Companies Act 2013

Amendment to E-voting – Rule 20 of Companies (Management and Administration) Rules, 2014

E-voting – Rule 20 of Companies (Management and Administration) Rules, 2014

Ministry of Corporate Affairs notified amendment to e-voting related provision effective from 19 March 2015.

Comparison of earlier and new provision with effects thereof are stated below.

 

Existing provisions New provisions Comment
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 (from the date of commencement of notification in the Official Gazette) For more clarity, MCA has inserted new provision.The amendments would be applicable to all those companies who shall issue notices of the general meeting after the commencement of this rule and not to those companies who have already issued notices before the commencement of this rules
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.

Provided that the Company may provide the facility referred to this in sub-rule on or before 1st January, 2015

Every listed company other than Chapter XB or Chapter XC of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 or a company having not less than 1000 shareholders shall provide to its members facility to exercise their vote by electronic means It is great relief that e-voting rules are now made applicable only to companies whose equity shares are listed on recognised stock exchange(s) in India. Earlier it was applicable to every listed company (i.e. even where only debt instruments were listed).

E-voting rules continues to apply to companies having 1000 or more shareholders (irrespective of fact that equity shares are listed or not).

However, e-voting rule is not applicable to Small and Medium Enterprises (SME) who has issued specified securities and Listing and Issue of Capital By Small and Medium Enterprises on Institutional Trading Platform without Initial Public offering.

“agency” means the National Securities Depository Limited’ the Central Depository Services (lndia) Limited or any other entity approved by the Ministry of Corporate Affairs subject to the condition that the National securities Depository Limited, the Central Depository Services (India) Limited or such other entity has obtained a certificate from the standardization Testing and Quality Certification Directorate, Department of Information Technology’ Ministry of Communications and Information Technology, Government of lndia including with regard to compliance with parameter specified under Explanation (vi); New provision. Now any other entity approved by MCA can also provide facility for e-voting besides NSDL and CDSL
cut-off date means a date not earlier than 7 days before the date of general meeting to determine the eligibility of the shareholders to vote by electronic means or in the general meeting New provision. Companies were taking cut-off date, generally, at the time of sending notice. Now, more clarity is brought on cut-off date for determining the eligibility of the shareholders for e-voting.
“Cyber security” means protecting information, equipment, devices, computer,computer resource, communication device and information stored therein from unauthorised access,use, disclosures, disruption, modification or destruction “Cyber security” means protecting information, equipment, devices, computer,computer resource, communication device and information stored therein from unauthorised access,use, disclosures, disruption, modification or destruction No change
For the purposes of this rule.(i) the expressions ‘‘voting by electronic means’’ or‘‘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, such 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’; Voting by electronic means includes remote e-voting and voting at the general meeting through an electronic voting system which may be the same as used for remote e-voting Companies are permitted to offer E-voting at general meeting also.This is good relief as companies need not go for poll at general meeting.
‘‘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’ No change
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 This provision is introduced to differentiate between e-voting at the venue of general meeting and otherwise than at such place.
(ii) the expression ‘‘secured system’’ means computer hardware, software, and procedure that –(a) are reasonably secure from unauthorized access and misuse;(b) provide a reasonable level of reliability and correct operation;

(c) are reasonably suited to performing the intended functions; and

(d) adhere to generally accepted security procedures.

‘‘secured system’’ means computer hardware, software, and procedure that –(a) are reasonably secure from unauthorized access and misuse;(b) provide a reasonable level of reliability and correct operation;

(c) are reasonably suited to performing the intended functions; and

(d) adhere to generally accepted security procedures.

