E-VOTING PARTICIPATION BY SHAREHOLDERS

 E-VOTING PARTICIPATION BY SHAREHOLDERS

Effective 1 October 2012, e-voting becomes mandatory for all such resolutions for which postal ballots are prescribed as per the Companies Act or other relevant regulations. As per the amendment to the Listing Agreement by SEBI, effective 1st October, e-voting will be mandatory for all such resolutions for which postal ballots are prescribed as per the Companies Act or other relevant regulations.

The Securities and Exchange Board of India (SEBI) has brought about this significant change by amending the Listing Agreement, vide a notification of 13 July 2012. A new clause 35A has been inserted in the listing agreement which provides that in case of all resolutions which are transacted using postal ballots. Postal ballots are currently required in terms of section 192A of the Companies Act. There are several other regulations also that mandatorily require resolutions to be passed by postal ballots—ICDR Regulations, Takeover Code, etc.

With an objective of larger shareholder participation in the decision making process of companies, Section 192A was inserted in the Companies Act, 1956 through the Companies (Amendment) Act, 2000. Section 192A of the Act, read with Companies (Passing of the Resolution by Postal Ballot) Rules requires listed companies to conduct certain business only by way of postal ballot, instead of transacting it in their general meetings. Rule 2(c) of the said Rules defines "Postal Ballot" as voting by shareholders by postal or electronic mode instead of voting personally by presenting for transacting businesses in a general meeting of the company. Ministry of Corporate Affairs vide its circular No 72 / 2011 dated 27-12-2011 permitted e voting .These provisions enable companies to transact any business through postal ballot/e-voting.

  

E-voting and its benefits

 E-voting is stated to be an internet based system through which shareholders can login and register their votes on companies' resolutions. It is expected to encourage greater participation of shareholders in decision making and may also reduce the cost borne by the shareholder to attend general meetings. Following are some of  possible  advantages of e voting .

benefits of e-voting for the shareholder:

ü Ability to take part in the decision making process in the comfort of their homes or offices.

ü Ability to vote easily on any number of resolutions of any number of companies whose securities they hold and eligible to vote.

ü Ease of voting - no pasting and posting.

ü Ample time to vote till the last day.

ü Less or no scope for invalid votes.

 FREQUENTLY ASKED QUESTIONS ON THE E-VOTING SYSTEM FOR CORPORATES

What is e-Voting?

Ans. Presently security holders can vote on resolutions proposed by companies through Postal Ballot. e-Voting is a mechanism through which security holders of companies can vote on resolutions electronically any-where and at any-time during the period of voting, through the electronic voting system developed by CDSL/NSDL.

Q2. How does the Company use e-Voting for resolutions requiring Postal Ballot?

1. The company desiring to use the e-Voting system has to sign the agreement and accept the terms and conditions for usage of the e-Voting system with CDSL/NSDL  The agreement is of a perpetual nature.

2. The Company will give a letter for Generation of user ids and passwords on the letterhead of the company.

3. User-id’s and passwords having the maker and checker privileges would be generated and sent to the Company or the RTA.

4. The Company itself or through its Registrar and Transfer Agent [RTA] will setup the e-Voting schedule on the e-Voting website www.evotingindia.com, upload the resolutions on which voting is required and generate the Electronic Voting Sequence Number (EVSN).

5. The resolutions which are to be passed through Postal Ballot will have to be setup by the Company through its RTA. The company will provide to CDSL/NSDL  a letter giving the details of the same.

6. The company will provide the details of the Scrutinizer to CDSL/NSDL .

7.CDSL/NSDL  will then generate login-id for the Scrutinizer for each EVSN.

8. The company can then upload the Register of Members (RoM), which contains the details of the security holders holding the securities in physical and  demat mode across both depositories, as on the record date in the specified format.

9. CDSL/NSDL  will then generate the passwords for security holders an forward the same to the company / RTA.

10. The company will then communicate the password, EVSN and the procedure for e-Voting, along with the notice of the resolution to all the security holders.

11. The security holders should log on to www.evotingindia.com during the duration of the Postal Ballot and cast their votes for all the resolutions on the e-Voting System.

12. After the voting period is over, the e-Voting system will provide to the scrutinizer, security holder wise details of the voting done in a report along with a summary, for the records of the company.

Q3. What are the benefits of the e-Voting System?

Ans. There are benefits to both categories of participants in the e-Voting System for  Corporates to Companies and Security holders.

Benefits to Companies are as follows:

1. Administrative costs associated with postal voting will be reduced as there will be no need for verification of signatures and counting of ballot votes. Also, costs associated with storing of physical ballot papers will be saved.

2. counting  of votes will be accurate.

