PASSING OF RESOLUTION THROUGH POSTAL BALLOT
As many of us are aware, “Postal Ballot” is a facility whereby the shareholders can vote through postal or electronic mode instead of voting in person at general meeting of the company. The mode of postal ballot gives the shareholder more freedom and convenience to give their assent/dissent to the proposed resolution. The postal ballot system was introduced in the year 2000, with a view to raise the participation level of shareholders in management of the company. As many of us are aware the number of shareholders who attended general meetings were low in the early 80’s & 90’s. In reality, majority of the shareholders were interested in the dividend/bonus and other benefits that the company distributes to the shareholders and they were not ready to waste their valuable time attending the general meetings. However, a prudent investor would be wise enough to use this tool of shareholder democracy effectively to be a part of the decision making process & management of company.
Voting Rights & Requisite Majority
The voting rights under postal ballot should be with reference to the paid up value of share capital held by the registered shareholder on the date of dispatch of notice. The Companies (Passing of the Resolutions by Postal ballot) Rules 2001 applies only to all ‘listed public companies’.
“Requisite majority” (in the case of items requiring special resolution) means votes cast in favour of the business is three times more than the votes cast against, with regard to ordinary resolution, votes cast in favour is more than the votes cast against. That means the determination of ‘requisite majority’ depends on the type of resolution to passed - ie. Ordinary or Special resolution.
Where the company opts for electronic mode of voting, then it should be through an electronic platform provided by an ‘Agency’ approved by MCA in this behalf.
Business transacted U/S 192 A
The following items/business should be passed through postal ballot (as provided by MCA vide its circular/notification GSR 419(E) dated 30.05.2011)-
1. Alteration of Object clause in Memorandum of Association;
2. Alteration of Articles of Association in relation to insertion of provisions defining private company;
3. Buy-back of its own shares;
4. Issue of shares with differential voting rights as to dividend or voting or otherwise under subclause (II) of clause (a) of sec86;
5. Change in place of registered office outside local limits of the city/town/village Sec146 subsec2;
6. Sale of whole or substantially the whole of the undertaking of the company as Sec 293(1a);
7. Giving loans or extending guarantee or providing security in excess of limit specified in 372A ;
8. Election of director under Sec 252 subsec 1;
9. Variation of rights attached to a class of shares/ debentures/securities as specified u/s 106;
Step by step procedure
1. The company secretary shall (after discussing the matter with the Chairman) arrange draft of
a. notice u/s 192A
b. proposed resolution
c. explanatory statement
d. postal ballot form
2. Before the board meeting, obtain consent of Scrutinizer for appointing him for postal ballot procedure. Proposed scrutinizer may be a retired judge or any person of repute who, in the opinion of the board would be able to conduct the postal ballot voting process in a fair and transparent manner. However, he should not be an employee of the company.
3. Convene BOD meeting (after giving notice to directors) to approve notice & attachments, calendar of events, to appoint scrutinizer and to appoint CS & MD/ED for supervising the process.
4. Within 15 minutes of completion of meeting intimate the Stock Exchange about the proposed resolution.
5. Dispatch copy of board resolution deciding postal ballot and calendar of events to ROC office at the earliest.
6. The company shall send ( by regd post/ cert of posting along with pre-paid self-addressed envelope) to all the shareholders, notice along with draft resolution, explanatory statement u/s 173 along with instructions. It shall contain a statement that, the filled in postal ballot forms should be received by the company within 30 days of dispatch. It should also contain date & venue for declaration of results of postal ballot procedure.
7. File 3 copies of postal ballot notice with stock exchange where the company has listed its securities.
8. Put an advertisement in news papers (one English & one regional language) showing the date of dispatch of postal ballot forms and last date for receipt of the filled-in forms. File copies of advt with SE.
9. The scrutinizer should be available at the registered Office of the company to ascertain the number of forms received. The company should ensure that, receipt stamp is put on the envelope and the same is kept under safe custody. If the resolution is assented to by majority of the shareholders then it shall have the same effect of a resolution passed in the general meeting. The filled-in forms received after expiry of thirty days from the date of despatch of notice shall be treated as if reply from the member has not been received.
10. The scrutinizer should submit the report on the outcome (as per the registers maintained by him)of the postal ballot procedure to the Chairman.
11. Declaration of result by chairman and publishing in the newspaper. Make arrangements to convey the results to the shareholders and the stock exchange.
12. File the resolution with the ROC at the earliest (File e-form 23, if required).
13. Get the minutes entered in the minutes book of general meeting and get the same signed by the chairman.
14. File results of the procedure with the stock exchange along with 3 copies of newspaper advertisement.
Contravention of provisions
a) If any person willfully destroys written assent sent by any member, then such person shall be punishable with imprisonment upto 6 months or with fine or both.
b) For default in complying with Sec 192A (sub sec 1 to 4), officer & company shall be punishable with a fine upto Rs.50,000/- in respect of each such default
Prepared by Victor J Uruvath
CS Trainee, Professional Programme.
1)ICSI guidelines & The Companies (Passing of Resolution by Postal Ballot) Rules 2001.