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Before jumping to any conclusion we need to analyse two sections of Companies Act 2013, Section 108 and section 110, text of the both sections are hereinafter written below:

Section 108: The Central Government may prescribed the class or classes of companies and manner in which a member may exercise his right to vote by the electronic means.

Rule 20 of Companies (Management & Administration) Rules 2014: Every company other than a company referred to in Chapter XB or Chapter XC of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 having its equity shares listed on a recognised stock exchange or a company having not less than one thousand members, shall provide to its members facility to exercise their right to vote on resolutions proposed to be considered at general meetings by electronic means.

Text of section 108 provides that, provision of e-voting is applicable only on following mentioned companies:

  1. A listed company (Excluding companies listed on SME platform or listed on Institutional trading platform)
  2. A public company have at least 1000 members

Every resolution proposed in Annual General Meeting by abovementioned companies shall be passed through e-voting as per prescribed procedure under above-cited rule.

Now take an overview of section 110, text of the same is written below :

Section 110: 1) Notwithstanding anything contained in this Act, a company—

(a) shall, in respect of such items of business as the Central Government may, by notification, declare to be transacted only by means of postal ballot; and

(b) may, in respect of any item of business, other than ordinary business and any business in respect of which directors or auditors have a right to be heard at any meeting, transact by means of postal ballot, in such manner as may be prescribed, instead of transacting such business at a general meeting.

(2) If a resolution is assented to by the requisite majority of the shareholders by means of postal ballot, it shall be deemed to have been duly passed at a general meeting convened in that behalf. 

Government prescribed following matters shall be conducted by means of postal ballot:

(a) alteration of the objects clause of the memorandum and in the case of the company in existence immediately before the commencement of the Act, alteration of the main objects of the memorandum;

(b) 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;

(c) change in place of registered office outside the local limits of any city, town or village as specified in sub-section (5) of section 12;

(d) 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 sub-section (8) of section 13;

(e) issue of shares with differential rights as to voting or dividend or otherwise under sub-clause (ii) of clause (a) of section 43;

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

(g) buy-back of shares by a company under sub-section (1) of section 68;

(h) election of a director under section 151 of the Act;

(i) sale of the whole or substantially the whole of an undertaking of a company as specified under sub-clause (a) of sub-section (1) of section 180;

(j) giving loans or extending guarantee or providing security in excess of the limit specified under sub-section (3) of section 186:

Provided that One Person Company and other companies having members upto two hundred are not required to transact any business through postal ballot.

Now what Section 110 interprets, It says that for the items prescribed by central government shall always be done through postal ballot. 

Now the point of contradiction is that, if a listed company or a public company having members more then 1000, how it could be transacted? 

If we read the first line of section 110 as stated above, it starts with notwithstanding anything contained in this act, which means, all the matters prescribed (Excluding matters of ordinary business items) by central government and all matters other then prescribed matters which company by means of board resolution decided to pass it through postal ballot shall be subjected to resolutions passed through postal ballot mode and all matters other then as cited above shall be passed through e-voting process.

Opinion: With all above sections, rules and explanations cited it is clear that e-voting is not alternative to postal ballot, postal ballot is mandatory for all matters prescribed by central government and matters decided by company to consider through postal ballot and matters other then that shall be considered by e-voting procedure (by lised companies & public companies have more than 1000 members).


Published by

(Intern at corporate capitalventures Pvt. Ltd.)
Category Corporate Law   Report

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