Voting Through Postal Ballot – The new rules under the Companies Act, 2013

---

Section 2(65) of the Companies Act, 2013 defines the term “Postal Ballot” as voting by post or through any electronic mode. This method of voting, used in respect of shareholders’ resolutions, gives an opportunity to the company’s members residing outside the local limits of its registered office, to exercise their voting rights, which would otherwise had not been possible in case of physical voting process.

Section 110 of Companies Act, 2013, which deals with voting by means of postal ballot, has brought about certain changes in the existing provisions relating to the passing of resolutions by postal ballot contained under Section 192A of the Companies Act, 1956 and the Companies (Passing of the resolution by postal ballot) Rules, 2011. It is pertinent to note here that Section 110 of the Companies Act, 201 has not yet come into effect.

Comparison of postal ballot provisions under the new and the old Companies Act

	Companies Act, 1956	Companies Act, 2013
Governing sections & Rules	Section 192A & Companies (Passing of the resolution by postal ballot) Rules, 2011	Section 110 & Chapter VII of the Draft Rules
Applicability	Listed public companies	All companies, whether public or private, having more than 50 members (One Person Company also exempted)
List of business notified by CG	9 items of business notified under the existing Rules.	Total 10 items of business notified under the draft rules. New item of business 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) of Cos. Act, 2013.
Mode of posting notice	Registered Post Acknowledgement Due Other secured mode of posting provided by DOP  Electronic mail	Registered Post Acknowledgement Due Speed Post Electronic means
Newspaper advertisement	Certain matters specified.	Along with the matters already specified, contact details for redressal of grievances connected with postal ballot must also be included in the advertisement.
Scrutinizer’s Report	As soon as possible after the last date of receipt of the postal ballot.	As soon as possible but not later than 7 days from the last date of receipt of postal ballot.
Placing notice/ results of postal ballot on website	Not specifically mentioned	Required to be placed on the website

Lists of specified business to be transacted only through postal ballot process:-

1)  Alteration of the objects clause/ main objects (in the case of company in existence immediately before the commencement of new Act) of the memorandum;

2)   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 a company in order to constitute it a private company;

3)   Change in place of registered office outside the local limits of any city, town or village as specified in Section 12(5);

4)     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);

5)   Issue of shares with differential rights as to voting or dividend or otherwise under Section 43(a)(ii);

6)   Variation in the rights attached to a class of shares or debentures or other securities as specified under section 48;

7)     Buy-back of shares by a company under Section 68(1);

8)     Election of a director under section 151 of the Act;

9)   Sale of the whole or substantially the whole of an undertaking of a company as specified under Section 180(1)(a);

10) Giving loans or extending guarantee or providing security in excess of the limit prescribed under Section 186(3).

Items of business that cannot 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:

(i) four ordinary items of business which could be transacted only at an Annual General meeting (Accounts approval, Dividend declaration, director appointment and auditor appointment); and

(ii) any business in respect of which directors or auditors have a right to be heard at any meeting.

Procedure for conducting voting through postal ballot in a nutshell

A. Steps to be taken by the Company Secretary in Employment

1. Prepare draft of Board resolution, postal ballot notice along with explanatory statement and postal ballot form. 
2. Obtain consent of the Scrutinizer to act as such. 
3. Convene Board meeting to approve the draft documents, appoint Scrutinizer, authorise WTD/ CS to oversee the entire postal ballot process, calendar of events.
4. Arrange for printing of address slips, notice, postal ballot forms and self-addressed postage pre-paid envelope (with Scrutinizer’s name and address).
5. File the board resolution along with the ’Calendar of events” with ROC within 7 days of passing Board resolution.
6. Despatch notices to shareholders whose names appear in the Register of members as on particular date as decided by the Board.
7. Place postal ballot notice on the company’s website. 
8. Immediately publish newspaper advertisement at least once in a vernacular newspaper in the principal vernacular language and at least once in English language in an English newspaper about the date of completion of dispatch of ballot papers and other specified matters.
9. Declaration of postal ballot results by the Chairman on receipt of the Scrutinizer’s Report. 
10. Place the results of the postal ballot on the company’s website along with the Scrutinizer’s Report and also display on the notice board.
11. File Form 23 with the Registrar of Companies in case of special resolution.
12. Prepare the minutes and obtain Chairman’s signature on it.
13. The company shall safely preserve the ballot papers and other related papers/register received from the Scrutinizer.

B. Steps to be taken by the Company Secretary in Practice (Acting as Scrutinizer)

1. Give his consent in writing, to the Board of Directors, to act as the Scrutinizer for conducting postal ballot.
2. After the dispatch of postal ballot notice is completed, receive the duly filled in and signed postal ballot forms sent by the shareholders and put receipt stamps on the envelopes as and when they are received.
3. To keep in safe custody all the postal ballot forms till the last date for receiving the postal ballot forms,
4. The scrutinizer shall maintain a register either manually or electronically and record daily 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.
5. After the last date for receiving the postal ballot forms is over, prepare Scrutinizer’s report and submit the same to the Chairman of the company within 7 days of the last date of the receipt of postal ballot forms.
6. After the Chairman considers, approves and signs the minutes, the scrutinizer shall return the ballot papers and other related papers/register to the company.

The provisions relating to voting by means of postal ballot are not new to the Company Secretaries as it was already applicable to the listed companies. Now the recent Companies Act has also brought unlisted companies having more than 50 members under the purview of postal ballot provisions. Though on one hand, this change will bring about more responsibility on the Company Secretary professionals, on the other hand, it will also widen the scope for Company Secretaries in practice. 

 

P.S. The Draft Rules under Chapter VII of the Companies Act, 2013 (yet to be notified) have been referred to in writing the above article. In case, the Rules are subsequently modified on its notification, then the article must be read keeping in mind such modifications/ amendments.