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MCA Says No E-Voting Till Dec 2014!

Published on Wed, Jun 18,2014 | 11:24, Updated at Wed, Jun 18 at 15:06Source : CNBC-TV18 |   Watch Video :

Just as AGM season starts, the Ministry for Corporate Affairs has dropped a bombshell that E-voting provisions in the Companies Act, 2013 do not become mandatory till 2014. This would have been good news but it may have come too late. CNBC-TV18’s Menaka Doshi explains why.

First the background. Rules accompanying Section 180 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. The intent was to make voting more participative. But somehow, thanks to poor drafting the E-voting provision has become very controversial.

COMPANIES ACT, 2013
E-voting: Section 108 & Rules
- Every listed company or company having not less than 1000 shareholders
- To provide shareholders with E-VOTING facility

COMPANIES ACT, 2013
E-voting Process
- To remain open for minimum 1 day and maximum 3 days
- Voting period to be completed 3 days prior to General Meeting date
- Vote cast cannot be changed

It is because a previous Section seems to suggest that if a resolution has been voted upon electronically, then it cannot be voted upon by a show of hands. Now typically most resolutions in an AGM are decided by a show of hands unless a poll is ordered or called for.  So 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.

COMPANIES ACT, 2013
Voting By Show Of Hands
- Section 107. (1) At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded under Section 109 or the voting is carried out electronically, be decided on a show of hands.

 So companies were grappling with all this confusion with very little help or clarity from MCA till today. Today the MCA has issued a circular saying the mandatory e-voting provisions have been deferred till December 2014. Which would have been good news but for 2 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
- SEBI in its recent changes to Clause 49 and 35B of the listing agreement makes it mandatory for all listed companies to provide e-voting facilities for all resolutions to be passed in general meetings on via postal ballots. And that is already effective. So until SEBI re-aligns to MCA’s recent moves, listed companies will still have to provide e-voting.

MCA has also issued other clarifications surrounding e-voting provisions which I won’t bore you with. 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.

COMPANIES ACT, 2013
E-Voting Deferred! !
MCA decides not to treat e-voting provisions as mandatory till 31"t December, 20I4

COMPANIES ACT, 2013
Too Little, Too Late?
- Many companies may have already sent out AGM notices
- May have already intimated e-voting facility

COMPANIES ACT, 2013
Too Little, Too Late?
SEBI amended Clause 35B
- All listed companies to provide e-voting for resolutions to be passed at general meetings or postal ballots
- Already effective

 

 
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