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Gurminder Dhami

Gurminder DhamiIntroduction

With the dawn of Companies Act, 2013 which strives towards shareholders activism, the shareholders now have an option to cast their vote electronically. The intention is to provide the shareholders opportunity to have their say at the general meeting of a company without even being present at the same.

The rules relating to provisions of e-voting were notified on 23rd June, 2014 and a clarification relating to the same was also issued vide circular no. 20/2014 on 20/06/2014.

Now, MCA has now come out Companies (Management and Administration) amendment rules, 2015 revising the procedure pertaining to e-voting.

In this article, unless otherwise expressly provided all sections referred to are of Companies Act, 2013 and rules referred to are of Companies (Management and Administration) rules, 2014 as amended by Companies (Management and Administration) amendment rules, 2015.

Revised Applicability

As per rule 20(2) the provisions of e-voting are applicable to:-

Company having not less than 1000 members

OR

Company other than those referred to in chapter XB(Companies listed on SME exchange) or chapter XC(Companies listed on institutional trading platform without IPO) of ICDR regulations, 2009 and having its equity shares listed on a recognized stock exchange.

Due to change in applicability now following companies are out of ambit of e-voting:-

  1. Companies listed on regional stock exchanges.
  2. Companies having whose debenture/preference shares were only listed.
  3. Companies listed on SME trading platform.
  4. Companies listed on institutional trading platform.

Notice of meeting

To whom: – The notice of the meeting shall be sent to all the members, directors and auditors of the company. It shall also be put up on the website of the Company and agency.

Mode of sending Notice: – Either by registered/speed post, courier or through electronic means, namely registered e-mail id.

Information to be given:

(A) The notice of the meeting shall clearly state:-

  • That the company is providing facility for voting by electronic means and the business may be transacted through such voting.
  • That the facility for voting, either through voting by electronic means or ballot/polling paper shall also be made available at the meeting and members attending the meeting who have not already cast their vote by remote e-voting shall be able to exercise their right at the meeting.

Voting by electronic means:includes “remote e-voting” and voting at the general meeting through an electronic voting system which may be the same as used for remote e-voting.

Remote e-voting: – means the facility of casting votes by a member using an electronic voting system from a place other than venue of a general meeting

(Therefore, it is clear that a company may conduct poll at the meeting through an electronic system instead of using ballot/polling paper. This practice was done by Reliance Industries Limited in its AGM held on 18th June, 2014) [1]

  • That the members who have cast their vote by remote e-voting prior to the meeting may also attend the meeting but shall not be entitled to cast their vote again. (Views of circular incorporated in rules now )

(B) The notice of the meeting shall:-

  • indicate the process and manner for voting by electronic means.
  • indicate the time schedule including the time period during which the votes may be cast by remote e-voting.
  • provide the details about the login ID.
  • specify the process and manner for generating or receiving the password and for casting of vote in a secure manner.

A resolution proposed to be considered through voting by electronic means shall not be withdrawn. (Rule 20(xviii))

Public notice by way of Advertisement

When: – On completion of dispatch of notices but min. 21 days before general meeting.

Where: –

i. Vernacular newspaper in principal vernacular language of the district in which registered office is situated having wide circulation in the district.

ii. English newspaper in English language having country-wide [2] circulation

iii. It shall also be put on the website of the company and agency.

What: – the public advertisement shall contain the following matter namely:-

  • Statement that the business may be transacted through voting by electronic means.
  • the date and time of commencement of remote e-voting.
  • the date and time of end of remote e-voting.
  • Cut-off date, defined under amended rule 20 as “a date not earlier than seven days before the date of general meeting for determining the eligibility to vote by electronic means or in the general meeting.
  • Manner in which persons who have acquired shares and become members of the company after the dispatch of notice may obtain the login ID and password.
  • Website of the company, if any, and of the agency where notice of the meeting is displayed.
  • Name, designation, address, email id and phone number of the person responsible to address the grievances connected with facility for voting by electronic means.

(Earlier in old rule 20 only contact details term was used, now it is expressly given what details are to be given)

  • A statement that:-

i. Remote e-voting shall not be allowed beyond the said date and time

ii. Manner in which the company shall provide for voting by members present at the Meeting (electronic/ballot paper).

iii. A member may participate in the general meeting even after exercising his right to vote through remote e-voting but shall not be allowed to vote again in the meeting.

iv. A person whose name is recorded in the register of members or in the register of beneficial owners maintained by the depositories as on the cut-off date only shall be entitled to avail the facility of remote e-voting as well as voting in the general meeting.

e-voting period

The remote e-voting period shall be of minimum 3 days and end necessarily 1 day before the general meeting at 5:00 P.M. Once the vote on a resolution is cast by the member, he shall not be allowed to change it subsequently or cast the vote again.

At the end of the remote e-voting period, the facility shall forthwith be blocked, provided that if a company opts to provide the same electronic system as used during remote e-voting during the general meeting, the said facility shall be in operation till al the resolutions are considered and voted upon in the meeting and may be used for voting by the member attending the meeting and who have not exercised their right to vote through remote e-voting.

Scrutinizer

The scrutinizer shall be willing to be appointed and be available for ascertaining the majority.