No change
A member may exercise his right to vote at any general meeting by electronic means and company may pass any resolution by electronic voting system in accordance with the provisions of this rule. A member may exercise his right to vote through voting by electronic means and the company shall pass any resolutions in accordance with the provisions of this rule Similar provisions.
A company which provides the facility to its members to exercise their votes atany general meeting by electronic voting system shall follow the following procedure, namely;(i) the notices of the meeting shall be sent to all the members, auditors of the company,

or directors either –

(a) by registered post or speed post ; or

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

(c) through courier service;

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 meeting 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

Similar provisions. No change.
(ii) the notice shall also be placed on the website of the company, if any and of the agency forthwith after it is sent to the members; the notice shall also be placed on the website of the company, if any and of the agency forthwith after it is sent to the members; No change
the notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means 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 Earlier electronic voting system and voting by electronic means meant the same meaning. But after this amendment, it has been explained separately for more clarity.
(B)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 New provision inserted. For the convenience of those shareholders who have not cast their votes by remote e-voting, they can cast their vote at the general meeting by any facility for voting available at the general meeting. Thus, companies have option to facilitate voting at general meeting either by e-voting or poll or ballot.
(c) that the members who have cast their vote by remote e-voting prior to the meeting may also attend the meeting but shall not be entitled to cast their vote again This is to bring clarity and offers chance to members who have already voted electronically before attending the general meeting, to speak at the meeting and may be persuade others to vote in a particular manner. Such members cannot vote again at general meeting.
(iv) the notice shall clearly indicate the process and manner for voting by electronic means and the time schedule including the time period during which the votes may be cast and shall also provide the login ID and create a facility for generating password and for keeping security and casting of vote in a secure manner; 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 ID

(D)specify the process and manner for generating or receiving the password and for casting of vote in a secure manner

No change
(v) the company shall cause an advertisement to be published, not less than five days before the date of beginning of the voting period, 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 sent the notice of the meeting and specifying therein, inter alia, the following matters, namely:-(a) statement that the business may be transacted by electronic voting;

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

(c) the date and time of commencement of voting through electronic means;

(d) the date and time of end of voting through electronic means;

(e) the statement that voting shall not be allowed beyond the said date and time;

(f) website address of the company and agency, if any, where notice of the meeting is

displayed; and

(g) contact details of the person responsible to address the grievances connected with the

electronic voting;

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 but at least 21 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 matters, namely:(a) statement that the business may be 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

 

Now the public notice by way of newspaper advertisement shall be published immediately on completion of dispatch of notice. Simultaneously e-voting period is also enhanced from 3 days to prescribing minimum 3 days i.e. it can be more and can be from date of dispatch of notice. Further e-voting shall close at 5.00 p.m. on the date preceding the date of the general meeting
(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.

For the convenience of the shareholders, if the members have not voted within the date and time of remote e-voting, he can avail the facility of voting by remaining present (in person or by proxy) at the meeting. Even if has casted his vote under remote e-voting, he is eligible to participate 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 meansProvided that the public notice shall be placed on the website of the company, if any, and of the agency
The facility for e-voting shall remain open for not less than one day and not more than three days. Provided that in all such cases, such voting period shall be completed three days prior to the date of the general meeting; The facility for remote e-voting shall be open for not less than three days and close at 5.00 p.m. on the date preceding the date of the general meeting. The period for e–voting has been extended. Now the facility for e-voting can remain open for more than three days but shall be closed at 5.00 p.m. on the date preceding the date of AGM
during the e-voting period, shareholders of the company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically

Provided that once the vote on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently

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. 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

Similar provisions. Only cut-off date to be considered in place of record date for the eligibility for the members to vote.It is clarified that a member may participate in the general meeting even after exercising his right to vote through remote e-voting. However such member shall not be allowed to vote again at the general meeting.
At the end of the voting period, the portal where votes are cast shall forthwith be blocked. At the end of the remote e-voting period, the facility shall forthwith be blocked No change
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 rights to vote through remote e-voting. New provision. This will save time and cost for company and members attending the general meeting.
The Board of directors shall appoint one scrutinizer, who may be Chartered Accountant inpractice, Cost Accountant in practice, or Company Secretary in practice or an advocate, but not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinize the 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 e-voting system

