Section 110 of the Companies Act, 2013 deals with 'Postal Ballot'. In a layman language, a postal ballot is a system of voting in which person send their votes by post when they cannot be present. It enables the as many voters as possible to participate. It can assist people who may not be able to attend the General Meeting.
Let's understand what actually section says:
110. (1) Notwithstanding anything contained in this Act, a Company-
(a) shall, in respect of such items of business as the Central Government may, by notification, declare to be transacted only by means of Postal ballot; and
(b) may, in respect of any item of business, other than ordinary business and any business in respect of which directors or auditors have a right to be heard at any meeting, transact by means of postal ballot, in such a manner as may be prescribed, instead of transacting such business at a general meeting.
(2) 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.
Associated Rules, Sections etc required to be read:
- Section 108 of the Companies Act, 2013 (e- voting)
- Rule 20 of the Companies (Management and Administration) Rules, 2014
- Rule 22 of the Companies (Management and Administration) Rules, 2014
- Regulation 44 of SEBI (LODR) Regulation, 2015
- Secretarial Standard 2 (SS-2), issued by ICSI
Applicability: It applies to all the Companies, whether public or private having more than 200 members.
Exemption: One Person Company and other companies having members upto 200 members are not required to transact any business through postal ballot.
Business items shall be transacted through postal ballot:
[Pursuant to clause (a) of sub- section (1) of section 110 read with Rule 22(16) of Companies (Management and Administration) Rules, 2014]
(a) 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;
(b) Alteration of articles of association in relation to insertion or removal of provisions which, under Section 2(68), are required to be included in the articles of the company in order to constitute it a private company
(c) Change in place of registered office outside the local limits of any city, town or village as per section 12(5);
(d) 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 under section 13(8);
(e) Issue of shares with differential rights as to voting or dividend or otherwise under sub-clause (ii) of clause (a) of section 43;
(f) Variation in the rights attached to a class of shares or debentures or other securities as specified under section 48;
(g) Buyback of shares by a company under section 68(1);
(h) Election of a director under section 151 of the Act;
(i) 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;
(j) Giving loans or extending guarantee or providing security in excess of the limit specified under section 186(3).
Business items shall not be transacted through postal ballot:
Apart from the above, a company may, at its discretion, transact any other item of business also through voting by postal ballot instead of transacting it at a general meeting, except the following businesses:
1. Consideration of financial statements and the reports of the Board of Directors and auditors
2. Declaration of Dividend
3. Appointment of directors in place of those retiring
4. Appointment of and the fixing of the remuneration of the auditors
5. Business in respect of which directors or auditors have a right to be heard at any meeting
Listing Compliances:
Provisions as per SEBI (LODR) Regulations, 2015:
Regulation 44 of SEBI (LODR) deals with this:
Voting by Shareholders
44. (1) The listed entity shall provide the facility of remote e- voting facility to its shareholders, in respect of all shareholders' resolutions.
(2) The e-voting facility to be provided to shareholders in terms of sub- regulation (1), shall be provided in compliance with the conditions specified under the Companies (Management and Administration) Rules, 2014, or amendments made thereto.
(3) The listed entity shall submit to the stock exchange within 48 hours of conclusion of its General Meeting details regarding the voting results in the format specified by the Board.
(4) The listed entity shall send proxy forms to holders of securities in all cases mentioning that a holder may vote either for or against each resolution.
Rule 20 of the Companies (Management and Administration) Rules, 2014:
20. (1) The provisions of this rule shall apply in respect of the general meetings for which notices are issued on or after the date of commencement of this rule.
(2) Every company which has listed its equity shares on a recognized stock exchange and every company having not less than one thousand members shall provide to its members facility to exercise their right to vote on resolutions proposed to be considered at a general meeting by electronic means:
Provided that a Nidhi, or an enterprise or institutional investor referred to in Chapter XB or Chapter XC of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 is not required to provide the facility to vote by electronic means:
Explanation.- For the purpose of this sub-rule, "Nidhi" means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from and lending to, its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.”.
(3) A member may exercise his right to vote through voting by electronic means in resolutions referred to in sub-rule (2) and the company shall pass such resolutions in accordance with the provisions of this rule.
