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E-voting under Companies Act, 2013

Date posted: Friday 3 April 2015
Laws:

Introduction

With the dawn of electronic age, where the distances around the world have been compressed by the use of internet, the Companies Act, 2013 has acknowledged the need to bring the advantage of technology to voting system of companies in order to enable the shareholders to be active in the decision making of the company. It has mandated e-voting, wherein a shareholder can vote on the resolutions of a meeting without even being present at the general meeting, from a remote location.

The rules relating to provisions of e-voting were notified on 23rd June, 2014. Now, MCA, on 19th March, 2015, has now come out Companies (Management and Administration) amendment rules, 2015 revising the procedure pertaining to e-voting.

What is E-voting?

“Electronic voting system” means a secured system based process of display of electronic ballots, recording of votes of the members and the number of votes polled in favour or against, in such a manner that the entire voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralized server with adequate cyber security. It includes remote e-voting.

“Remote e-voting” means the facility of casting votes by a member using an electronic voting system from a place other than venue of a general meeting.

Applicability

The e-voting and the provisions relating to e-voting under Companies Act, 2013 have been made mandatory for the following:

  1. Companies that are listed on recognized stock exchange, other than
    1. Companies listed on SME Exchange
    2. SME companies listed on Institutional Trading Platform without IPO
  2. Company having 1000 or more members

Procedure to be followed by companies providing e-voting facility

  1. Notice of the meeting is to be sent to all members, directors and auditors of the company.
    1. Notice shall be sent by
      1. Registered post or speed post, or,
      2. Electronic means, i.e. registered e-mail id of the recipient, or,
      3. Courier service.
    2. Contents of the notice: The notice of the meeting shall state
      1. That the company is providing facility for voting by electronic means and the business may be transacted through such voting,
      2. That the facility for voting, either through voting by electronic means or ballot/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,
      3. That the members who have cast their vote by remote e-voting prior to the meeting may attend the meeting but shall not be entitled to cast their vote again,
      4. Process and manner for voting by electronic means,
      5. Time schedule including the time period during which the votes may be cast by remote e-voting,
      6. Details about the login ID,
      7. Process and manner for generating or receiving the password and for casting of vote in a secure manner,
      8. Notice of the meeting shall be displayed on the website of the company, if any, after it is sent to the members.
  1. Public Notice by way of Advertisement:
    1. When: A public notice by way of an advertisement shall be published immediately on completion of dispatch of notices, but atleast 21 days before the date of the general meeting.
    2. Where: Such advertisement shall be published in
      1. One English newspaper having country wide circulation,
      2. One vernacular newspaper having wide circulation in the district of the Registered office of the company, and
      3. Website of the company and agency
    3. Contents of such advertisement shall be:
      1. Statement that the business may be transacted through voting by electronic means,
      2. The date and time of commencement of remote e-voting,
      3. The date and time of end of remote e-voting,
      4. cut-off date,
      5. The manner in which the shareholders may obtain the login ID and password,
      6. Website of the company, if any, and of the agency where notice of the meeting is displayed.
      7. Name, designation, address, email id and phone number of the person responsible to address the grievances connected with facility for voting by electronic means.
      8. The statement that
        1. Remote e-voting shall not be allowed beyond the said date and time
        2. Manner in which the company shall provide for voting by members present at the Meeting (electronic/ballot paper)
        3. 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
        4. 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.
  1. Remote E-voting:
    1. A resolution proposed to be considered through voting by electronic means shall not be withdrawn.
    2. The facility for remote e-voting shall remain open for not less than 3 days and shall close at 5.00 p.m. on the date preceding the date off the general meeting.
    3. During the period when facility for remote e-voting is provided, the members of the company holding shares either in physical form or in dematerialized form, as on the cut-off date, may opt for remote e-voting.
    4. 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.
    5. At the end of the remote e-voting period, the facility shall forthwith be blocked.
    6. 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 or Scrutinizer or any other person till the votes are cast in the meeting.
  2. E-voting in the meeting:
    1. 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.
    2. The Chairman shall, at the general meeting at the end of discussion on the resolutions on which voting is to be held, allow voting with the assistance of scrutinizer, by use of ballot or polling paper or by using an e-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.
    3. If a company opts to provide the same electronic 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 by the member attending the meeting and who have not exercised their right to vote through remote e-voting.
  3. Scrutinizer:
    1. Board of directors of the company shall appoint one or more scrutinizers, who is a 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 as a Scrutinizer.
    2. Function of the Scrutinizer: to scrutinize the voting and remote e-voting process in a fair and transparent manner
    3. The Scrutinizer may take assistance of a person who is not in employment of the company and who is well-versed with the e- voting system.
    4. 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 scrutinizer 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 scrutinizer may require, who have cast votes through remote e-voting but not the manner in which they have cast their votes.
    5. 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 who are not in the employment of the company.
    6. 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.
    7. The scrutinizer shall make, not later than three days of conclusion of the meeting, a consolidated scrutinizer’s report of the total votes cast in favour or against, if any, to the Chairman or a person authorized by him in writing who shall countersign the same.
  4. On submission of report by Scrutinizer to Chairman:
    1. The Chairman or a person authorized by him in writing shall declare the result of the voting.
    2. 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.
    3. 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.

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