Gaurav Kumar Pandit

Gaurav Kumar Pandit

Brief/Introduction: Postal ballot means ballot conducted by mail or electronic means; a system of voting in which people send their votes by post/ electronic means. Experience of several decades have shown most of the shareholders who reside in far-flung areas are unable to attend Annual or Extraordinary General Meetings. By postal ballot, shareholders can take part in decision making of the company. The concept of postal ballot was also recommended by the Working Group set up by Government to propose a new Bill to re-enact Companies Act, 1956 and also by Kumar Mangalam Birla Committee on Corporate Governance. The provision of postal ballot is prescribed only for the issues where participation of every shareholder is essential, e.g., investment proposals, appointment of directors, sale of the whole or substantially the whole of an undertaking of a company etc.

Kumar Mangalam Birtla Committee  observed that Voting at the general meetings of companies is the most valuable and fundamental mechanism by which the shareholders accept or reject the proposals of the board of directors as regards the structure, the strategy, the ownership and the management of the corporation. Voting is the only mechanism available with the shareholders for exercising an external check on the board and the management.

Under the present framework of the Companies Act, 2013, a company is required to obtain the approval of its shareholders for various important decisions such as increase in its authorised capital, shifting of registered office, change in the name, amalgamation and reconstitution, buy-back of shares, further issue of shares, etc. Since the shareholders of any large public listed company are scattered throughout the length and breadth of the country, they are unable to physically attend the general meetings of the company to exercise their right to vote on matters of vital importance. The system of voting by proxy has also not proved very effective.

In this article we will discuss about various legal provisions under the Companies Act, 2013, Secretarial Standards, SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 which are required to be complied with by Listed Companies and various practical issues which a listed Company faces in conducting Postal ballot. This article also contains comprehensive checklist coving all the practical and legal aspects for handing Postal Ballot with timelines.

 If you want look checklist without going through the legal provision please find below “Checklist for Postal Ballot”.

Legal provisions pertaining to Postal Ballot

We have to check and comply with provision of the following statutory enactments:

1. The Companies Act, 2013 read with the Companies (Management and Administration Rules) 2014

2. Secretarial Standards

3. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Regulations”).

THE COMPANIES ACT, 2013 READ WITH THE COMPANIES (MANAGEMENT AND ADMINISTRATION RULES) 2014 AND SECRETARIAL STANDARDS–

Meaning of Postal Ballot is given under section 2(65) of the Companies Act, 2013 (“the Act”) as “Postal ballot” means voting by post or through any electronic mode.

Section 110 of the Act read with Rule 22 of the Companies (Management and Administration Rules) 2014 (“the Rules”) provides the following:

  • Section 110 has overriding effect over the whole of the Act.
  • Following Items shall mandatorily transacted through Postal Ballot

(i) Alteration of the objects (Main object if company is registered under CA, 1956) clause of the memorandum;

(ii) Alteration of Articles for conversion of Company into public or private company;

(iii) Change in place of registered office outside the local limits of any city, town or village as specified in sub-section (5) of section 12 of the Act;

(iv) Change in objects for which money is raised by Prospectus and such money remains unutilized;

(v) Issue of shares with differential rights as to voting or dividend or otherwise

(vi) Variation in the rights attached to a class of shares or debentures or other securities as specified under section 48 of the Act;

(vii) Buy-back of shares;

(viii) Election of small shareholder director under section 151 of the Act;

(ix) Sale of the whole or substantially the whole of an undertaking of a company as specified under sub-clause (a) of sub-section (1) of section 180;

[it may be noted that section 180(1)(a) is applicable in the case of sale, lease or otherwise dispose off , and this clause only talks about sale of undertaking. Therefore, in the case of lease or disposing of undertaking other than sale doesn’t require postal ballot. Leasing under section 180 can be done by passing resolution in General Meeting.]

(x) giving loans or extending guarantee or providing security in excess of the limit specified under sub-section (3) of section 186.

  • Companies required to transact aforesaid business by Postal ballot:

– A company (Whether listed or unlisted) having shareholders of having more than 200 members shall transact aforesaid business by way of Postal Ballot

– The provisions of Postal ballot shall not be applicable to One Person Company or Private Company (as max number of shareholders cannot exceed 200).

  • A Company may at its own discretion may transact any businessby way of postal ballot other than the following business:

1. Ordinary Business

2. Any business in respect of which directors or auditors have a right to be heard at any meeting

Note: In view of the above provision, it can be concluded that a Private company may also at its own discretion transact any business other than prohibited businesses by way of Postal Ballot.

