Companies Act, 2013 Procedure

Passing of Resolution by Postal Ballot

Napur Rathore
Nupur Rathore

Published on: Jun 11, 2020

Introduction

Voting by postal ballot means voting by ballot, by post or electronic means. Every company, except a company having less than or equal to two hundred Members, shall transact items of business as prescribed, only by means of postal ballot instead of transacting such business at a General Meeting.

A Company

  • Shall, in respect of such items of business to be transacted only by means of Postal Ballot stated in Annexure A.
  • 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,

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. [Section 110(2)]

Mandatory Requirements for Passing of Resolution by Postal Ballot

  1. Any item of business required to be transacted by means of Postal Ballot, may be transacted at a General Meeting by a Company which is required to provide the facility to members to vote by electronic means under section 108, in the manner provided in that section. [Proviso of Section 110(1)]
  2. In case of listed company, shall first disclose to stock exchange(s) (where shares are listed) about the Postal Ballot as soon as reasonably possible and not later than twenty four hours from the end of the Postal Ballot and update the same on the website of the company within 2 working days. [Regulation 30 and 46(3) of the SEBI (LODR) Regulations, 2015]
  3. A notice should be send to all the shareholders, along with a draft resolution explaining the reasons therefor and requesting them to send their assent or dissent in writing on a postal ballot. [Rule 22(1) of The Companies (Management and Administration) Rules, 2014]
  4. The notice shall be sent either (a) by Registered Post or speed post, or (b) through electronic means like registered e-mail id or (c) through courier service for facilitating the communication of the assent or dissent of the shareholder to the resolution within the said period of thirty days. [Rule 22(2) of The Companies (Management and Administration) Rules, 2014]
  5. Notice shall specify the day, date, time and venue where the results of the voting by postal ballot will be announced and the link of the website where such results will be displayed. [Clause 16.4.3 of the Secretarial Standard – 2]
  6. Notice of the postal ballot shall inform the Members about availability of e-voting facility, if any, and provide necessary information thereof to enable them to access such facility. [Clause 16.4.4 of the Secretarial Standard – 2]
  7. In case of listed company, give intimation at least two working days in advance to the stock exchange about the Postal Ballot. [Regulation 29 of the SEBI(LODR) Regulation, 2015]
  8. Ordinary Business shall not be transacted by means of a postal ballot. [Clause 16.1 of the Secretarial Standard – 2]
  9. Taking the Board Approval for below mentioned items
    The Board shall
    • identify the businesses to be transacted through postal ballot
    • approve the Notice of postal ballot incorporating proposed Resolution(s) and explanatory statement thereto
    • authorise the Company Secretary or where there is no Company Secretary, any Director of the company to conduct postal ballot process and sign and send the Notice along with other documents
    • appoint one scrutiniser for the postal ballot
    • appoint an Agency in respect of e-voting for the postal ballot
    • decide the cut-off date for reckoning Voting Rights and ascertaining those Members to whom the Notice and postal ballot forms shall be sent. [Clause 16.3 of the Secretarial Standard – 2]

