All decision taken by the Board of Directors have to be documented by passing Board Resolutions. The proceedings of every Board Meeting along with the various resolutions passed are recorded in the form of Board minutes. Section 118 of the Companies Act, 2013 provides the detailed procedure for maintenance of minutes. At any point of time, the external parties or statutory authorities may require copies of such resolutions passed which have to be shared with them as Certified True copies.
Certified True Copy (CTC) of a Board resolution is a physical document, which has to be printed on the letter head of the Company, affirming the outcome of a particular resolution that has been passed by the Board of Directors who have consented and approved in their duly convened meeting.
Importance of CTC: Board resolutions are a record of the important decisions taken by the Company’s Board for the day to day management, development or growth perspective of the Company. Therefore, it is the responsibility of the Board and the certifying professionals/officers to ensure that they provide correct, accurate and reliable details of the resolutions passed to the persons or authorities who act upon those Certified true copies.
Any falsification of information mentioned in the Certified True copy or any non-compliance in the issuance of Certified True Copies of the Board resolution is considered as a punishable offence and may even lead to severe civil proceedings. The person certifying the contents of the CTC needs to ensure everything mentioned therein is true, fair and correct before signing. before signing.
A. Instances when the Certified True Copy (CTC) is required to be submitted?
- the bankers for either opening, operating, agreeing to the prescribed bank credit limits or changes in the authorised signatories of a bank accounts
- various statutory authorities for confirmation of particular transactions/business decisions of the Company etc.
- authorising the Company’s employees who are not part of the Board to perform a particular activity or represent the Company or to enter into any agreement on behalf of the Company.
Section 21 of Companies Act 2013 deals with authentication of documents, proceedings and contracts
This section is applicable to all companies.
(8) The documents or form or application filed may contain a power of attorney issued to an Advocate or Chartered Accountant or Cost Accountant or Company Secretary who is in whole time practice and to any others person supported by Board resolution to make representation to the registering or approving authority failing which a Director or key managerial personnel can make representation before such authority.
Interpretation: If the authority is given to a practicing professional or any other person to represent on behalf of the Company than such Document /form/application should be supported by a POA/Board Resolution.
B. Important points that need to be ensured before issuing a Certified True Copy (CTC):
Following is the mandatory protocol that needs to be adhered before authenticating the extract of Board resolution:
1. A Board meeting needs to be conducted in compliance with the Companies Act, 2013 by given at least 7 days’ clear notice to its Board of Directors. If convened at a shorter notice, then proper intimation needs to be given to the Board and their consent availed. If the company is required to have an independent director, presence of at least one Independent director is required.
2. The Meeting that has been convened needs to have requisite quorum which is 1/3 rd of total strength or 2 (Two) Directors, whichever is higher. Where meeting of Board could not be held for want of quorum, the meeting shall automatically adjourn to same time, same place at next week (Not being national holiday).
3. If a physical Board meeting is not possible then the Board can participate in the meeting by way of video conferencing & other audio visual means but they shall be properly recorded.
The Board must be aware of the matters (mentioned below) which can not be dealt at a meeting held though Video conferencing:
- Approval of the annual financial statements;
- Approval of the Board’s report;
- Approval of the prospectus;
- Audit Committee Meetings for consideration of accounts; and
- Approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.
4. The said resolution which is proposed to be shared as a Certified True Copy should be passed and recorded in the Board Meeting Minutes. It has to be approved with requisite majority to have the authenticity.
5. The Board meeting where the resolution was passed needs to have duly signed documents mentioned as below for records:
a) Notice of the Board meeting informing the Directors the resolutions that needs to be acknowledged and approved in their meeting.b) If the notice is sent in electronic mode then it should be in accordance with the timelines as mentioned in the Companies Act, 2013.
c) Attendance sheets showing Directors presence in the Board meeting
d) Signed copy of minutes as a proof affirming that the resolution has been approved by the Board.
C. Contents that need to be there in the Certified True Copy (CTC):
- The CTC needs to be printed on the letter head of the Company.
- The date, time, venue of the Board meeting/Circular resolution where the said resolution was passed.
- Details of the director signing the CTC i.e. his/her Name, designation and DIN.
- If the CTC is signed by a Company Secretary then his/her Name, designation and Membership Number.
- If the CTC is signed by a Practising Company Secretary then his/her Name, designation and Certificate of Practice number
- Details of the individual who is being granted authority to act on behalf of the Company, if required as per the format.
- The CTC needs to authenticated after all the requirements of Companies Act, 2013 are compiled pursuant to Section 21 of the Companies Act, 2013.
If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted then the Company and every officer of the Company who is in default or such other person shall be punishable with fine which may extend to Rs. 10,000 (Rupees Ten thousand Only) and where the contravention is continuing one, with a further fine which may extend to Rs. 1000 (Rupees One thousand Only) for every day after the first during which the contravention continues.
Therefore it is the responsibility of person certifying the document as a true copy to ensure that all important points are adhered to before issuing the Certified True Copy and that there is no omission of facts.
Article contributed by:
Monica Thakur, R&A Associates Team