Voting by Electronic means ‘e-voting’, which is a term serving several different types of Voting, implementing both electronic means of counting votes and electronic means of casting a vote. Electronic voting technology can optically scan voting systems include punched cards and DRE or specialized voting kiosks, which may include self-contained direct-recording electronic voting systems. It can also involve private computer networks, transmission of ballots and votes via telephones, or the Internet.
Two main kinds of e-Voting can be recognized as below:-
What are the new provisions presented by the Companies Act, 2013 on Voting done by electronic means?
Companies Act, 2013, has presented new provisions on voting through electronic resources under Section 108 read with Companies (Management and Administration) Rules, 2014.
Voting completed by electronic means U/s 108
- Every single registered company must provide its members facility to work out their right to vote at general meetings by electronic means, who conditionally having not less than 1000 shareholders.
- Company may pass any official resolution voting by Electronic means in agreement with the provisions of this rule. By this, members may work out his right to vote at any general meeting by such electronic means during resolution.
‘‘Electronic voting system’’ or “Voting by Electronic means’’ means a ‘secured system’ founded process of show for electronic ballots, tracking all the votes of the members and the number of votes polled in support or in contradiction of. It happens in such a way that the entire Voting exercised by way of electronic means gets registered and totaled in an electronic registry in a consolidated server with satisfactory ‘cyber security’;
The term ‘‘secured system’’ means, software, computer hardware, and all the procedure that –
- Are rationally secure from unlawful access and misuse;
- Deliver a reasonable level of dependability and precise operation;
- Are rationally suited to performing the envisioned functions; and
- Stick to generally accepted security actions.
The term “Cyber security” means protecting information, devices, equipment, computer, communication device, computer resource, and information deposited within from not permitted access, use, disruption, disclosures, modification, or damage.
Read our article:Prohibitions and Restrictions Regarding Political Contributions
What are the Case laws concerning Transparency of Voting by electronic means”?
- Case Law: – National Textile Corporation (UP) (1998) Ltd vs. Swadeshi Polytex Ltd and Ors. (92 Comp Cas 315 CLB)
Honorable Company Law Board emphasized while dismissing this case, “The annual general meeting is a prospect or opportunity to carry out certain routine business and take stock of the affairs of the company and.”
- Case Law: – Re. Godrej Industries Limited (2014)
Honorable judge G.S. Patel of Bombay High Court, in this case, has observed the importance of discussions and deliberations at general meeting of members:
- We must recall that at the heart of corporate governance lies clearness and a well-established attitude of indoor democracy that makes the shareholders competent.
- The right to use the vote as an appearance of a well-versed decision. That necessarily means that the shareholder has an unchallengeable right to ask questions, seek explanations, and receive replies before he decides which way he will vote.
- No meeting is mandatory and that the shareholder must cast his vote only on the basis of the information that has been directed to him by post or email. It seems to be completely contrary to the legislative intent and essence to the express”.
What is the process for Voting by electronic means to be followed by the company?
Any company which chooses to provide the facility to its members to work out their votes by electronic voting system/Voting by Electronic means at any general meeting will follow few actions.
Aptitude to its members
Notices directed to all the auditors of the company, members, or directors or both should have these following features.
Those are as follows:-
- Listed email id;
- Speed post OR Registered post
- Courier service;
- Notice should be engaged on the website of the company,
- It should indicate the procedure and method for Voting by electronic means and the time timetable
- It should mention that the business might be managed through electronic voting co-ordination
- It should publish once in a vernacular newspaper in the main vernacular dialectal
- It should advertise to be published, not less than five days before the date of commencement of the voting period.
Scrutinizer Conditional Issues
- Such voting period shall be finalized three days prior to the date of the general meeting in all such cases.
- The scrutinizer so appointed may take aid of a person who is not in occupation of the company and who is well-versed/equipped with the e-voting co-ordination.
- As soon as the vote on a determination is cast by the shareholder, he will not be allowed to modify it afterward.
What are the Agencies for e-voting Platform Service?
Benefits of e-Voting
Disadvantages of e-Voting
- Unintended of misuse of user Id and Password
- Deficiency of awareness between the shareholders
- Process of e-voting is not a substance to any kind of influence.
- No choice is available to the shareholders to amend the casted vote.
What is meant by Mobile Voting concerning e-voting?
- Mobile Voting is acceptable for the parliamentary elections in some of the foreign countries. SEBI/MCA may deliberate upon including the Mobile Voting under the realm of Electronic Voting, as the mobile phones are now measured as one of the required gadgets and became a “Sixth finger” to one and all.
- By citing the details of assent or dissent and resolution sequence number in Mobile Voting, the shareholders may request discovery it very easy to cast their vote by just conveyance a text message to the company’s “Toll-free number” from their registered mobile number. The company has to employ one scrutinizer as like e-voting, to monitor the entire mobile voting process.
What MCS had come up because of the COVID-19 outbreak concerning E-voting by Electronic means?