The Board may appoint a PCA/PCS/PCWA/Advocate/any other person, not in employment of the company and is a person of repute as the scrutinizer. Now since as per rule20 the Scrutinizer of e-voting & poll shall be the same, he should be a member of the Company as on cut-off date in order to be entitled to attend the general meeting.

The scrutinizer may take assistance of a person who is not in the employment of the company and who is well versed with the e-voting system.

Procedure at the meeting

(A) Documents required:-

  1. Polling Papers (MGT-12).
  2. Register of Members, attendance register (including attendance slips) and Specimen signatures of members (to be coordinated with the RTA in case of listed company).
  3. Proxy register and proxy forms received (MGT-11) and Board Resolution(s) under section 113 (Representation of body corporate).
  4. Ballot papers received in pursuance of clause 35B (2) of listing agreement.
  5. Information required under rule 20 regarding persons who have voted through remote e-voting namely, name, folio, number of shares and other info. Scrutinizer may require (eg:- Copy of Board Resolution uploaded, in case of voting by Body Corporate) but the manner in which the votes have been cast should not be available to the scrutinizer.

(B) Procedure:-

The Chairman shall, at the general meeting at the end of discussion on the resolutions on which voting is to be held, allow voting as provided in rule 21(1)(a) to (h) as applicable, with the assistance of scrutinizer.(views of the circular that show of hands not allowed in case of e-voting now incorporated in rules)

The manner in which members have cast their votes, affirming or negating the resolution shall remain secret and not available to the chairman, scrutinizer or any other person till the votes are cast in the meeting.

The procedure can be summed up as under:-

1. The scrutinizer shall distribute the polling paper to the members & proxies and lock an empty box in their presence.

2. After voting, he will open the box, count and hereafter unblock the votes cast through remote e-voting in presence of at least 2 witnesses who are not in employment of the Company.

3. The scrutinizer shall give a consolidated report within 3 days of conclusion of meeting to the chairman or authorized person by him. While preparing the report check the following with reference to votes cast at the general meeting :-

a.       The person voting or on whose behalf the proxy has cast the vote is member as on cut-off date.

b.      The person is present at the meeting, from attendance register.

c.       Validity of signature of the person signing, from specimen signatures.

d.      In case, person voting is a proxy, then proxy registers and forms.

e.       In case member is a body corporate, authorization through Board resolution.

f.        Incomplete polling papers to be taken as invalid

g.       The vote of person who has already voted through remote e-voting shall e taken as invalid.

h.      In case, there is doubt upon validity of proxy, validity shall be decided in consultation with the chairman.

4. The scrutinizer shall also maintain a register, manually/electronically to record assent/dissent mentioning the particulars of name, address, folio number/client ID of members, no. of shares held by them, nominal value of such shares and whether they have differential voting rights.

5. The chairman shall countersign the report and declared the result forthwith. The results should also be placed at the website of company, agency and stock exchange (listed company).

6. After signing of the minutes by the chairman, scrutinizer shall handover the register and other related papers to the Company.

The resolution shall be deemed to be passed on the date of relevant general meeting subject to requisite majority.

An indicative timeline for e-voting is annexed (below) as annexure-A.

 Annexure-A e-votingContradiction

Ques. Within how much time scrutinizer’s report has to be given?

Ans: As per rule 21(2) report of scrutinizer on poll shall be submitted to the Chairman of the meeting within seven days from the date the poll is taken.

But, as per rule 20 the consolidated report shall be given to the chairman/ authorized person with 3 days of conclusion of meeting.

In light of above provisions it can be interpreted that the result has to be mandatorily be given by the scrutinizer within 3 days (not seven) to ensure compliance with rule 20.

Ques. Whether a separate report for poll on has to be given by the scrutinizer?

Ans: As per rule 21(2) report of scrutinizer on poll shall be given by the scrutinizer in MGT-13.

But, rule 20(4)(xi) & (xii) says that a consolidated report needs to be given and provisions rule of 21(1)(a) to (h) relating to poll shall be followed.

In light of above and applying the harmonious rule of interpretation, it can be summed as follows:-

Companies on which e-voting is mandatory: – A consolidated report will be given and it is not required to give a separate report on poll in MGT-13.

Where e-voting not mandatory: – Report on poll shall be given in MGT-13 within 7 days of taking poll.

[1] Refer the given disclosure under clause 35A.

http://www.bseindia.com/xml-data/corpfiling/AttachHis/Reliance_Industries_Ltd_200614.pdf

[2] In previous rule 20, “district” was used instead of “country wide”.

Disclaimer: The entire contents of this article have been prepared on the basis of relevant provisions and information existing at the time of preparation. Though utmost effort has been made to provide authentic information, it is suggested to kindly cross check the relevant provisions for better understanding.   The observations of the author are personal view and the author does not take any responsibility of the same and this cannot be quoted without the written consent of the author.

(Author may be contacted at csgurminderdhami@gmail.com or on his mobile no. +91-8800568609- Suggestions, comments and queries solicited. )

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Author Bio

Gurminder Singh Dhami is a young, energetic Company Secretary with an eye for detail into the nuances of Corporate Law. A researcher at heart, he has written various articles on new Companies Act, 2013 and leads the Team in keeping abreast with the latest changes and supports in critically analyzing View Full Profile

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