23 November 2007
PASSING OF RESOLUTIONS BY POSTAL BALLOT* 166.1 Background note Section 192A of the Act provides for passing of resolutions by postal ballot in respect of specified matters. The term “postal ballot” includes voting by electronic mode. 166.2 Applicability to listed companies This provision is applicable only in case of listed public companies. Resolutions notified by the Central Government (Para 166.3) should be passed only through postal ballot instead of transacting at a properly convened general meeting. In respect of resolutions relating to other matters, the Company has the option to pass the resolution through postal ballot or in a properly convened general meeting. 166.3 List of business to be passed through postal ballot The list of businesses which shall be passed through postal ballot are given hereunder : u Alteration in the Objects Clause of the memorandum of association u Alteration of Articles of Association in relation to insertion of provisions defining a private company u Buy-back of own shares under section 77A(1) of the Companies Act, 1956 u Issue of shares with differential voting rights under section 86(ii)(a) of the Companies Act, 1956 u Change in place of registered office outside local limits of any city, town or village as specified in section 146(2) of the Companies Act, 1956 C H A P T E R *RELEVANT PROVISIONS : u Companies Act, 1956 : Section 192A. u Companies (Passing of the Resolution by Postal Ballot) Rules, 2001. APPLICABILITY : LISTED PUBLIC COMPANY. u Sale of whole or substantially the whole of undertaking as specified under section 293(1)(a) of the Companies Act, 1956 u Giving loans or extending guarantee or providing security in excess of the limit specified under section 372A(1) of the Companies Act, 1956 u Election of a director under proviso to section 252(1) of the Companies Act, 1956 u Variation in the rights attached to a class of shares or debentures or other securities as specified under section 106 of the Companies Act, 1956. 166.4 Responsibility for conduct of postal ballot process The Board of Directors of the company should make the company secretary along with one of the functional directors responsible for the entire postal ballot process by means of an appropriate board resolution the resolution should be passed in the Board Meeting in which notice required to be sent to the shareholders under section 192A(2) is approved by the Board. A copy of the board resolution should be despatched along with items to be included in the calendar of events within one week of passing of the Board resolution to the concerned Registrar of Companies for information. Appointment of scrutinizer should also be appointed at this meeting. 166.5 Issue of notice to shareholders Notice of resolution be sent to all shareholders along with a draft resolution explaining reasons therefor and requesting them to send assent or dissent in writing on a postal ballot within 30 days of posting the letter. 166.5-1 Mode of despatch of notice The notice should be sent by registered post with acknowledgement due or under certificate of posting along with a postage pre-paid envelope to facilitate the shareholder to give his assent or dissent and return the ballot paper duly completed. 166.5-2 Foot note in the notice of general meeting A note may be given below the notice of general meeting for understanding of members that the transaction at Sl. No. requires consent of shareholders through postal ballot. 166.5-3 Publication of notice An advertisement regarding despatch of ballot papers may be published in a leading English newspaper and in one vernacular newspaper circulating in the State in which the registered office of the company is situated. 166.6 Appointment of scrutinizer The Board should appoint one scrutinizer, who is not in employment of the company. 166.6-1 Who can be a scrutinizer The scrutinizer may be a retired judge or any person of repute who, in the opinion of the board, can conduct the postal ballot voting process in a fair and transparent manner. The scrutinizer should be willing to be appointed and should be available at the registered office for the purpose of ascertainment of requisite majority. 166.6-2 Duration of office of scrutinizer The scrutinizer will be in position for 35 days (excluding holidays) from the date of issue of notice for general meeting. 166.7 Maintenance of record by scrutinizer and conducting postal ballot The scrutinizer shall maintain a register (including electronic media) to record the consent or otherwise received mentioning the particulars of name, address, folio number, number of shares, nominal value of shares etc. and a record of ballots received in defaced or mutilated form. 166.7-1 Safe custody of ballots The postal ballot and all other papers relating to it shall be under his safe custody till the chairman considers, approves and signs the minutes of the meeting. 166.7.2 Voting rights The voting right on postal ballot shall be in proportion to the shareholders share of the paid-up share capital of the company. 166.8 Effect of non-receipt of assent or dissent If consent is received after 30 days from the date of issue of notice, it shall be treated as if reply has not been received from the member. 