In these puzzling COVID-19 times, the question on how to compact with democracy during a pandemic has been elevated by several voices. According to Circular No. 14/ 2020 dated 8th April 2020 issued by the Ministry of Corporate Affairs (MCA), it has provided the clarifications with relative passing of Special Resolution and Ordinary Resolution under the Companies Act, 2013. It also includes rules made thereunder on explanation of the threat postured by COVID-19.
This supposed circular had delivered the time limit for adopting such procedure by the company for leading an Extra-Ordinary General Meeting (EGM) and the way out which shall be adopted by the companies in case holding of an Extra-Ordinary General Meeting (EGM) which is inevitable.
MCA has been delivered “Circular No.17/ 2020 dated 13th April 2020,” which pronounces the clarifications on the difficulties in ‘serving’ and ‘receiving notices/ responses’ by post in the present circumstances.
Clarifications required for:-
|Manner of Issuance of Notice||Postal Ballot and Passing of Items||Voting by Show of Hands||Sending E-mails-poll of items|
Manner & Mode
Before assembling the general meeting, the manner & mode of issue of notices to the members is followed by the below-mentioned way.
According to the “Circular No.17/2020 dated 13th April 2020”,
- A statement that the EGM has been convened through Other Audio-Visual Means or (OAVM)Video conferencing (VC) in agreement with appropriate provisions of the Companies Act, 2013. It should be operative in parallel with “General Circular No.14/2020 dated 8th April 2020’ and “Circular No.17/2020 dated 13th April 2020”;
- Availability of notice of the meeting and the date and time of the EGM through VC or OAVM and the stock exchange should be published on the website of the company;
- The manner & mode in which the members who have not listed their email addresses with the company or who are allotted shares incorporeal form can cast their vote over the e-voting system during the meeting or through remote e-voting;
- The manner & mode in which the members can get the same registered with the company who have not itemized their email addresses with the company or any other details measured essential by the company.
- Point to be noted that the Chairman of the meeting shall gratify himself and reason to record the same before bearing in mind the business in the meeting. It should depict all efforts feasible to enable members to contribute and vote on the items being considered in the meeting under the conditions have been made by the company.
Email Notice/Postal Ballot and Passing of Items
- The MCA has explained that Rule 22(15) of the Companies (Management and Administration) Rules, 2014 in order to eradicate such difficulty, which provides that the provisions of Rule 20 of the Companies (Management and Administration) Rules, 2014 as far as applicable concerning Voting by electronic means shall apply, ‘mutatis mutandis’ in terms of the Voting by electronic means.
- The requirement provided in Rule 20 of the Companies (Management and Administration) Rules, 2014, as well as the agenda, carried in the “General Circular No. 14/2020 dated 8th April 2020″ and the “General Circular No.17/2020 dated 13th April 2020″ would be pertinent to mutatis mutandis where the companies which are obligatory to provide the aptitude of e-voting under the Companies Act, 2013, or any other company which has chosen for such facility, while they are managing any item only by “postal ballot” up to “30th June 2020”.
- Shareholders who have listed their email address with the company or Fund depository participant; in that case, the company would direct notice by email to all its.The company shall also deliver a process of registration of email addresses of members and stated in its community notice.
- Point to be noted that the communication of the ‘assent’ or ‘dissent’ of the members would only take place over the remote e-voting scheme.
Emails by members
- To acquire clarification as to whether the members are needed to take part in the poll on items reflected during the meeting by sending emails, various representations were made to the Ministry of Corporate Affairs in advance to the company before the assembly, which actually held through “VC or OAVM” capability.
- According to the “General Circular No. 14/ 2020, dated 8th April 2020 –sub-paragraph B – XII of para 3” the MCA illuminated that it does not provide for polling by members at any time prior to the general meeting.
- Point to be noted that the members may take their assent or dissent only at such stage on items deemed to be in the meeting by sending emails, and poll will take place during the meeting the to the elected email address of the company, which was dispersed by the company in the notice directed to the members.
While concluding, electronic voting/Voting by Electronic means aids the shareholders to cast their vote from any place and at any time, substitutes the Postal ballot process and avoids unnecessary time consumption/cost of the company. Role of scrutinizer will go under standard in the e-voting process, as there will be no physical assembling and totaling of ballot papers, confirmation of signatures, and refusal of invalid votes, if any. The main accountability is on the part of scrutinizer who must take care of the e-voting procedure.
As a consequence, the aforementioned clarifications delivered by the MCA through the said circular will certainly ease the problems faced by the companies for ‘passing of ordinary’ and ‘special resolution’ of crucial nature.
This blog titled “Voting through Electronic means: 2020 COVID-19 Regimes” which provides the bird’s eye view of the “General Circular No.14/2020 dated 8th April 2020” issued by the MCA based on the General Circular No.17/2020 dated 13th April 2020, more meritoriously which will assist you in understanding this article. We, at Corpbiz, would be more than happy to guide you in the process of getting E-Voting or any related compliance for empowering you to tackle with ease the problems faced by the companies for ‘passing of ordinary’ and ‘special resolution’ of crucial nature.
Read our article: Overall Voting by Show of Hands: 2020 COVID-19 Regimes