  • Postal Ballot dispenses the requirement of holding a General Meeting. If resolution is passed by Requisite Majority (i.e. Requirements of Ordinary Resolution/Special Resolution), such resolution is deemed to be passed at the General Meeting.
  • [Secretarial Standard 2] Board Approval – Board shall

– Identify the business to be transacted through Postal Ballot.

– Approve the Notice of the Postal Ballot – Notice shall contain Proposed Resolution and Explanatory Statement

– Authorize Company Secretary or in case of no Company Secretary, any director of the Company to

i) conduct the Postal Ballot Process

ii) sign and send notice along with other documents

– Appoint Scrutinizer for Postal Ballot (including e-voting).

> Prior Consent of Scrutinizer shall be obtained and placed before the Board.

> Scrutinizer can be Practicing Company Secretary (PCS), Practicing Chartered Accountant (PCA), Practicing Cost & Management Accountant (PCMA), Advocate or any other person repute and in the opinion of the Board such person is competent to scrutinize the postal ballot process in fair and transparent manner.

> Scrutinizer shall not be in the employment of the Company. Scrutinizer may take the assistance of any other person who is not in the employment of the Company and who is well versed with the system of e-voting.

– Appoint an agency for e-voting

– Decide record date [cut off] for sending of Notice and ascertaining the eligibility of the members who are entitled to vote.

– Decide calendar of event.

– Authorize Chairman/ or in his absence any other director to receive the i) scrutinizer’s register ii) report on postal ballot ii) other relating documents.

Procedure to be followed for Postal Ballot

– Notice to all the shareholders, along with a draft resolution explaining the reasons therefor and requesting them to send their assent or dissent in writing on a postal ballot. Notice shall also be given to Auditors, Directors, Secretarial Auditors, debenture trustee (if any).

– Notice shall be accompanied by postal ballot form with necessary instructions for filling, signing and returning.

Postal Ballot Form

♦ The postal ballot form shall be accompanied by a postage prepaid reply envelopeaddressed to the scrutiniser.

♦ Contain instructions as to the manner in which the form is to be completed, assent or dissent is to be recorded and its return to the scrutiniser.

♦ The postal ballot form may(not mandatory) specify instances in which such Form shall be treated as invalid or rejected and procedure for issue of duplicate postal ballot Forms.

A postal ballot form shall be considered invalid if:

(a) A form other than one issued by the company has been used;

(b) It has not been signed by or on behalf of the Member;

(c) Signature on the postal ballot form doesn’t match the specimen signatures with the company

(d) It is not possible to determine without any doubt the assent or dissent of the Member;

(e) Neither assent nor dissent is mentioned;

(f) Any competent authority has given directions in writing to the company to freeze the Voting Rights of the Member;

(g) The envelope containing the postal ballot form is received after the last date prescribed;

(h) The postal ballot form, signed in a representative capacity, is not accompanied by a certified copy of the relevant specific authority;

(i) It is received from a Member who is in arrears of payment of calls;

(j) It is defaced or mutilated in such a way that its identity as a genuine form cannot be established;

(k) Member has made any amendment to the Resolution or imposed any condition while exercising his vote.

(l) undated postal ballot form

  • Contents of the Notice

♦ Notice shall specify day, date, time and venue where the results of voting by Postal Ballot will be declared and Link of the website where such results will be displayed.

♦ Notice also specify mode of declaration of results.

♦ Notice shall inform the shareholders about availability of e-voting facility and provide necessary information enabling shareholder to assess such facility.

Clearly specify e-voting procedure.

♦ date and time of commencement and end of e-voting and also contain a statement that voting shall not be allowed beyond the said date and time.

♦ contact details of the official responsible to address the grievances connected with the e-voting for postal ballot

♦ clearly specify that any Member cannot vote both by post and e-voting and if he votes both by post and e-voting, his vote by post shall be treated as invalid

♦ Notice shall clearly mention the record date as on which the right of voting of the Members shall be reckoned and state that a person who is not a Member as on the record date should treat this Notice for information purposes only.

♦ explanatory statement shall set out all such facts as would enable a Member to understand the meaning, scope and implicationsof the item of business and to take a decision thereon.

♦ Every business proposed to be passed by Postal ballot shall be in the form of the Resolution only.

– Time period for sending assent or dissent is 30 days from the date of dispatch of the Notice.

– Assent or dissent may be given by the post or electronic means during the period of 30 days.