166.9 Submission of report by scrutinizer The scrutinizer shall submit his report as soon as possible after the last date of receipt of postal ballots and shall be available at the registered office of the company for ascertaining the requisite majority. 166.10 Signing of minutes by Chairman On signing of minutes by Chairman, the scrutinizer shall return the ballots and other papers to the company for preservation till the resolutions are given effect to. 166.11 DCA clarifications regarding postal ballot Refer Annex 166.1 for clarifications on the Companies (Passing of Resolutions by Postal Ballot) Rules. ANNEX 166.1 (Refer Para 166.11) DCA CIRCULAR - POSTAL BALLOT CLARIFICATION REGARDING COMPANIES (PASSING OF THE RESOLUTION BY POSTAL BALLOT) RULES, 2001 Section 192A(1) of the Companies Act, 1956 was inserted by the Companies (Amendment) Act, 2000, which came into force with effect from 13th December, 2000. The provisions of the section give all listed companies an option of passing shareholder’s resolution through postal ballot. Further, they are necessarily required to get certain businesses as notified by the Central Government, vide Notification No. G.S.R. 337(E), dated 10th May, 2001, to be passed through postal ballot. The Companies (Passing of the Resolution by Postal Ballot) Rules, 2001, which were notified on 10th May, 2001, mention transactions to be transacted through postal ballot. Pursuant to section 2 of the Companies (Amendment) Act, 2000, a Notification No. S.O. 523(E), dated 15th June, 2001, was published indicating the date from which the provisions of section 192A shall come into force i.e., 15th June, 2001. The Department has received a number of queries from the professionals, Chamber of Commerce and Industry, corporate sectors, etc. on the above subject. The points raised have been carefully examined and the Department’s views thereon are indicated below :— 1. The Companies (Passing of the Resolution by Postal Ballot) Rules, 2001, read with section 192A shall apply to notices calling meetings of the shareholders approved by the board of directors after 15th June, 2001. 2. According to the provisions of section 192A, it is not mandatory for the company to release an advertisement giving the date of completion of despatch of postal ballots. However, as a measure of good corporate governance companies in their own interest may release an advertisement for publishing the date of completion of despatch of postal ballots. 3. A specimen postal ballot form and items to be included in the calendar of events for conducting voting through postal ballot are enclosed for the use and convenience of the companies. The concerned companies must ensure that the postal ballots are serially numbered and have distinguishing water marks in order to avoid printing of any duplicate ballot papers. 4. The companies are required to specify the last date by which the postal ballot must be received by the company keeping in view the provisions contained in rule 5(f) of the Companies (Passing of the Resolution by Postal Ballot) Rules, 2001, and the instructions at serial number 5 of the specimen postal ballot form. 5. It is clarified that voting right on postal ballot shall be in proportion to the shareholders share of the paid up equity share capital of the company. 6. The company secretary along with one of the functional directors should be made responsible for the entire postal ballot process by means of an appropriate board resolution. The resolution should be passed in the board meeting in which notice required to be sent to the shareholder under section 192A(2) is approved by the board. A copy of the board resolution should be despatched along with item to be included in the calendar of events within one week of passing of the board resolution to the concerned Registrar of Companies for information. 7. A query has been raised whether the Companies (Passing of the Resolution by Postal Ballot) Rules, 2001, is applicable only in respect of list of businesses as notified under rule 4 of the said Rules. It is hereby clarified that the Central Government may at any time include or delete the items to be transacted through postal ballot, therefore, the procedure as specified in the Rules has to be followed for any business to be transacted through postal ballot. 8. A query has also been raised whether passing of all resolutions in respect of ordinary and special business other than those covered under rule 4 of the said Rules can be treated as sufficient compliance with provisions of section 166 of the Companies Act, 1956, and also whether the company is required to convene a general meeting in case the resolutions are to be passed through postal ballot. While the companies are required to hold annual general meetings which is a mandatory requirement under section 166 of the Companies Act, 1956, it is hereby clarified that any listed company which intends to transact such businesses as notified under rule 4 of the said Rules has to do so only in the general meeting along with other ordinary businesses and special business, if any. The companies are required to send notice only in respect of item to be transacted through postal ballot well in advance so that the reply is received from the shareholders before the date of the general meeting. This will enable the scrutinizer to be in a position to make an entry in the appropriate register maintained for the purpose and make it available to the chairman of the general meeting who shall declare the results in the general meeting. The date of passing of the resolution will be the date of the general meeting. 