Background

Section 118 of the Companies Act, read with Rule 25 of the Companies (Management and Administration) Rules, 2014, establishes the comprehensive framework for preparation, maintenance, and preservation of minutes of proceedings for various corporate meetings. This provision serves as a critical corporate governance mechanism ensuring transparency, accountability, and proper documentation of corporate decision-making processes.

Applicability

All types of companies are required to comply with this provision except:

• Section 8 company – the section shall not apply as a whole except that minutes may be recorded within thirty days of the conclusion of every meeting in case of companies where the articles of association provide for confirmation of minutes by circulation.
• Specified IFSC Public Company / Specified IFSC Private Company- the minutes of every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in the manner as may be prescribed under section 118(1) at or before the next Board or committee meeting, as the case may be and kept in books kept for that purpose and Sub-section (10) of section 118 Shall not apply.

Key Compliances as per Section 118 of the act in Accordance with SS-1:

Maintenance of Minutes

• A distinct minute book shall be maintained for each type of meeting namely:-

(i) General meetings of the members;

(ii) Meetings of the creditors

(iii) Meetings of the Board; and

(iv) Meetings of each of the committees of the Board like audit committee, Nomination & Remuneration committee, etc.

• A company may maintain its Minutes in physical or in electronic form.
• The pages of the Minutes Books shall be consecutively numbered.
• Minutes shall not be pasted or attached to the Minutes Book, or tampered with in any manner.
• Minutes Books, if maintained in loose-leaf form, shall be bound periodically depending on the size and volume and coinciding with one or more financial years of the company.
• Minutes Books shall be kept at the Registered Office of the company or at such other place as may be approved by the Board.

Contents of the Minutes

• 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.

• In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall also contain—

(a) the names of the Directors present at the meeting; and

(b) in the case of each resolution passed at the meeting, the names of the Directors, if any, dissenting from, or not concurring with the resolution.

• The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes
• Every company shall observe secretarial standards with respect to general (SS-2) and Board meetings (SS-1) specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.
• Minutes shall record the names of the Directors present physically or through Electronic Mode, the Company Secretary who is in attendance at the Meeting and Invitees, if any, including Invitees for specific items.
• Minutes shall contain a record of all appointments made at the Meeting
• In case of a Director participating through Electronic Mode, his particulars, the location from where he participated and wherever required, his consent to sign the statutory registers placed at the Meeting.
• The name of Company Secretary who is in attendance and Invitees, if any, for specific items and mode of their attendance if through Electronic Mode.
• Record of election, if any, of the Chairman of the Meeting.
• Record of presence of Quorum.
• The names of Directors who sought and were granted leave of absence.
• Noting of the Minutes of the preceding Meeting.
• Noting the Minutes of the Meetings of the Committees.
• The text of the Resolution(s) passed by circulation since the last Meeting, including dissent or abstention, if any.
• The fact that an Interested Director did not participate in the discussions and did not vote on item of business in which he was interested and in case of a related party transaction such director was not present in the meeting during discussions and voting on such item.
• If any Director has participated only for a part of the Meeting, the Agenda items in which he did not participate.
• The fact of the dissent and the name of the Director who dissented from the Resolution or abstained from voting thereon.
• Ratification by Independent Director or majority of Directors, as the case may be, in case of Meetings held at a shorter Notice.
• Consideration of any item other than those included in the Agenda with the consent of majority of the Directors present at the Meeting and ratification of the decision taken in respect of such item by a majority, of Directors of the company.
• The time of commencement and conclusion of the Meeting.
• Apart from the Resolution or the decision, Minutes shall mention the brief background of all proposals and summarise the deliberations thereof. In case of major decisions, the rationale thereof shall also be mentioned

Recording of Minutes

• Minutes shall contain a fair and correct summary of the proceedings of the Meeting.
• Minutes shall be written in clear, concise and plain language.
• Wherever the decision of the Board is based on any unsigned documents including reports or notes or presentations tabled or presented at the Meeting, which were not part of the Notes on Agenda and are referred to in the Minutes, shall be identified by initialling of such documents by the Company Secretary or the Chairman.
• Where any earlier Resolution(s) or decision is superseded or modified, Minutes shall contain a specific reference to such earlier Resolution(s) or decision or state that the Resolution is in supersession of all earlier Resolutions passed in that regard.
• Minutes of the preceding Meeting shall be noted at a Meeting of the Board held immediately following the date of entry of such Minutes in the Minutes Book.

Finalization of Minutes

• Within fifteen days from the date of the conclusion of the Meeting of the Board or the Committee, the draft Minutes thereof shall be circulated by hand or by speed post or by registered post or by courier or by e-mail or by any other recognised electronic means to all the members of the Board or the Committee, as on the date of the Meeting, for their comments.
• Proof of sending draft Minutes and its delivery shall be maintained by the company for such period as decided by the Board, which shall not be less than three years from the date of the Meeting.
• The Directors, whether present at the Meeting or not, shall communicate their comments, if any, in writing on the draft Minutes within seven days from the date of circulation thereof, so that the Minutes are finalized and entered in the Minutes Book within the specified time limit of thirty days.
• If any Director communicates his comments after the expiry of the said
• period of seven days, the Chairman, if so authorised by the Board, shall have the discretion to consider such comments.

Entry in the Minutes Book

• The date of entry of the Minutes in the Minutes Book shall be recorded by the Company Secretary.
• Minutes, once entered in the Minutes Book, shall not be altered. Any alteration in the Minutes as entered shall be made only by way of express approval of the Board at its subsequent Meeting at which the Minutes are noted by the Board and the fact of such alteration shall be recorded in the Minutes of such subsequent Meeting.

Signing and Dating of Minutes

• Minutes of the Meeting of the Board shall be signed and dated by the Chairman of the Meeting or by the Chairman of the next Meeting.
• The Chairman shall initial each page of the Minutes, sign the last page and append to such signature the date on which and the place where he has signed the Minutes.
• Minutes, once signed by the Chairman, shall not be altered, save as mentioned in this Standard.

Post Signing Requirements

• Minutes of all Meetings shall be preserved permanently in physical or in electronic form with Timestamp.
• Office copies of Notices, Agenda, Notes on Agenda and other related papers shall be preserved in good order in physical or in electronic form for as long as they remain current or for eight financial years, whichever is later and may be destroyed thereafter with the approval of the Board.
• The minute books of general meetings, shall be kept at the registered office of the company and shall be preserved permanently and kept in the custody of the company secretary or any director duly authorised by the board
• The minutes books of the Board and committee meetings shall be preserved permanently and kept in the custody of the company secretary of the company or any director duly authorized by the Board for the purpose and shall be kept in the registered office or such place as Board may decide.

Penalties & Punishments

·      If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.

·       If a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.