– Notice shall be send by either

(a) by Registered Post or speed post, or

(b) through electronic means like registered e-mail id, or

(c) through courier service

Note: It seems that a company can send notice by email, but company is required to send notice in hard copy as well as if any shareholder decides to give assent or dissent by posting Postal Ballot Paper to Post then he must have prepaid envelop and other documents in hard.

Practically, Corporates incorporate a line in the notice viz. “In case a Member is desirous of obtaining a printed Postal Ballot Form, he or she may send an e-mail or letter to the Company” to save the cost of printing and postage.

  • Newspaper Advertisement– Advertisement in Newspaper at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, about having dispatched the ballot papers and specifying therein, inter alia, the following matters, namely:—

(a) a statement to the effect that the business is to be transacted by postal ballot which includes voting by electronic means;

(b) the date of completion of dispatch of notices;

(c) the date of commencement of voting;

(d) the date of end of voting;

(e) the statement that any postal ballot received from the member beyond the said date will not be valid and voting whether by post or by electronic means shall not be allowed beyond the said date;

(f) a statement to the effect that members, who have not received postal ballot forms may apply to the company and obtain a duplicate thereof; and

(g) contact details of the person responsible to address the grievances connected with the voting by postal ballot including voting by electronic means.

– Advertisement shall clearly mention the record date as on which the right of voting of the Members shall be reckoned and state that a person who is not a Member as on the record date should treat this Notice for information purposes only.

– As per Regulation 47 of the SEBI Regulations in newspaper advertisement give a reference in the newspaper publication, to link of the website of listed entity and stock exchange(s), where further details are available.

  • Notice shall be placed on the website of the Company forthwith notice is sent to shareholders and remain on the website till the last date of receipt of Postal ballots from the members.
  • Postal ballot received back from the shareholders shall be kept in the safe custody of the scrutinizer and after the receipt of assent or dissent of the shareholder in writing on a postal ballot, no person shall deface or destroy the ballot paper or declare the identity of the shareholder.
  • Declaration of Results

♦ Scrutinizer shall submit his report to the chairman/ director authorized by the Board who shall countersign the same as soon as possible after the last date of receipt of postal ballots but not later than seven days

But as per regulation 44 of the SEBI Regulations listed company shall submit results to Stock Exchanges within 48 hours.

Therefore, scrutinizer is required to submit report before 48 hours from the last date of receiving Postal Ballot

♦ Based on the scrutiniser’s report, the Chairman or any other Directorauthorised by him shall declare the result of the postal ballot on the date, time and venue specified in the Notice, with details of the number of votes cast for and against the Resolution, invalid votes and the final result as to whether the Resolution has been carried or not.

♦ The scrutinizer shall maintain a register either manually or electronically to record their assent or dissent received, mentioning the particulars of name, address, folio number or client ID of the shareholder, number of shares held by them, nominal value of such shares, whether the shares have differential voting rights, if any, details of postal ballots which are received in defaced or mutilated form and postal ballot forms which are invalid.

♦ The result of the voting along with the scrutiniser’s reportshall be displayed on the Notice Board of the company at its Registered Office and its Head Office as well as Corporate Office, if any, if such office is situated elsewhere, and also be placed on the website of the company, in case of companies having a website.

Resolution by postal ballot shall be deemed to be passed on on the last date specified by the company for receipt of duly completed postal ballotforms or e-voting.

– The postal ballot and all other papers relating to postal ballot including voting by electronic means, shall be under the safe custody of the scrutinizer till the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the ballot papers and other related papers or register to the company who shall preserve such ballot papers and other related papers or register safely.

– The assent or dissent received after thirty days from the date of issue of notice shall be treated as if reply from the member has not been received.

– The results shall be declared by placing it, along with the scrutinizer’s report, on the website of the company.

  • A Resolution passed by postal ballot shall not be rescinded/modified otherwise than by a Resolution passed subsequently through postal ballot [SS 2].
  • The provisions of rule 20 regarding voting by electronic means shall apply, as far as applicable, mutatis mutandisto this rule in respect of the voting by electronic means.

Company is required to provide e-voting facility to the shareholders for 30 days.

  • Minutes – As per section 118 of the Companies Act, 2013, minutes of Postal ballot shall be drafted and signed within 30 days from the date of resolution by Postal ballot. Minutes shall be recorded in minute book of General Meetings.

– A brief report on the postal ballot conducted including the resolution proposed, the result of the voting thereon and the summary of the scrutinizer’s report shall be entered in the minutes book of general meetings along with the date of such entry within thirty days from the date of passing of resolution.

