MANNER OF VOTING BY SHARHOLDERS
VOTING
Voting Denotes a method by which a person express his wish or opinion in an authorized formal way or a mechanism through which the wishes of persons are ascertained in relation to a particular matter. It reflects the mood of the meeting on a particular matter. If a motion gets support of the required members in a meeting, it become resolution
1. Voting by Show of hand
2. Voting on poll
3. Voting By Postal ballot
4. Voting Through Electronic Means
1. VOTES BY SHOW OF HANDS
Section 107 States that at every annual general meeting, a resolution put to the vote of meeting, shall be decided on the basis of voting by show of hands at the first instance, unless a poll is demanded or the voting is carried out electronically.
In voting by show of hands proxies cannot vote unless the articles provided therefore.
Votes of members personally present will be counted on a show of hands. (Hornby Bridge Co. (1879) 11 Ch D 109)
1.1 One Member one vote by show of hands
In the case of voting by Show of hands, every member has right to cast only one vote, irrespective of the number of shares he holds. (Earnest v Loma Gold Mines Ltd. (1897) 1CH 1 (CA)}
Therefore, the voting by show of hands is not value based because it does not differentiate between the members having more or less shares in the company.
1.2 Proxies cannot vote by show of hands
In the case of voting by show of hands, only members who are personally present can exercise the voting. The proxies do not have such rights unless the articles specifically provide for that.
1.3 Directors cannot participate at meeting unless they are having voting rights as a member
Directors present at general meeting cannot participate at the general meetings unless they are member themselves and having a right to vote. But with the permission of the chairman, they can answer quires raised by the members.
1.4 Chairman’s declaration of result in case of vote by show of hands is conclusive, unless the poll is demanded or ordered by the chairman
In a voting by show of hands, the chairman at the time of putting a motion for voting, asks the members, who are in the favor of the motion, to raise their hands. The number of such persons will be counted. Similarly, The chairman will further ask the members, who is against the motion, to raise their hands and their number of persons voting against, the motion will be deemed to have been carried and the chairman will accordingly announce the result.
A declaration by the chairman of the meeting of passing of a resolution or otherwise by show of hands and an entry to that effect in the books containing the minutes of the meeting of the company shall be conclusive evidence of the fact of passing of such resolution or otherwise. (Section 107(2)
2. VOTING IN GENERAL MEETING BY POLL
Voting by poll
Voting by poll means a system in which ballot paper are distributed among the members present at the meeting, in person or by proxy, to participate in the voting. All the members in person or by proxy at a meeting have the voting right in a poll in proportion to the number of shares held by each of them.
Therefore the voting by poll, a member need not use all his votes or cast in the same way all the votes he uses.
2.1 Time for demand for a poll
According to the provision of section 109 of the Companies Act 2013, a poll may be demanded either
Before or on the declaration of the result of voting by show of hands. However, the chairman has power to order for a poll at his own motion.
2.2 Criteria for valid demand for a poll
Section 109(1) states that the chairman shall order for a poll, when a demand is made by members specified below:-
(a) In the case of a company having share capital, by any member or embers (present in person or proxy) and holding shares for a paid up value of Rs. 500,000 or more or members having voting right of not less than 1/10th of the total voting power.
(b) In the case of any other company, any member or members present in person or proxy holding not less than 1/10 of the total voting power has a right to demand on poll.
2.3 Withdrawal of demand for poll
The person or persons who demanded a poll may withdraw the demand at any time, with the permission of the chairman.
3. VOTING BY POSTAL BALLOT
Postal Ballot describe the method of voting in which ballot paper are dispatched to the members of the company and such paper returned to the company by post, it is called the postal ballot.
Section 110 of the Companies Act, 2013 provides a mechanism for passing of resolution by postal ballot by, a company-
(i) shall, in respect of such item of business as the Central Government may, by notification, declare to be transacted only by means of postal ballot; and
(ii) may, in respect of any item of business, other than ordinary business and any business in respect of which director and auditors have a right to be heard at any meeting, transact by means of postal ballot,
(iii) in such manner as may be prescribed, instead of transacting such business at a general meeting.
Applicability on companies for passing of resolution by Postal Ballot
Proviso to Rule 22 of the Companies (Management and Administration), Rules, 2014, Provides that One Person Company and other companies having member upto 200 are not required to transact any business through postal ballot.
4.VOTING THROUGH ELECTRONIC
Section 108 provides that the Central Government may prescribe the class or class of companies and manner in which a member may exercise his right to vote by the electronic means.
According to Rule 20(1) of the Company (Management and Administration) Rules, 2014, every listed company or a company having not less than 1,000 shareholders shall provide to its members facility to exercise their right to vote at general meeting by electronics means.
A member may exercise his right to vote at any general meeting by electronics means and company may pass resolution by electronic voting system in accordance with the provision of this rule. (Rule 20(2))
FAQ
Whether show of hands under section 107 is possible in case of companies which are covered under rule 20 of Companies (Management and Administration) Rules, 2014 relating to voting through electronic means?
Section 107 relating to voting by show of hands provides that at any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded under section 109 or the voting is carried out electronically, be decided on show of hands.
For all the transactions put to vote by electronic means by such companies, the provisions of section 107 become ineffective. According to rule 20(1) of Companies (Management and Administration) Rules, 2014, every listed company or a company having not less than one thousand shareholders, shall provide to its members facility to exercise their right to vote at
General meetings by electronic means. Also, it has been clarified by the MCA vide General Circular 20/2014 dated 17th June, 2014 that voting by show of hands under section 107 would not be allowable in cases where rule 20 of Companies (Management and Administration) Rules, 2014 is applicable.
Note: Referring to General Circular 20/2014 dated 17th June, 2014 the MCA while considering the some practical difficulties in respect of voting through electronic means and conduct of general meetings, decided not to treat the relevant provisions of Section 108 of the Companies Act, 2013 read with rule 20 of the Companies (Management and Administration) Rules, 2Ol4 dealing with the exercise of right to vote by members by electronic means (e-means) as mandatory till 31st December, 2O14.
Whether concept of demand for poll u/s 109 of the Companies Act, 2013 is relevant for companies covered under Rule 20 of Companies (Management and Administration) Rules, 2014 relating to voting through electronic means.
The Ministry of Corporate Affairs has vide General Circular 20/2014 dated 17th June, 2014 clarified that for companies which are covered under section 108 read with rule 20 of Companies (Management and Administration) Rules, 2014, the provisions relating to demand for poll would not be relevant.
Whether a person who has voted through e-voting facility provided by the company can participate in general meeting? Further, can he change his vote?
It has been clarified by MCA vide General Circular 20/2014 dated 17th June, 2014 that a person who has voted through e-voting mechanism in accordance with rule 20 shall not be debarred from participation in the general meeting physically. But he shall not be able to vote in the meeting again, and his earlier vote (cast through e-means) shall be treated as final.
Therefore, a member of the company who has voted through electronic means may attend the general meeting and participate in the deliberations, though in accordance with the section 108 and Rule 20 of Companies (Management and Administration) Rules, 2014, the member is not allowed to change his vote once casted.
Whether concept of proxy is relevant in respect of a general meeting wherein -voting facility has been provided to the members.
Proxy is a facility given to a member to exercise his voting rights in case the member is unable to attend and vote himself. The provision for electronic voting is a platform facilitating the members to vote on their own. Hence, any member who has not exercised his vote electronically, may attend and vote at the general meeting either personally or by appointing a proxy to attend and vote on his behalf. The concept of proxy is still relevant, though with limited applicability.
Thanks
Rahul Kumar
Rkdhiman1210@gmail.com
CAclubindia
