Companies allowed service of documents to its members through electronic mode

Background: – Section 53 of the Companies Act, 1956 (the Act) provides for service of documents on members of the company by various modes. Service under Certificate of Posting was one of the prescribed mode.

The Department of Posts has recently discontinued the postal facility under ‘Certificate of Posting’ vide their circular dated 23 February 2011. Therefore, this mode will not be available to companies after that date.

Service of documents by e-mode instead of under Certificate of Posting mode

In view of the above and move of Ministry of Corporate Affairs (MCA), towards paperless compliances by the companies and based on sections 2, 4, 5 and 81 of the Information Technology Act, 2000, permitting service of documents in electronic mode, MCA has issued a Circular no. 17/ 2011 on 21 April, 2011 clarifying that:

“A company would have complied with Section 53 of the Companies Act, if the service of document has been made through electronic mode.”

Service of documents through electronic mode shall be available to the companies obtaining e-mail addresses of its members, for sending the notice/ documents through e-mail, by giving an advance opportunity to every shareholder for registering their email address and any changes therein from time to time.

Further, in case any member has not registered his e-mail address with the company, the service of document will be effected by other modes of service as provided under section 53 of the Act.

This circular issued by MCA provides a breather to the companies by providing them a cost-effective and less burdensome mode of servicing the documents through electronic mode.