– In case of every resolution passed by postal ballot, minutes shall be signed by the chairman of the Board within the aforesaid period of thirty days or in the event of there being no chairman of the Board or the death or inability of that chairman within that period, by a director duly authorized by the Board for the purpose.

  • No Requirement of Quorum in respect of business transacted through Postal Ballot (SS2)

SEBI (LISTING OBLIGATIONS & DISCLOSURE REQUIRMENTS) REGULATIONS, 2015

Regulation 42 of SEBI LODR – Record Date

  • Intimate the record date to all the stock exchanges where record date is decided for –

a) Declaration of Dividend

b) Issue of right of Bonus shares

c) issue of shares for conversion of debentures or any other convertible security;

d) shares arising out of rights attached to debentures or any other convertible security

e) corporate actions like mergers, de-mergers, splits and bonus shares, where stock derivatives are available on the stock of listed entity or where listed entity’s stocks form part of an index on which derivatives are available;

f) such other purposes as may be specified by the stock exchange(s).

  • Notice in advance atleast 7 working days (excluding record date and date of notice) specifying the record date and the purpose of record date.
  • Time gap of at least thirty days between two record dates
  • For the purpose of shares in physical form, there may be a book closure.

Regulations 30 read with schedule III of SEBI Regulations and Company’s Policy on Materiality of Transactions

  • Intimation within 24 hours/ 30 minutes (in case of BM) as the case may be from the time of occurrence of the event.
  • In case disclosure is made after 24 hours then intimation shall be given along with reason for delay.
  • Disclose the Intimation/disclosure made to stock exchanges above on the website of the Company.
  • In case where an event occurs or an information is available with the listed entity, which has not been indicated in Para A or B of Part A of Schedule III, but which may have material effect on it, the listed entity is required to make adequate disclosures in regard thereof.
  • Relevant clause of Para A of schedule III –

12. Issuance of notices, call letters, resolutions and circulars sent to shareholders, debenture holders or creditors or any class of them or advertised in the media by the Company and the following:

12.1. date of notice/call letters/resolutions etc.;

12.2. brief details viz. agenda (if any) proposed to be taken up, resolution to be passed, manner of approval proposed etc.

13. Proceedings of annual and extraordinary general meetings of the Company and the following details in brief:

13.1. date of the meeting;

13.2. brief details of items deliberated and results thereof;

13.3. manner of approval proposed for certain items (e-voting etc.).

  • Website disclosure of news paper advertisement [regulation 46(2) (q) ] and disclosure under regulation 30 as above

DETAILED CHECKLIST FOR POSTAL BALLOT

S.No. Particulars Remarks
1 Before Board Meeting activities

  • Decide Scrutinizer for Postal Ballot and receive his consent.
  • Draft of the Notice, Explanatory statement along with proposed resolution shall be finalized
  • Finalize Printer, Dispatcher and Agency to design the Notice, if any. – discuss the time required by them, cost and other procedural work
  • Finalize e-voting agency – prepare final documents to be executed with e-voting agency and take confirmation (signing shall be done after Board meeting only)
  • Take pre paid envelop permit from Post office for Postal Ballot envelop.
  • Discuss with RTA regarding cut off date for Notice and list of Shareholders on cut off date & Voting
  • Decide calendar of Events
  • Prepare Agenda of the Board Meeting
  • Printing of Postal Ballot Envelops, Postal Ballot Form and prepaid envelops can be done before the Meeting
Advance mail to NSDL and CDSL by copying RTA in case record date/cut off date is other than friday)
2 Call a Board Meeting as per section 173  and SS 1 and dispatch Agenda and Notice of the Board Meeting X-7 (excluding date of BM and date of Notice)
3 Transact the following transaction in the Board Meeting

– Identify the business to be transacted through Postal Ballot.

– Approve the Notice of the Postal Ballot – Notice shall contain Proposed Resolution and Explanatory Statement

– Authorise Company Secretary or in case of no CS, any director of the Company to

i) conduct the Postal Ballot Process

ii)  sign and send notice along with other documents

– Appoint Scrutinizer for Postal Ballot

– Appoint an agency for e-voting

– Decide record date [cut off] for sending of Notice and ascertaining the eligibility of the members who are entitled to vote.

– Decide calendar of event.

– Authorize Chairman/ or in his absence any other director to receive the

i) scrutinizer’s register

ii) report on postal ballot and other relating documents.

Note: cutoff date can be taken on Friday and the Banpose of shareholders by CDSL & NSDL. It will save the cost of the Company. Some RTA does not charge for the data of shareholders for Postal Ballot subject to the condition that intimation to NSDL and CDSL and RTA given in advance.

