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Just as AGM season starts the Ministry of Corporate Affairs has dropped a bombshell that e-voting provisions in the Companies Act, 2013 do not become mandatory till 2015. This would have been good news but it may have come too late.

Shareholders of a Company have been expressing their assent or dissent for the resolutions requiring their approval by way of voting.  It is impossible for the shareholders of the Company to be present physically for every General Meeting, so “Passing of Resolutions by Postal Ballot” under Section 192A was introduced in the Companies Act, 1956 along with The Companies (Passing of the Resolution by Postal Ballot) Rules, 2001.

There was no provision for e-voting under the Companies Act, 1956. SEBI circular dated July 13, 2012 brings an amendment to the Equity Listing Agreement mandating top 500 listed entities to provide e-voting platform to their shareholders in respect of businesses which are transacted through Postal Ballot.

Now the Companies Act, 2013 has introduced new provision, voting through electronic means under Section 108 read with the Companies (Management and Administration) Rules, 2014. Rules accompanying Section 108 of the Companies Act, 2013 require all Listed Companies and Companies with 1000 or more shareholders to provide e-voting. The rules also detail the procedure to be followed when implementing e-voting. The intent was to make voting more participative so that even shareholders far flung such as foreign institutional investors could participate on deciding on resolutions.

But somehow, thanks to poor drafting, the e-voting provision has become very controversial because a previous Section in the Act, namely Section 107 seems to suggest that if a resolution has been voted upon electronically, then it cannot be voted upon by a show of hands. Typically, most resolutions in an AGM are decided by a show of hands unless a poll is ordered or called for. If providing e-voting rules out show of hands then all such resolutions have to be decided by poll, which can be cumbersome and time consuming. So companies were grappling with all this confusion with very little help or clarity from MCA.

The MCA has issued a circular saying the mandatory e-voting provisions has been deferred till 2015 which would have been good news but for two reasons. Many companies would have already issued AGM notices and in that specified e-voting facilities so now they will have to go through with the e-voting. The second reason is that SEBI in amended clause 49 and 35B of the Listing Agreement making it mandatory for all Listed Companies to provide e-voting facilities for all resolutions to be passed in General Meetings or via postal ballots. SEBI relies on the Companies Act and the rules in order to do so, and this is already effective on the part of SEBI. So until SEBI re-aligns to MCA's recent moves, Listed Companies will still have to provide e-voting.

This is good news for the small group of shareholders that were worried about going to an AGM and seeing the process entirely changed and doing away with show of hands, etc. but it is really bad news for FIIs or all those shareholders who had hope to be able to vote on a resolution remotely because now these e-voting provisions have been pushed to next year. MCA has also issued other clarifications surrounding e-voting provisions.

Voting through electronic means-

Every listed Company or a Company having not less than 1000 shareholders shall provide to its members facility to exercise their right to vote at General Meetings by electronic means. A member may exercise the right to vote at any General Meeting by electronic means and Company may pass any resolution by electronic voting system in accordance with the provisions of the Companies Act, 2013.

Voting by electronic means or electronic voting system means a secured system based process of display of electronic ballots, recording of votes of the members and the number of votes polled in favour or against, such that the entire voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralized server with adequate cyber security.

Procedure to be followed by the Company:

A Company which opts to provide the facility to its members to exercise their votes at any General Meeting by electronic voting system shall follow the following procedure:

1. The notice of the meeting shall be sent to all the members, auditors of the Company, or Directors either-

- By registered post or speed post ; or

- Through electronic means like registered e-mail id;

- Through courier service;

2. The notice shall also be placed on the website of the Company, if any and of the agency forthwith after it is sent to the members;

3. The notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the Company is providing facility for voting by electronic means;

4. The notice shall clearly indicate the process and manner for voting by electronic means and the time schedule including the time period during which the votes may be cast and shall also provide the login ID and create a facility for generating password and for keeping security and casting of vote in a secure manner;

The Company shall cause an advertisement to be published, not less than five days before the date of beginning of the voting period, 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 sent the notice of the meeting and specifying therein, inter alia, the following matters, namely:-

- Statement that the business may be transacted by e-voting;

- The date of completion of sending of notices;

- The date and time of commencement of voting through electronic means;

- The date and time of end of voting through electronic means;

- The statement that voting shall not be allowed beyond the said date and time;

- Website address of the Company and agency, if any, where notice of the meeting is displayed;

- Contact details of the person responsible to address the grievances connected with the electronic voting;

- The e-voting shall remain open for not less than one day and not more than three days. In all such cases, such voting period shall be completed three days prior to the date of the General Meeting.

- During the e-voting period, shareholders of the Company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically. Once the vote on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently.

- At the end of the voting period, the portal where votes are cast shall forthwith be blocked.

- The Board of Directors shall appoint one scrutinizer, who may be Company Secretary in Practice or Chartered Accountant in Practice, Cost Accountant in Practice, or  an advocate, but not in employment of the Company and is a person of repute who, in the opinion of the Board can scrutinize the e-voting process in a fair and transparent manner. The scrutinizer so appointed may take assistance of a person who is not in employment of the Company and who is well-versed with the e-voting system.

