Wednesday, 5 August 2015

Decoding Secretarial Standards – Postal Ballot

In this post, I will discuss Secretarial Standards related to Postal Ballot under SS – 2.
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. [Paragraph 16.1]
A company with 200 or more member shall transact prescribed items of business only by means of postal ballot.
The list of items of businesses requiring to be transacted only by means of a postal ballot is given at Annexure to SS -2. [Background Paragraph 1 after Paragraph 16.1]
The Board may however opt to transact any other item of special business, not being any business in respect of which Directors or auditors have a right to be heard at the Meeting, by means of postal ballot. [Background Paragraph 1 after Paragraph 16.1]

The Board may opt to transact any item of special business to transact through postal ballot. Any item of business in which Director or Auditor has a right to be heard at the meeting shall not be transacted through postal ballot.
Ordinary Business shall not be transacted by means of a postal ballot. [Background Paragraph 1 after Paragraph 16.1]
Every company having its equity shares listed on a recognized stock exchange other than companies whose equity shares are listed on SME Exchange or on the Institutional Trading Platform and other companies which are required to provide e-voting facility shall provide such facility to its Members in respect of those items, which are required to be transacted through postal ballot. [Paragraph 16.2]
Other companies presently prescribed are companies having not less than one thousand Members. [Background Paragraph 1 after Paragraph 16.2]
What conflict is in Paragraph 16.1 (which talk about 200 members) and Background Paragraph after Paragraph 16.2 (which talk about one thousand members)?
Board Approval:
The Board shall:
(a) identify the businesses to be transacted through postal ballot;
(b) approve the Notice of postal ballot incorporating proposed Resolution(s) and explanatory statement thereto;
(c) 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 ;
(d) appoint one scrutiniser for the postal ballot.
The scrutiniser may be a Company Secretary in Practice, a Chartered Accountant in Practice, a Cost Accountant in Practice, an Advocate or any other person of repute who is not in the employment of the company and, who can in the opinion of the Board, scrutinise the postal ballot process in a fair and transparent manner.
The scrutiniser shall however not be an officer or employee of the company.
The scrutiniser 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.
Prior Consent to act as a scrutiniser shall be obtained from the scrutiniser and placed before the Board for noting.
(e) appoint an Agency in respect of e-voting for the postal ballot;
(f) decide the record date for reckoning Voting Rights and ascertaining those Members to whom the Notice and postal ballot forms shall be sent.
Only Members as of the record date shall be entitled to vote on the proposed Resolution by postal ballot.
(g) decide on the calendar of events.
(h) authorise the Chairman or in his absence, any other Director to receive the scrutiniser’s register, report on postal ballot and other related papers with requisite details.
The scrutiniser is required to submit his report within seven days from the last date of receipt of postal ballot forms. [Paragraph 16.3 and related paragraph]
Notice:
Notice of the postal ballot shall be given in writing to every Member of the company. Such Notice shall be sent either by registered post or speed post, or by courier or by e-mail or by any other electronic means at the address registered with the company. [Paragraph 16.4.1]
The Notice shall be accompanied by the postal ballot form with the necessary instructions for filling, signing and returning the same. [Background Paragraph 1 after Paragraph 16.4.1]
In case the Notice and accompanying documents are sent to Members by e-mail, these shall be sent to the Members’ e-mail addresses, registered with the company or provided by the depository, in the manner prescribed under the Act. [Background Paragraph 2 after Paragraph 16.4.1]
This may not be practically possible to send postal ballot form as it required to be send accompanied by postage prepaid reply envelop address to the scrutiniser as per Paragraph 16.5.1 discussed.
Such Notice shall also be given to the Directors and Auditors of the company, to the Secretarial Auditor, to Debenture Trustees, if any, and, wherever applicable or so required, to other specified recipients. [Background Paragraph 3 after Paragraph 16.4.1]
An advertisement containing prescribed details 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 Notice and the ballot papers. [Background Paragraph 4 after Paragraph 16.4.1]
In case of companies having a website, Notice of the postal ballot shall also be placed on the website. [Paragraph 16.4.2]
Such Notice shall remain on the website till the last date for receipt of the postal ballot forms from the Members. [Background Paragraph 1 after Paragraph 16.4.2]
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. [Paragraph 16.4.3]
Notice shall also specify the mode of declaration of the results of the voting by postal ballot. [Background Paragraph 1 after Paragraph 16.4.3]
I am not sure what ‘mode’ means here and how this paragraph add value to Paragraph 16.4.3.
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. [Paragraph 16.4.4]
In case the facility of e-voting has been made available, the provisions relating to conduct of e-voting shall apply, mutatis mutandis, as far as applicable. [Background Paragraph 1 after Paragraph 16.4.4]
This paragraph denote that provision e – voting as additional facility under postal ballot is different from “e – voting”.
Notice shall describe clearly the e-voting procedure. [Background Paragraph 2 after Paragraph 16.4.4]
Notice shall also clearly specify the date and time of commencement and end of e-voting, if any and contain a statement that voting shall not be allowed beyond the said date and time. Notice shall also contain contact details of the official responsible to address the grievances connected with the e-voting for postal ballot. [Background Paragraph 2 after Paragraph 16.4.4]