9. The Department is separately taking the following actions for amending the Companies (Passing of the Resolution by Postal Ballot) Rules, 2001 : (i) Insert new rule 2A as under : ‘The notices may be issued by the companies under certificate of posting and an advertisement shall be published in a leading English newspaper and in one vernacular newspaper circulating in the State in which the registered office of the company is situated about having despatched the ballot papers’; (ii) In rule 4, the word ‘may’ is proposed to be substituted by the word ‘shall’; (iii) In rule 4(b), the words ‘deletion or’ is proposed to be omitted ; (iv) In rule 4(h) the words ‘proviso to’ to be inserted after the word ‘under’ ; (v) Rule 4(i) is proposed to be deleted ; (vi) Rule 5(c) is proposed to be substituted by :— ‘scrutineer will submit his report as soon as possible after the last date of receipt of postal ballot’ ; (vii) Rule 5(f) is proposed to be substituted by :— ‘the consent or otherwise received after 30 days from the date of issue of notice will be strictly treated as if reply from the member has not been received’. XYZ CEMENTS LIMITED Registered Office ....................................................................................................................................... Postal Ballot Form 1. Name(s) of shareholder(s) (in block : ................................................................ letters) (including joint holders, if any) ................................................................ ................................................................ 2. Registered address of the sole/first : ................................................................ named shareholder 3. Registered folio No./DP ID No./Client : ................................................................ ID No.* (*Applicable to investors holding shares in dematerialised form) 4. Number of shares held 5. I/We hereby exercise my/our vote in respect of the ordinary/special resolution to be passed through postal ballot for the business stated in the notice of the company by sending my/our assent or dissent to the said resolution by placing the tick (ü) mark at the appropriate box below: Item No. No. of shares I/We assent to the resolution I/We dissent to the resolution Place : Date : ................................................................ (Signature of the shareholder) Instructions 1. A member desiring to exercise vote by postal ballot may complete this Postal Ballot Form and send it to the company in the attached self-addressed envelope. Postage will be borne and paid by the company. However, envelopes containing postal ballots, if sent by courier at the expenses of the registered shareholder will also be accepted. 2. The self-addressed envelope bears the address of the scrutineer appointed by the board of directors of the company. 3. This form should be completed and signed by the shareholder. In the case of joint holding, this form should be completed and signed (as per the specimen signature registered with the company) by the first named shareholder and in his absence, by the next named shareholder. 4. Unsigned Postal Ballot Form will be rejected. 5. Duly completed Postal Ballot Form should reach the company not later than the close of working hours on............(day).............(date). Postal Ballot Form received after this date will be strictly treated as if the reply from the member has not been received. 6. Voting rights shall be reckoned on the paid up value of shares registered in the name of the shareholders on the date of despatch of the notice. Items to be included in the calendar of events 1. Date of despatch of notice of meeting in which the business as notified by the Central Government will also be transacted through postal ballot. 2. Date of completion of despatch of notice along with postal ballot. 3. Date of appointment of scrutinizer. 4. Date on which consent given by the scrutineer to act as scrutineer. 5. Last date for receiving postal ballot papers by scrutineer. 6. Date of signing of the minutes book by the chairman in which the results ballot is recorded. 7. Date of returning the ballot papers, register required to be maintained by the scrutineer under rule 5(e) of the Companies (Passing of the Resolutions by Postal Ballot) Rules, 2001, and other related papers to the chairman by the scrutinizer. 8. Date of board resolution authorising one of the functional directors and the secretary to be responsible for the entire poll process. 9. Date of handing over the ballot papers to the designated authority. General Circular : No. 16, dated 24-7-2001.
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