X
4 Filing of Necessary form with ROC, if Required X+30
5 Intimate Stock Exchanges and upload on the website of the Company if any matter is relating to Regulation 30 of SEBI Regulations and Website disclosure under regulation 46.  within 30 minutes or 24 hours to stock exchange

Upload on website within 24 hours of submission

4 Advance intimate to stock exchange specifying the purpose of record date Record Date – 7 Working days -1-1
5
  • Printing of the Notices along with explanatory statements, Postal ballot Form (Generally 3 days taken it could be exceed)
  • Overprinting of details of shareholders by RTA (time taken approx. 24 hours)
  • File an application for activating/obtaining EVSN to NSDL/CDSL/evoting agency – (any time after board meeting but before starting of E-voting)
  • Obtain details of shareholders from RTA regarding as on cutoff date.
  • Provide information to NSDL for sending email Notice to Shareholders atleast one day before the starting of E-voting.
X+5
6
  • Send Notice along with relevant documents to Shareholders, Directors, Auditors, and Secretarial Auditors by speed post or Registered Post or by courier or by email (email is to be sent by NSDL/CDSL/RTA).
  • Put Notice of Postal Ballot on the Company Website, NSDL/CDSL Website
  • Send notice of Postal ballot to stock exchanges pursuant to regulation 30 (within 24 hours from sending of the Notice to shareholders but it could be before sending of the Postal Ballot.
  • Put the disclosure made to STXs under regulation 30 on website of the Company (within 24 hours)
X+7 (any other date can be taken but shall be as per schedule of Events)

X+7

X+8

X+9

7 – Advertisement in Newspaper at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, about having dispatched the ballot papers and specifying therein, inter alia, the following matters, namely:—

(a) a statement to the effect that the business is to be transacted by postal ballot which includes voting by electronic means;

(b) the date of completion of dispatch of notices;

(c) the date of commencement of voting;

(d) the date of end of voting;

(e) the statement that any postal ballot received from the member beyond the said date will not be valid and voting whether by post or by electronic means shall not be allowed beyond the said date;

(f) a statement to the effect that members, who have not received postal ballot forms may apply to the company and obtain a duplicate thereof; and

(g) contact details of the person responsible to address the grievances connected with the voting by postal ballot including voting by electronic means.

(Other requirement to be fulfilled as mentioned in the Legal Provisions)

X+8

(Forthwith is mentioned in statutory provisions)

8
  • Send Newspaper publication to STXs pursuant to R.30 of SEBI (LODR) (within 24 hours)
  • Put the disclosure made to STXs under regulation 30 on website of the Company along with Newspaper Publication
X+9
9 E-voting and Time line for receipt of the Post Ballot

Note: Resolution by postal ballot shall be deemed to be passed on on the last date specified by the company for receipt of duly completed postal ballot forms or e-voting.

Voting shall be open for atleast 30 days.

X+8 to X+38 (Date of Resolution passed)

E-voting can be start on the date of dispatch or next date (its practice)

10 Scrutinizer shall maintain a register of Postal Ballot Forms and other documents
11
  • The scrutinizer shall submit his report to the Chairman who shall countersign the same.
  • Based on the scrutinizer’s report, the Chairman or any other director authorized by him shall declare the result of the postal ballot on the date, time and venue specified in the notice, with details of the number of votes cast for and against the Resolution, invalid votes and the final result as to whether the Resolution has been carried or not.
  • Place such result along with the scrutinizer’s report on the website of the Company & evoting agency. [i.e. declaration of result]
  • File the copy of the result along with Scrutinizer Report with the Stock Exchanges.
  • The result of the voting along with the scrutiniser’s report shall be displayed on the Notice Board of the company at its Registered Office and its Head Office as well as Corporate Office, if any,
 

 

X+38+2

(within 48 hours of last date of receipt of Postal Ballot Form)

10 File necessary ROC forms MGT-14, MR-1 etc, if any. Date of passing of Resolution + prescribed limit
11 Preparation and signing of minutes Date of passing of Resoluton+30
12 Return of Postal Ballot and other documents to Chairman by Company Secretary After signing of Minutes

More Under Company Law

Posted Under

Category : Company Law (3490)
Type : Articles (14994)
Tags : Companies Act (1961) Companies Act 2013 (1733)

4 responses to “Practical Guide to Postal Ballot – Listed Company”

  1. vijay kumar says:

    wonderful information

  2. sanoj kumar says:

    good gaurav…keep it up..

  3. Julee Singh says:

    Nice Concept ?

  4. Rahul says:

    Nice Article

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