(4) A company which provides the facility to its members to exercise voting by electronic means shall comply with the following procedure, namely:-
(i) the notice of the shall be sent to all the members, directors and auditors of the company either
(a) by registered post or speed post; or
(b) through electronic means, namely, registered e-mail ID of the recipient; or
(c) by courier service;
(ii) the notice shall also be placed on the website, if any, of the company and of the agency forthwith after it is sent to the members;
(iii) the notice of the meeting shall clearly state –
(A) that the company is providing facility for voting by electronic means and the business may be transacted through such voting;
(B) that the facility for voting, either through electronic voting system or ballot or 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;
(C) that the members who have cast their vote by remote-voting prior to the meeting may also attend the meeting but shall not be entitled to cast their vote again;
(iv) the notice shall –
(A) indicate the process and manner for voting by electronic means;
(B) indicate the time schedule including the time period during which the votes may be cast by remote e-voting;
(C) provide the details about the login lD;
(D) specify the process and manner for generating or receiving the password and for casting of vote in a secure manner.
(v) the company shall cause a public notice by way of an advertisement to be published, immediately on completion of dispatch of notices for the meeting under clause (i) of sub-rule (4) but at least twenty-one days before the date of general meeting, 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 country-wide circulation, and specifying in the said advertisement, inter alia,. the following manners namely :-
(a) statement that the business maybe transacted through voting by electronic means;
(b) the date and time of commencement of remote e-voting;
(c) the date and time of end of remote e-voting;
(d) cut-off date;
(e) the 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;
(f) the statement that -
(A) remote e-voting shall not be allowed beyond the said date and time;
(B) the manner in which the company shall provide for voting by members present at the meeting; and
(C) 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; and
(D) 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;
(g) website address of the company, if any, and of the agency where notice of the meeting is displayed; and
(h) name, designation, address, email id and phone number of the person responsible to address the grievances connected with facility for voting by electronic means:
Provided that the public notice shall be placed on the website of the company, if any, and of the agency;
(vi) the facility for remote e-voting shall remain open for not less than thee days and shall close at 5.00 p.m. on the date Preceding the date of the general meeting;
(vii) during the period when facility for remote e-voting is provided, the members of the company, holding shares either in physical form or in dematerialised form, as on the cut-off date, may opt for remote e-voting:
Provided that 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:
Provided further that 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;
(viii) 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 voting system as used during remote e-voting during the general meeting, the said facility shall be in operation till all the resolutions are considered and voted upon in the meeting and may be used for voting only by the members attending the meeting and who have not exercised their right to vote through remote e-voting.
(ix) the Board of Directors shall appoint one or more scrutinizer, who may be Chartered Accountant in practice, Cost Accountant in practice, or Company Secretary in practice or an Advocate, or any other person who is not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinize the voting and remote e-voting process in a fair and transparent manner:
Provided that the scrutinizer so appointed may take assistance of a person who is not in employment of the company and who is well-versed with the electronic voting system;
(x) the scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority;
(xi) 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 clauses (a) to (h) of sub-rule (l) of rule 21 as applicable, with the assistance of scrutinizer, by use of ballot or polling paper or by using an electronic voting system for all those members who are present at the general meeting but have not cast their votes by availing the remote e-voting facility.
(xii) the scrutinizer shall, immediately after the conclusion of voting at the general meeting, first count the votes cast at the meeting, thereafter unblock the votes cast through remote e-voting in the presence of at least two witnesses not in the employment of the company and make, not later than three days of conclusion of the meeting, a consolidated scrutinizer's report of the total votes cast in favor or against, if any, to the Chairman or a person authorized by him in writing who shall countersign the same:
Provided that the Chairman or a person authorized by him in writing shall declare the result of the voting forthwith;
Explanation.- lt is hereby clarified that the manner in which members have cast their votes, that is affirming or negating the resolution, shall remain secret and not available to the Chairman, Scrutiniser or any other person till the votes are cast in the meeting.
(xiii) For the purpose of ensuring that members who have cast their votes through remote e-voting do not vote again at the general meeting, the scrutiniser shall have access, after the closure of period for remote e-voting and before the start of general meeting, to details relating to members such as their names, folios, number of shares held and such other information that the scrutiniser may require, who have cast votes through remote e-voting but not the manner in which they have cast their votes:
(xiv) the scrutinizer shall maintain a register either manually or electronically to record the assent or dissent received, mentioning the particulars of name, address, folio number or client ID of the members, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights;
(xv) the register and all other papers relating to voting by electronic means shall remain in the safe custody of the scrutinizer until the Chairman considers, approves and signs the minutes and there after, the scrutinizer shall hand over the register and other related papers to the company.