3. The voting results can be declared immediately after the close of the voting.

4. Voting process is faster transparent and cost efficient.

5. This will enable regulators to reduce the time provided for postal ballot.

Benefits to security holders:

1. Ability to take part in the decision making process in the comfort of their homes or offices.

2. Can vote easily on any number of resolutions of any number of companies whose securities they hold and eligible to vote.

3. Ease of voting - no pasting and posting.

4. Ample time to vote till the last day.

5. No scope for invalid votes.

 What is the legal framework under which e-Voting is permitted?

Ans. Currently, the Companies (Passing of the Resolution by Postal Ballot) Rules, 2001, defines the term "Postal Ballot" as voting by shareholders by postal or electronic mode instead of voting personally by presenting for transacting businesses in a general meeting of the company. Further, the MCA in its circular 17/2011 dated 2nd May 2011, has also recognised CDSL/NSDL  as a systems provider for electronic voting for Postal Ballot Resolutions.

 Is time period for e-Voting different from that for voting through Postal Ballot?

Ans. Currently, the time is defined in the Postal Ballot Rules, 2001, framed under section 192A of the Companies Act, 1956 hence, the time period is same.

How would the passwords for e-Voting be sent to the security holders?

Ans. The passwords would be dispatched to the security holders by the RTA / Company along with the notices.

Is it necessary for all companies to send passwords to all its security holders every time it decides to go for e-Voting?

Ans. The passwords sent to the demat account holders would be valid for all the securities held in the portfolio of the security holder’s demat account. Demat account holders who have already voted for an earlier instance of e-Voting on CDSL/NSDL e-Voting platform and have not received a password then they may login using their existing login details. However, passwords will have to be sent to physical security holders for each voting.

Does the e-Voting System facilitate voting for only demat account holders in CDSL/NSDL  ?

Ans. The e-Voting System facilitates voting in electronic mode for all holders in physical and demat mode as on the record date.

What are the charges for the Service?

Ans. Presently CDSL/NSDL will not charge you for use of the e-Voting system.

Partial voting is permitted in Postal Ballot mechanism. Is the same available in the e-Voting system?

Ans. Yes, a security holder can decide to vote only on some of the resolutions put to vote, the same can be done in e-Voting.

Can an investor split the votes within a particular resolution?

Ans. Yes, however the company has to decide whether to permit security holders to vote for or against within a resolution. If available, security holders are permitted to split votes for a resolution  upto the total holding only.

Which votes would be considered if the investor has voted through the internet and physically?

Ans. The votes cast by the investor through the internet will be considered as the final votes for the resolution. However the Company / Scrutinizer will have the right to decide which should be considered as the final vote.

Can an investor vote partially through the online e-Voting system and partially through the postal ballot facility?

Ans. The investor has the option to vote either through the internet or through the postal ballots, on all the resolutions available for voting, but not both. The system will record the votes cast through either of the modes and disallow voting entry of physical votes or electronic voting for security holders.

 How will proxies vote? Is the concept of proxy still applicable?

Ans. Voting through proxy is permitted to help investors who cannot attend the meeting to appoint a person designated by them to vote on their behalf at the meeting. Through e-Voting the investor can vote directly on the resolutions proposed at a place and time of their convenience. This would eliminate the need of appointing a proxy.

How will the signatures be verified in case of electronic Voting?

Ans. The investor is given a login id and password in order to cast their votes in a secure manner. Hence in this case the verification of the signature is not required. Besides the system uses 2 factor  authentication. The security holder has to enter the user id (Folio no in case of physical shares or demat account no in case of demat holding), the PAN and password provided by  CDSL/NSDL  .

How will the votes be counted if some security holders vote through e-Voting and some vote though postal ballot?

Ans. The  e-Voting system provides for entry of vote received through postal ballot by the Scrutinizer. The system would collate all the votes received physically and electronically in a consolidated Voting Report.

 How will the results be made available at the end of the voting period?

Ans. The Scrutinizer will be able to download a consolidated report, which includes votes cast by the investor electronically and votes received by the Scrutinizer though Postal Ballot which have been entered in the system. The Voting Report download page contains the instructions for downloading, saving and viewing the report.

 Why would a shareholder be unable to login to the e-Voting System?

Ans. The shareholder is attempting to login using the incorrect password and case for the login details provided to them. Shareholders should check the case of the login details and should be entered as provided to them.

 How do the shareholders obtain the Notice / Resolution of the postal ballot?

Ans. The explanatory note of the resolution would visible to the shareholder, in a Protected Document Format (PDF), once the shareholder clicks on the Resolution File link in their login.

Is there any User Manual or information pertaining to this facility?

Ans.  The manual for security holders to cast their vote on e-Voting and for Companies to set-up e-Voting is available on the website  www.evotingindia.com.

Thus e voting will reduce the cost for the company and save time for the shareholders and allows participation by all  the shareholders.