Procedure for Passing of Resolution by Postal Ballot

  1. Send Notice along with Draft Resolution to the Shareholders [Rule 22(1) and 22(2) of the Companies (Management and Administration) Rules, 2014]
    Where a Company is required or decides to pass any resolution by way of Postal Ballot, it shall send a notice to all the Shareholders, along with a draft resolution explaining the reasons therefor and requesting them to send their assent or dissent in writing on a Postal Ballot because Postal Ballot means voting by post or through electronic means within a period of thirty days from the date of dispatch of the notice. The notice shall be sent either
    • by Registered Post or speed post or
    • through electronic means like registered e-mail id or
    • through courier service for facilitating the communication of the assent or dissent of the shareholder to the resolution within the said period of thirty days.
  2. Publish Advertisement about dispatched Ballot Papers [Rule 22(3) of the Companies (Management and Administration) Rules, 2014 and Clause 16.4.4 of the Secretarial Standard – 2]
    An advertisement shall be published 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 dispatched the ballot papers and specifying therein the following matters, namely
    • a statement to the effect that the business is to be transacted by Postal Ballot which includes voting by electronic means
    • the date of completion of dispatch of notices
    • the date of commencement of voting (postal and e-voting)
    • the date of end of voting (postal and e-voting)
    • the statement that any Postal Ballot received from the member beyond the said date will not be valid and voting whether by post or by electronic means shall not be allowed beyond the said date
    • a statement to the effect that members, who have not received Postal Ballot forms may apply to the company and obtain a duplicate thereof
    • contact details of the person responsible to address the grievances connected with the voting by Postal Ballot including voting by electronic means
    • day, date, time and venue of declaration of results and the link of the website where such results will be displayed.
  3. Place Notice of Postal Ballot on Website of the Company [Rule 22(4) of the Companies (Management and Administration) Rules, 2014 and Clause 16.4.2 of the Secretarial Standard – 2]
    The notice of the Postal Ballot shall also be placed on the website of the Company forthwith after the notice is sent to the members and such notice shall remain on such website till the last date for receipt of the Postal Ballots from the members.
  4. Appointment of a Scrutinizer [Rule 22(5) and 22(6) of the Companies (Management and Administration) Rules, 2014]
    The Board of Directors shall appoint one Scrutinizer, who is not in employment of the Company and who, in the opinion of the Board can conduct the Postal Ballot voting process in a fair and transparent manner. The Scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority.
  5. Receive Report of Scrutinizer [Rule 22(8), 22(9) and 22(12) of the Companies (Management and Administration) Rules, 2014 and 16.6.1 of the Secretarial Standard – 2]
    Postal ballot received back from the shareholders shall be kept in the safe custody of the Scrutinizer and after the receipt of assent or dissent of the shareholder in writing on a Postal Ballot, no person shall deface or destroy the ballot paper or declare the identity of the shareholder. The Scrutinizer shall submit his report as soon as possible after the last date of receipt of Postal Ballots but not later than seven days thereof. The assent or dissent received after thirty days from the date of issue of notice shall be treated as if reply from the member has not been received.
  6. Maintenance of Register of Assent or Dissent by the Scrutinizer [Rule 22(10) of the Companies (Management and Administration) Rules, 2014]
    The scrutinizer shall maintain a register either manually or electronically to record their assent or dissent received, mentioning the particulars of name, address, folio number or client ID of the shareholder, number of shares held by them, nominal value of such shares, whether the shares have differential voting rights, if any, details of Postal Ballots which are received in defaced or mutilated form and Postal Ballot forms which are invalid.
  7. Safe Custody and Handing Over of Ballot Papers to the Company by Scrutinizer [Rule 22(11) of the Companies (Management and Administration) Rules, 2014]:
    The Postal Ballot and all other papers relating to Postal Ballot including voting by electronic means, shall be under the safe custody of the Scrutinizer till the Chairman considers, approves and signs the minutes and thereafter, the Scrutinizer shall return the Ballot Papers and other related papers or register to the Company.
  8. Preservance of Ballot Paper and Other Related Paper and Registers [Rule 22(11) of the Companies (Management and Administration) Rules, 2014]:
    Every Company shall preserve such Ballot Papers and other related papers or Register of assent or dissent safely.
  9. Declaration of Result on the Website [16.6.2 of the Secretarial Standard – 2 and Rule 22(13) of the Companies (Management and Administration) Rules, 2014]
    The results shall be declared by placing it, along with the Scrutinizer’s Report, on the website of the Company.

Annexure - A

Items of business which shall be passed only by postal ballot
  1. 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.
  2. Alteration of Articles of Association in relation to insertion or removal of provisions which are required to be included in the Articles of a company in order to constitute it a private company
  3. Change in place of Registered Office outside the local limits of any city, town or village
  4. 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
  5. Issue of shares with differential rights as to voting or dividend or otherwise
  6. Variation in the rights attached to a class of shares or debentures or other securities
  7. Buy-back of shares by a company
  8. Appointment of a Director elected by Small Shareholders
  9. Sale of the whole or substantially the whole of an undertaking of a company or where the company owns more than one undertaking, of whole or substantially the whole of any of such undertakings
  10. Giving loans or extending guarantee or providing security in excess of the limit specified
  11. Any other Resolution prescribed under any applicable law, rules or regulations
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