Notice shall clearly specify that any Member cannot vote both by post and e-voting and if he votes both by post and e-voting, his vote by post shall be treated as invalid. [Background Paragraph 2 after Paragraph 16.4.4]
The advertisement shall, inter alia, state the following matters:
(a) a statement to the effect that the business is to be transacted by postal ballot which may include voting by electronic means;
(b) the date of completion of dispatch of Notices;
(c) the date of commencement of voting ( postal and e-voting);
(d) the date of end of voting ( postal and e-voting);
(e) the statement that any postal ballot form received from the Member after thirty days from the date of dispatch of Notice will not be valid;
(f) a statement to the effect that Member who has not received postal ballot form may apply to the company and obtain a duplicate thereof;
(g) contact details of the person responsible to address the queries/grievances connected with the voting by postal ballot including voting by electronic means, if any; and
(h) day, date, time and venue of declaration of results and the link of the website where such results will be displayed. [Background Paragraph 5 after Paragraph 16.4.4]
Notice and the advertisement shall clearly mention the record date as on which the right of voting of the Members shall be reckoned and state that a person who is not a Member as on the record date should treat this Notice for information purposes only. [Background Paragraph 6 after Paragraph 16.4.4]
Each item proposed to be passed through postal ballot shall be in the form of a Resolution and shall be accompanied by an explanatory statement which shall set out all such facts as would enable a Member to understand the meaning, scope and implications of the item of business and to take a decision thereon. [Paragraph 16.4.5]
Postal ballot forms:
The postal ballot form shall be accompanied by a postage prepaid reply envelope addressed to the scrutiniser. [Paragraph 16.5.1]
A single postal ballot Form may provide for multiple items of business to be transacted. [Background Paragraph 1 after Paragraph 16.5.1]
The postal ballot form shall contain instructions as to the manner in which the form is to be completed, assent or dissent is to be recorded and its return to the scrutiniser. [Paragraph 16.5.2]
The postal ballot form may specify instances in which such Form shall be treated as invalid or rejected and procedure for issue of duplicate postal ballot Forms. [Background Paragraph 1 after Paragraph 16.5.2]
A postal ballot form shall be considered invalid if:
(a) A form other than one issued by the company has been used;
(b) It has not been signed by or on behalf of the Member;
(c) Signature on the postal ballot form doesn’t match the specimen signatures with the company
(d) It is not possible to determine without any doubt the assent or dissent of the Member;
(e) Neither assent nor dissent is mentioned;
(f) Any competent authority has given directions in writing to the company to freeze the Voting Rights of the Member;
(g) The envelope containing the postal ballot form is received after the last date prescribed;
(h) The postal ballot form, signed in a representative capacity, is not accompanied by a certified copy of the relevant specific authority;
(i) It is received from a Member who is in arrears of payment of calls;
(j) It is defaced or mutilated in such a way that its identity as a genuine form cannot be established;
(k) Member has made any amendment to the Resolution or imposed any condition while exercising his vote. [Paragraph 16.5.3]
A postal ballot form which is otherwise complete in all respects and is lodged within the prescribed time limit but is undated shall be considered valid. [Background Paragraph 1 after Paragraph 16.5.3]
Declaration of results:
Based on the scrutiniser’s report, the Chairman or any other Director authorised by him shall declare the result of the postal ballot on the date, time and venue specified in the Notice, with details of the number of votes cast for and against the Resolution, invalid votes and the final result as to whether the Resolution has been carried or not. [Paragraph 16.6.1]
The scrutiniser shall submit his report to the Chairman who shall countersign the same. In case Chairman is not available, for such purpose, the report by the scrutiniser shall be submitted to any other Director who is authorised by the Board to receive such report, who shall countersign the scrutiniser’s report on behalf of the Chairman. [Background Paragraph 1 after Paragraph 16.6.1]
The result of the voting with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not, along with the scrutiniser’s report shall be displayed on the Notice Board of the company at its Registered Office and its Head Office as well as Corporate Office, if any, if such office is situated elsewhere, and also be placed on the website of the company, in case of companies having a website. [Paragraph 16.6.2]
The Resolution, if passed by requisite majority, shall be deemed to have been passed on the last date specified by the company for receipt of duly completed postal ballot forms or e-voting. [Paragraph 16.6.3]
Custody of scrutiniser’s registers, report and other related papers:
The postal ballot forms, other related papers, register and scrutiniser’s report received from the scrutiniser shall be kept in the custody of the Company Secretary or any other person authorised by the Board for this purpose. [Paragraph 16.7]
Rescinding the Resolution:
A Resolution passed by postal ballot shall not be rescinded otherwise than by a Resolution passed subsequently through postal ballot. [Paragraph 16.8]
This avoid a situation where a resolution passed by postal ballot or e – voting rescinded by a resolution passed by few members in meeting without any poll but show of hand.
Modification to the Resolution:
No amendment or modification shall be made to any Resolution circulated to the Members for passing by means of postal ballot.
At the end of this post, I want to mention that some provisions I criticised here may be taken from the Act or relevant Rules and in such case may be treated my suggestion for relevant changes the Act or these Rules.

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