New Delhi, Oct. 7: The Secretarial Standards Board (SSB) of the Institute of the Company Secretaries of India (ICSI) is working on a new secretarial standard on dividends.
The new secretarial standard is expected to be out in about three months, a top ICSI official said. The main issue to be addressed will be the calculation of the divisible profit for declaration of dividends. The official said there are several gaps in the calculation of dividends and the Companies Act does not cover the area adequately. Companies currently adopt different practices based on various case laws. The board will standardise the best of these practices.
The SSB is headed by the past president of the ICSI, N. J. N. Wazifdar. Apart from ICSI members, the board will comprise officials of the department of company affairs (DCA), the Securities and Exchange Board of India (Sebi), the Institute of Chartered Accountants of India and the Institute of Cost and Work Accountants of India.
The standards laid down by the ICSI are not mandatory at present and will only be in the form of recommendations. “They can be made mandatory over a period of time by the regulatory authorities like the DCA and Sebi, once they feel that the standards are well adopted by the corporates,” ICSI deputy director Alka Kapoor said.
A preliminary report on the standards is first given to the chambers of commerce and other institutes for feedback. Then, comments are invited from the public through websites and other forums.
Recently, ICSI issued its first guidance notes regarding meetings of boards of directors. It elaborates on compliance norms on the secretarial standard SS1 issued in December last year. In May this year, the ICSI has issued SS2 on general meetings for which a guidance note is now under preparation.
The guidance note on the meeting of board of directors stipulates that notices for board meetings should be issued to directors who are abroad, they should be on company letterheads, and can be sent through courier and e-mail besides the conventional methods. Further, a proof of dispatch of notice should be maintained, as directors often use that as an excuse for not attending a meeting.