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 Similar provisions. Companies have option to appoint one or more scrutinizer who can be either :practicing company secretaries, chartered accountants, cost accountants, advocate or any other person.
the scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority the scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority No change
The Chairman shall, at the general meeting, at the end of discussion on the resolutions on which voting is to be held, shall allow voting with the assistance of the Scrutinizer by use of ballot or polling paper or by using an electronic voting system for all those members who have not casted their votes by remote e-voting. At general meeting, for enabling voting by members (who have not done voting using remote e-voting) company may provide any one of the facilities viz. e-voting or poll or ballot.Scrutinizer needs to be appointed for the same, who may be the same person as for remote e-voting.
the scrutinizer shall, within a period of not exceeding three working days from the date of conclusion of e-voting period, unblock the votes in the presence of at least two witnesses not in the employment of the company and make a scrutinizer’s report of the votes cast in favour or against, if any, forthwith to the Chairman 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 2 witness not in the employment of the company and make a consolidated scrutinizer’s report of the total votes cast in favour of, not later than 3 days of conclusion of the meeting to the Chairman or a person authorized in writing who shall countersign the same.Provided that the chairman or a person authorised by him in writing shall declare the result of the voting forthwith

 

Explanation: It 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, Scrutinizer or any other person till the votes are cast in the meeting

In lieu of separate reports for e-voting, postal ballot and poll, a consolidated scrutinizer’s report is to be prepared by the Scrutinizer for remote e-voting and other facility of voting provided at the general meeting.A report shall be submitted within 3 days from the conclusion of the general meeting

 

Chairman or any person authorized by him shall also countersign the consolidated scrutinizer’s report. This is a newly inserted provision.

 

 

 

 

 

 

New provision: the votes casted by the member (ie. Affirming or negating the resolution) during remote e-voting shall remain confidential till the votes are cast in the general meeting.

This is a welcome move from good governance point of view. Companies would not know if major shareholders have voted in favour or against the proposed resolution, until the scrutinizer prepares consolidated report.

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 who have cast votes through remote e-voting but not the manner in which they have cast their votes. To check whether the members have not cast their votes both by remote e-voting and at the general meeting, the scrutinizer can access to the details of the members who have voted, but not the manner i.e. in favour of the resolution or in against of the resolution since the manner of votes casted by the member shall remain secret as per the clarification issued by MCA. Thus, e-voting facility providers like NSDL, CDSL and other recognized agencies will need to ensure this.These details, would be required to be shared with the Share Transfer Agent to ensure that those attending the meeting are entitled to vote or have already voted using remote e-voting.
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 shareholders, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights 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 shareholders, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights No change
the register and all other papers relating to electronic voting shall remain in the safe custody of the scrutinizer until the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the register and other related papers to the company. the register and all other papers relating to voting through electronic means shall remain in the safe custody of the scrutinizer until the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall hand over the register and other related papers to the company. No change
the results declared along with the scrutinizer’s report shall be placed on the website of the company and on the website of the agency within two days of passing of the resolution at the relevant general meeting of members the results declared along with the scrutinizer’s report shall be placed on the website of the Company 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

Now the results are to be declared on the website of the company immediately (earlier 2 days’ time was permitted).

 

 

 

Companies whose equity shares are listed shall forward the results to the stock exchange. Stock exchanges in turn are required to place result on their website.

subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant general meeting of members 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 purpose 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

 

Now MCA has clarified that the votes shall be requisite as per Section 114 of the Act (by replacing word ‘requisite’ in place of ‘sufficient’.For ordinary resolution, if the votes cast in favour exceeds the votes cast against the resolution.

 

For special resolution, if the votes cast in favour are not less than three times the votes, if any cast against the resolution.

A resolution proposed to be considered through voting by electronic means shall not be withdrawn New provision. This is obvious to avoid situation where voting has take place using remote e-voting and subsequently at general meeting the same cannot be withdrawn.Though nothing is provided on ‘amendment to proposed resolution’ the same shall hold good as for withdrawal of resolution.
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