is free (s.119(2); rule 26 and its proviso, Companies (Management and Administration) Rules, 2014).

Are the Secretarial Standards binding?
Section 118(10) requires every company to observe the secretarial standards for general and Board meetings issued by the ICSI and approved by the Central Government.

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