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A critical analysis of E-voting facility under companies Act 2013 V/s 35B of Listing Agreement
20 Jun 2014

·      What exactly is e- voting?

E-voting is a process where a shareholder who is not able to personally attend a company meeting sends his vote by logging into is computer through a special URL allocated by the company the company makes arrangement with service provider such as CDSL for this purpose.

E-voting known by various names such as remote voting advance voting absentee voting is common in several countries already. The European Union made it mandatory in the 2007. Australia, Malaysia have also made it mandatory. In several of the states inthe USA also, such a voting is mandatory.

The MCA incorporated rule 20 of companies (Management and Administrative) Rules , 2014 which mandates listed companies and companies having 1000 or more shareholder must provide e-voting facility for their general meeting.

·      Sigh of Relief or Sigh Grief?

Unclear provision, and belated clarification for some,it is a sigh of relief and for lots of others it is a sigh of grief.

Sigh of relief  1):The MCA’s so called clarifications no 20/2014 of 17th June,2014 says e-voting will not be mandatory till 31st Dec, 2014 in other words AGMs this year may go the traditional way and may not offer e-voting facility in the coming AGM up to Dec,2014.

Now for the sigh of grief: for many large company the AGM notices have already been approved, printed and many have actually already posted their notices these notices have given their e-voting facility. Already it is settled law that even if e-voting facility is not mandatory the company may still offer the facility so, if the notice and sent by the company as already provided the facility the circular of 17th June does not help the company at all.

The clause 35B of the listing agreement, already effective, has also made e-voting mandatory for all listed companies unless MCA and SEBI remove this anomaly and issue directions in absolute alignment / coordination, it is unlikely that SEBI will have differed clause 35B as well up to 31st Dec, 2014. Non listed company will still be bound by the two sets of rules and therefore will have to offer e- voting in the coming AGM. If SEBI does not issue a similar relaxation then the benefit of the MCA circular will be available only to unlisted company having 1000 or more shareholders which actually are just a handful or bare minimum.

All the listed companies are to follow Clause 35B, despite relaxation by MCA till 31st,December 2014. But we recommend that if any listed company is to follow Clause 35 then they should also opt for MCA rule 20 of companies (Management and Administrative) Rules , 2014 and provide e-Voting facility to its shareholders.

·      Show of hands ruled out!

One of the most convenientways of conduct of a meeting is to offer a resolution for voting by show of hands.The MCA circular refers to sec 107 of the act to say that show of hand is ruledout in the company meetings.

However, the MCA circular mandates that show of hands will be ruled out all together this interpretation will make company meeting a chaotic and marathon affair, as all resolution will have to put to vote by poll unlike a show of hand, which can be concluded within minutes, a poll required an extremely elaborate exercise the secretarial department of the company has to issue and hand out voting slips,which shareholder fill, sign and drop and ballot boxes. The poll slips a relater verified, counted, tallied by a “scrutinizer”. Since this amount to physical verification signature verification, preparation of a tally votes, etc.the entire process is time-consuming!

The law allows a company to take a poll within 48 hours. Most companies actually do that-thefixed a day for a poll, within 48 hours this would mean the shareholders haveto come again for voting on a poll.

The whole exercise of poll adds a perfunctory burden on company and makes the exercise of poll – taking cumbersome both for companies and for shareholders.

·      Will there be a demand for poll?

Para 6 of the circular have left shareholders guessing as to what will be the voting at the meeting like? Will there be no voting at all? Of course, that cannot be an intendor interpretation of the law.

e-voting is  the facility and not a compulsion of recently the Bombay high court in the Goderj industries Ltd- wadala Commodities, cases held that the right of a member to vote electronically is not to exclusion of his right to vote at the meeting. He may exercise the right either way butcertainly not the duplicate or additional casting of votes.

Therefore, the true meaning of the para 6 will be that the voting at the meeting will be by way of a poll only. The question of a show of hands does not arise-as already ruled out by the very first paragraph. Hence there is also no question for members for proxies demanding for a poll. The chairman of the meeting will, therefore,necessarily have to order a poll.


The purpose of the law permitting e-voting is to make shareholder participating in meeting in more democratic manner, more convenient but not to make meeting chaotic or cumbersome. No purpose of law is being served by insisting on a poll or agree resolution. Sec 107 will not be so cumbersome if company allowed to use show of hand as well. But if all the language of sec 107(1) is a hindrance, the MCA could have use its power for removal of difficulties by inserting appropriate language changes in sec 107(1).

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