Ms. Jaya Sharma-Singhania and Mr. Akash Deepak Tekale

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.

Vote

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.

Companies

Procedure to be followed for conducting postal ballot:

Board Resolution

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Vote by Post

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

More Under Company Law

Posted Under

Category : Company Law (3435)
Type : Articles (14571)
Tags : Companies Act (1903) Companies Act 2013 (1675)

One response to “An Overview on Postal Ballot”

  1. Nidhi Parekh says:

    Dear Madam,

    Is postal ballot applicable if a listed company wishes to takeover unlisted company.

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