Ms. Jaya Sharma-Singhania and Mr. Akash Deepak Tekale
Introduction:
Voting by Postal Ballot is a type of voting in which pre-paid ballot papers are distributed to the members for their voting.
“In the Indian scenario, postal ballot is relatively a new concept which was introduced in the Companies Act, 1956 by insertion of a new Section, namely Section 192A through an amendment made to the said Act in year 2001. The Companies Act, 1956 contained no definition of postal ballot. However, the explanation given in Section 192A states that “for the purpose of this section, “postal ballot” includes voting by electronic mode”. Section 2(65) of the Companies Act, 2013 defines postal ballot as: “postal ballot” means voting by post or through any electronic mode. This definition gives us a fair idea about the meaning of postal ballot and also provides clarity that the Companies Act, 2013 has recognized the medium of e-voting for the purpose of postal ballot.
Why was Postal Ballot introduced?
- To increase the participation of voters in the voting and
- to enable voting at the door-step of the people who may not be able to attend a meeting in person.
Following list of business shall be transacted only by means of voting through postal ballot:
| SECTION | TRANSACTIONS FOR WHICH POSTAL BALLOT IS MANDATORY |
| 13 | Alteration of the objects clause of the memorandum and in the case of the company in existence immediately before the commencement of the Act, alteration of the main objects of the memorandum |
| 2 (68) | Alteration of articles of association in relation to insertion or removal of provisions which are required to be included in the articles of a company in order to constitute it a private company |
| 12(5) | Change in place of registered office outside the local limits of any city, town or village. |
| 13(8) | Change in objects for which a company has raised money from public through prospectus and still has any unutilized amount out of the money so raised |
| 43(a)(ii) | Issue of shares with differential rights as to voting or dividend or otherwise |
| 48 | Variation in the rights attached to a class of shares or debentures or other securities |
| 68(1) | Buy-back of shares by a company |
| 151 | Election of a director |
| 180(1)(a) | Sale of the whole or substantially the whole of an undertaking of a company |
| 186(3) | Giving loans or extending guarantee or providing security in excess of the limit |
A company may transact any other business by postal ballot instead of transacting at a general meeting except:
- ordinary business and
- any business in respect of which directors or auditors have a right to be heard at any meeting.
If a resolution is assented to by the requisite majority of the shareholders by means of postal ballot, it shall be deemed to have been duly passed at a general meeting convened in that behalf.
Procedure to be followed for conducting postal ballot:
Beneits of postal ballot to a company:
- Larger participation by shareholders;
- Increase in voting percentage;
- Increase in transparency;
- Reduce the time length of voting;
- Simple to understand.
Benefits of postal ballot to a shareholder:
The concept of Postal Ballot is a unique provision which gives shareholders the right to vote on items of business of a corporate body without actually attending its general meetings either personally or through their proxies/representatives.
Postal Ballot provides an opportunity even to such shareholders to take part in the decision making process. The facility now provided to all shareholders, regardless of their location or their ability to be physically present at an appointed day and place, to approve or reject a proposal of the Board and to vote on items of business by postal or electronic mode, is a further step to encourage corporate democracy and to promote good corporate governance.
Limitations of Postal Ballot:
- Cost of voting by postal ballot is high as compared to other means of voting.
- Ordinary business transactions cannot be voted by means of postal ballot.
Difference between Voting by Show of Hand and Postal Ballot:
A vote on a show of hands just counts up the PEOPLE voting for and against. It takes no account of the number of votes that each voter may have. A postal ballot vote takes into account the number of shares that a voter has. Voting by show of hands is much quicker and simpler to manage as compared to voting by postal ballot. On the other hand, voting by postal ballot doesn’t require the presence of the shareholders.
Postal Ballot – Companies Act, 1956 Vs Companies Act, 2013:
| Companies Act, 1956 | Companies Act, 2013 |
| Section 192A of the 1956 Act deals with Postal Ballot | Section 110 of the 2013 act deals with Postal Ballot |
| It applies only to listed public companies | It applies to all companies |
How do we help?
Being a practicing professional, we provide professional advice and ensure compliance with the said act and compliances required to be done under the said law.
Conclusion:
The Companies Act, 2013 has recognized the medium of e-voting for the purpose of postal ballot. Postal Ballot is a unique provision which gives shareholders the right to vote on items of business of a corporate body without actually attending its general meetings either personally or through their proxies/representatives. It is a further step to encourage corporate democracy and to promote good corporate governance.
Contributed By:
Ms. Jaya Sharma-Singhania
Mr. Akash Deepak Tekale
Jaya Sharma and Associates, Practising Company Secretary Firm, Mumbai.
Bibliography:
· Finapp.co.in
· Wikipedia.org
· Caclubindia.com
Author Bio
The same IDEA of Postal Ballot is similarly being followed for certain other purposes; e.g. election of office bearers in regulatory authotrities for CAS and other Professionals.
Lately, borrowing the same IDEA, for the forthcoming General Elections in say, Karnataka, special arrangements are reported to have been made to enable voting at home by SSCs of age over 80. Of course, the gesture is appreciated. Even so, if closely considered, the propriety of such voting before the DATE fixed for public voting at the booths is suspect and of grave doubt.
Anyone having any independent thoughts to spare and share, thereby eminently add value?
Me have in mind the undeniable fact of, – ‘mortality’ of both voter and candidate! If uprightly viewed, is there not a risk of such votes of SSCs , especially if were to be challenged , post-election, by any defeated candidate being invalidated as ‘unconstitutional ‘ ?!?
Dear Madam,
Is postal ballot applicable if a listed company wishes to takeover unlisted company.