(xvi) the results declared along with the report of the scrutinizer shall be placed on the website of the company, if any, and on the website of the agency immediately after the result is declared by the Chairman :
Provided that in case of companies whose equity shares are listed on a recognized stock exchange, the company shall, simultaneously, forward the results to the concerned stock exchange or exchanges where its equity shares are listed and such stock exchange or exchanges shall place the results on its or their website.
(xvii) subject to receipt of requisite number of votes, the resolution shall be deemed to be passed on the date of the relevant general meeting.
Explanation.- For the purposes of this clause, the requisite number of votes shall be the votes required to pass the resolution as the 'ordinary resolution' or the 'special resolution' as the case may be, under section 114 of the Act.
(xviii) a resolution proposed to be considered through voting by electronic means shall not be withdrawn."
Procedure for conducting Postal Ballot:
1. Dispatch of notice to all the shareholders
Where a Company is required or decides to pass any resolution by way of postal ballot, it shall send a notice to all the shareholders, along with a draft resolution explaining the reasons therefore and requesting them to send their assent or dissent in writing on a postal ballot means voting by post or through electronic means within a period of thirty days from the date of dispatch of notice.
Mode of dispatch
The notice shall be sent either:
(a) By Registered Post or speed Post, or
(b) Through electronic means like registered e-mail or
(c) Through courier service
For facilitating the communication the assent or dissent of the shareholder to the resolution within the said period of thirty days.
2. Publication of advertisement
An advertisement shall be published 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.
Matters to be specified in advertisement
- A statement to the effect that the business is to be transacted by postal ballot which includes voting by electronic means;
- The date of completion of dispatch of notices;
- The date of commencement of voting;
- The date of end of voting;
- 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;
- A statement to the effect that members, who have not received postal ballot forms may apply to the company and obtain a duplicate thereof;
- Contact details of the person responsible to address the grievances connected with the voting by postal ballot including voting by electronic means.
3. Notice to be placed on website
The notice of the postal ballot shall also be placed on the website of the company forthwith after the notice is sent to the members and such notice shall remain on such website till the last date for receipt of the postal ballots from the members.
4. Appointment of Scrutinizer
The Board of directors shall appoint one scrutinizer, who is not in employment of the company and who, in the opinion of the Board can conduct the postal ballot voting process in a fair and transparent manner. The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority.
Duty of Scrutinizer
a. 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.
b. The scrutinizer shall submit his report as soon as possible after the last date of receipt of postal ballots but not later than seven days thereof.
c. 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 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.
Secretarial Standard on General Meeting (SS-2)
[Pursuant to clause 16 of SS-2]
Passing of resolution by postal ballot
Every company, except a company having less than or equal to 200 members, shall transact items of business as prescribed, only by means of postal ballot instead of transacting such business at a general meeting. Ordinary business shall not be transacted by means of postal ballot.
Posting on website
In case of companies having a website, notice of the postal ballot shall also be placed on the website. Such notice shall remain on the website till the last day for receipt of the postal ballot forms from the members.
Specify the day, date etc
Notice shall specify the day, date, time and venue where the results of the voting by postal ballot will be announced and the link of the website where such results will be displayed. Notice shall also specify the mode of declaration of the results of the voting by postal ballot.
Informing the members
Notice of the postal ballot shall inform the members about availability of e-voting facility, if any, and provide necessary information thereof to enable them to access such facility. In case the facility of e- voting has been made available, the provisions relating to conduct of e- voting shall apply, mutatis mutandis as far as applicable. Notice shall describe clearly the e- voting procedure.
Specify the time of commencement and end of e-voting
Notice shall also clearly specify the date and time of commencement and end of e-voting, if any and contain a statement that voting shall not be allowed beyond the said date and time.
Details of responsible Officials
Notice shall also contain contact details of the official responsible to address the grievances connected with the e-voting for postal ballot.
Notice shall clearly specify that any member cannot vote by post and e- voting and if he votes both by post and e-voting, his vote by post shall be treated as invalid.
Conclusion
Postal Ballot is not a new concept, but Companies Act, 2013 widened the scope of its applicability. It is an additional facility to the shareholder or member, where he has the option of voting either by postal ballot or e-voting or in person.
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