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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.

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

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.

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.

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

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

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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