- The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority;

- The scrutinizer shall, within a period of not exceeding three working days from the date of conclusion of e-voting period, unblock the votes in the presence of at least two witnesses not in the employment of the Company and make a scrutinizer’s report of the votes cast in favour or against, if any, forthwith to the Chairman;

- The scrutinizer shall maintain a register either manually or electronically to record the assent or dissent, received, mentioning the particulars of name, address, folio number or client ID of the shareholders, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights;

- The register and all other papers relating to electronic voting shall remain in the safe custody of the scrutinizer until the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the register and other related papers to the Company.

- The results declared along with the scrutinizer’s report shall be placed on the website of the Company and on the website of the agency within two days of passing of the resolution at the relevant General Meeting of members;

- Subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant General Meeting of members.

E-voting Platform:

In order to hinder the problems faced with the postal ballot, NSDL and CDSL Ventures Limited (CVL) has developed an internet based e-voting platform which enables the shareholders to vote electronically in a convenient manner. The details of the same are as follows:

Name of the agency


CDSL ventures Limited (CVL)


E-mail Id


- For providing e-voting service platform, a certificate is required to be obtained by any agency from Standardization Testing and Quality Certification (STQC) Directorate, Department of Information Technology, Ministry of Communication and IT, Government of India, New Delhi. At Present NSDL and CDSL are providing e-voting platform, after obtaining necessary certifications.

- Data of all the Shareholders will be provided to the agency providing e-voting platform by the Company.

- Agencies providing such e-voting platform shall ensure that the process for e-voting is explained in the e-voting platform along with necessary “FAQs” and shall also ensure that the draft resolutions, explanatory statement and other annexure, if any, sent to the shareholders are displayed prominently in the concerned page of the e- voting platform.

- User ID and Password will be provided to the shareholders by the agency providing e-voting platform.

- In case of Joint Shareholding e-voting option will be available only to the First Shareholder.

- Voting on selective resolution will be permitted.

- E-Voting facility will be available to shareholders holding shares in physical form as well as in Demat Form.

Process of e-voting for the Company:

- Every listed Company or a Company having not less than one thousand shareholders  shall choose any one of the agencies, which is currently providing e-voting platform for this purpose.

- The Company through its Register and Transfer Agent (RTA) will set up the e-voting schedule on the website and upload the resolutions on which voting is required and generate the Electronic Voting Sequence Number (EVSN).

- The Company will then upload the Register of Members in the specified file format.

- CDSL/NSDL will generate the password for each shareholder and print the same in a secured manner, which is to be sent to all the shareholders.

- The Company will then communicate the password, EVSN and the procedure for e-voting along with the notice of resolution to all the shareholders.

- After the voting period is over, the e-voting system will provide to the scrutinizer, a report containing the shareholder wise details of vote done, for the records of the Company.

Process of e-voting for the Shareholders:

- The shareholders can login to the e-voting system using their user-id (i.e. Demat Account Number/ Folio Number), PAN and password.

- After logging in, demat shareholders will have to confirm their personal details and compulsorily change their password. This password can be used by demat shareholders for voting on resolutions of any other Company in which they are eligible to vote.

- During the voting period, the shareholders can visit the e-voting website and select the relevant EVSN Company for voting.

- Shareholders can view the detailed resolutions on the website and cast their vote available for voting.

Advantages of e-Voting to the Company/ Registrar and Share Transfer Agents:

- Reduction in cost and paperwork.

- No need to store physical ballot papers.

- Accurate counting of votes.

- Declaration of results in a very short time.

- No need to verify the signatures.

Advantages of e-Voting to the Shareholders:

- Invalid votes cannot be casted and also votes won’t be lost in transit.

- Voting can be done from anywhere.

- Sufficient time will be available for voting as it can be casted even on the last day.

- Voting can be done for different companies at the same time.

- Increase of transparency

- Increase of participation in the decision making process

Disadvantages of e-Voting:

- There may be a chance of misuse of user Id and Password of the shareholders, if it is fallen into wrong hands.

- Lack of awareness among the shareholders about the new process of e-voting.

- It has to be ensured that the entire process of e-voting is not subject to any kind of manipulation.

- Correct Data of Shareholders will have to be provided by the Registrar and Share Transfer Agents or the Company to the agency providing e-voting platform otherwise a shareholder may not get his user Id and password and thus may not be able to cast his vote.

- No option is available to the shareholders to modify the casted vote.


Suffice it to say this is yet another instance of some very poor handling by a ministry that has been shepherding this new law for over 10 years now. Therefore, we have a confusion that is prevailing just with the on set of the AGM season. Those companies that have not yet sent out their AGM notices, they will be lucky they don’t have to provide for e-voting unless that is if SEBI aligns its Clause 35B of Listing Agreement with MCA otherwise they will still have to provide for e-voting.

On the whole electronic voting replaces the Postal ballot process and saves time and cost of the Company. It also helps the shareholders to cast their vote from anywhere and at anytime. In the e-voting process, role of scrutinizer will go under paradigm shift as there will be no physical collecting and counting of ballot papers, verification of signatures and rejection of invalid votes, if any .The main responsibility is on the part of scrutinizer who should take care of the e-voting process. Some part of uncertainty still prevails. Let’s hope for the better corporate governance.


Published by

CS Avinash Godse
(C.S. LL.B.)
Category Others   Report

  22 Shares   6558 Views



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