POSTAL BALLOT

Purpose: Postal Ballot process gives an opportunity to the company’s members to exercise their votes (by postal or electronic mode), without being personally present and voting in a general meeting of the Company.

APPLICABLE PROVISIONS:

Companies Act, 2013 (“Act”) – Section 2(65) and Section 110
Rule 20 & 22 of Companies (Management and Administration) Rules, 2014 (“Companies Management Rules”)

MCA Circulars issued during a pandemic

Standard 16 of Secretarial Standard 2 on General Meetings

DEFINITION OF POSTAL BALLOT AS PER COMPANIES ACT, 2013 (“ACT”)

As per Section 2 (65) of the Companies Act 2013 (“Act):

“postal ballot” means voting by post or through any electronic mode

RELEVANT PROVISIONS UNDER SECTION 110 OF THE ACT & RULES MADE THEREUNDER

WHERE RESOLUTION’s CANNOT BE PASSED BY THE WAY OF POSTAL BALLOT:

As per Sec 110 of the Company – a company may transact any other business by postal ballot instead of transacting at a general meeting except:
Ordinary Business and
Any business in respect of which directors or auditors have a right to be heard at any meeting.
The following are the items of business which are deemed as Ordinary Business and hence cannot be voted by the means of postal ballot:
the consideration of financial statements and the reports of the Board of Directors and auditors;
the declaration of any dividend;
the appointment of directors in place of those retiring;
the appointment of, and the fixing of the remuneration of, the auditors.

WHERE RESOLUTION’s CAN BE PASSED BY THE WAY OF POSTAL BALLOT:

All other items of business other than the aforementioned businesses can be transacted through postal ballot, instead of transacting such business at a general meeting. That means all other items (other than consideration of financial statements, declaration of dividend, appointment of directors in place of those retiring, appointment and fixing remuneration of auditors or any business in respect of which directors or auditors have a right to be heard at any meeting), can be passed by the way of postal ballot
However, Sec 110 (1) read with rule 22 (16) of Companies Management Rules provides the list of matters which are required to be transacted only by way of postal ballot by companies having more than 200 members and except One Person Company. The matters are as follows:
alteration of the objects clause of the memorandum and in the case of a company in existence immediately before the commencement of the Act,
alteration of the main objects of the memorandum;
alteration of articles of association in relation to insertion or removal of provisions which, under sub-section (68) of section 2, are required to be included in the articles of a company in order to constitute it a private company;
change in the place of registered office outside the local limits of any city, town or village as specified in sub-section (5) of section 12;
change in the 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 sub-section (8) of section 13;
issue of shares with differential rights as to voting or dividend or otherwise under sub-clause (ii) of clause (a) of section 43;
variation in the rights attached to a class of shares or debentures or other securities as specified under section 48;
buy-back of shares by a company under sub-section (1) of section 68;
election of a director under section 151 of the Act (appointment of directors elected by small shareholders)
sale of the whole or substantially the whole of an undertaking of a company as specified under sub-clause (a) of subsection (1) of section 180;
giving loans or extending guarantee or providing security in excess of the limit specified under sub-section (3) of section 186 (limits specified under Sec 186- 60% of the paid up capital+Free reserve+Security Premium or 100% of Free Reserve + Security Premium)

RULE 22 OF COMPANIES MANAGEMENT AND ADMINISTARTION RULES 2014 READ WITH SECRETARIAL STANDARD- 2 (“SS-2”)– PROVIDES FOR THE PROCEDURE TO BE FOLLOWED FOR CONDUCTING BUSINESS THROUGH POSTAL BALLOT AS BELOW:

(1) 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 therefor and requesting them to send 25 their assent or dissent in writing on a postal ballot because postal ballot means voting by post or through electronic means within a period of thirty days from the date of dispatch of the notice.

(2) The notice shall be sent either

(a) by Registered Post or speed post, or

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

for facilitating the communication of the assent or dissent of the shareholder to the resolution within the said period of thirty days.

(As per Standard 16 of SS-2,

16.4.1 Notice of the postal ballot shall be given in writing to every Member of the company. Such Notice shall be sent either by registered post or speed post, or by courier or by e-mail or by any other electronic means at the address registered with the company.

16.4.2 In case of companies having a website, Notice of the postal ballot shall simultaneously be placed on the website

16.4.3 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.

16.4.4 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)

(3) 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, inter alia, the following matters, namely:-

(a) a statement to the effect that the business is to be transacted by postal ballot which includes voting by electronic means;

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

(d) the date of end of voting;

(e) 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; 26

(f) a statement to the effect that members, who have not received postal ballot forms may apply to the company and obtain a duplicate thereof; and

(g) contact details of the person responsible to address the grievances connected with the voting by postal ballot including voting by electronic means.

(4) 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.

(5) 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.

(6) The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority.

(7) If a resolution is assented to by the requisite majority of the shareholders by means of postal ballot including voting by electronic means, it shall be deemed to have been duly passed at a general meeting convened in that behalf (Omitted by Notification Companies (Management and Administration) Amendment Rules, 2016 Dated 23rd September, 2016.)

(8) 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. 27 (9) 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;

(9) 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;

(10) 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.

(11) 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.

(12) 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.

(13) The results shall be declared by placing it, along with the scrutinizer’s report, on the website of the company.

(14) The resolution shall be deemed to be passed on the date of at a meeting convened in that behalf (Omitted by Notification Companies (Management and Administration) Amendment Rules, 2016 Dated 23rd September, 2016.)

(15) The provisions of rule 20 regarding voting by electronic means shall apply, as far as applicable, mutatis mutandis to this rule in respect of the voting by electronic means.

OTHER ADDITIONAL & RELEVANT PROVISIONS OF SS-2 – SECRETARIAL STANDARD ON GENERAL MEETINGS:

Standard 16.2 Every company having its equity shares listed on a recognised stock exchange other than companies whose equity shares are listed on SME Exchange or on the Institutional Trading Platform and other companies which are required to provide e-voting facility shall provide such facility to its Members in respect of those items, which are required to be transacted through postal ballot

Standard 16.5 Postal Ballot Forms

16.5.1 The postal ballot form shall be accompanied by a postage prepaid reply envelope addressed to the scrutiniser

16.5.2 The postal ballot form shall contain instructions as to the manner in which the form is to be completed, assent or dissent is to be recorded and its return to the scrutiniser

16.5.3 A postal ballot form shall be considered invalid if:

(a) A form other than one issued by the company has been used;

(b) It has not been signed by or on behalf of the Member;

(d) It is not possible to determine without any doubt the assent or dissent of the Member;

(e) Neither assent nor dissent is mentioned;

(f) Any competent authority has given directions in writing to the company to freeze the Voting Rights of the Member;

(g) The envelope containing the postal ballot form is received after the last date prescribed;

(h) The postal ballot form, signed in a representative capacity, is not accompanied by a certified copy of the relevant specific authority;

(i) It is received from a Member who is in arrears of payment of calls;

(j) It is defaced or mutilated in such a way that its identity as a genuine form cannot be established;

(k) Member has made any amendment to the Resolution or imposed any condition while exercising his vote

Complete SS- 2 can be referred at weblink : Starting Pages.pmd (icsi.edu)