Postal Ballot Companies Act 2013 (Meaning Notice Procedure)

Check out the detailed Explanation of Postal Ballot under the Companies Act 2013. Section 110 and Rule 22 of the Companies (Management and Administration ) Rules,2014 deals with Postal Ballot under the Companies Act 2013. The following article clearly explains the Postal Ballot meaning, Procedure for Passing the Resolution by Postal Ballot, Items of business to be transacted through postal ballot etc.

Introduction

Postal Ballot Companies Act 2013 (Meaning Notice Procedure)

According to Section 110, A company shall transact businesses notified by Central Government through postal ballot only not in general meeting. A company may transact any business through postal ballot except –

  • ordinary business in an annual general meeting; and
  • business in respect of which directors or auditors have a right to be heard at any meeting.

A resolution passed through postal ballot shall be deemed to have been passed at a general meeting.

Postal Ballot Meaning

Postal Ballot is defined under section 2(65) means “voting by post or through any electronic mode”. Postal Ballot definition was never given in the Companies Act, 1956 because the concept of Postal Ballot was introduced into the Companies Act, 1956 by the 2001 Amendment and postal ballot under the 1956 Act included only voting by postal ballot not by electronic mode.

Postal Ballot Voting

Postal Ballot is not same as voting through electronic mode. The concept of Postal Ballot is a unique provision which gives shareholders the right to vote on items of business of a corporate body without actually attending its general meetings either personally or through their proxies/representatives.

The of Postal Ballot provides an opportunity even to such shareholders to take part in the decision making process The facility now provided to all shareholders, regardless of their location or their ability to be physically present at an appointed day and place, to approve or reject a proposal of the Board and to vote on items of business by postal or electronic mode, is a further step to encourage corporate democracy and to promote good corporate governance.

Every company except one person company and other companies having upto fifty members are required to transact business through postal ballot.

However, a company is required to hold an Annual General Meeting, every year, as this is a mandatory requirement under Section 96 of the Act.

Items of business to be transacted through postal ballot

Pursuant to clause (a) of sub-section (1) of section 110, the following items of business shall be transacted only by means of voting through a 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, under subsection (68) of section 2, 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 as specified in sub-section (5) of section 12;
  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 under sub-section (8) of section 13;
  5. Issue of shares with differential rights as to voting or dividend or otherwise under subclause (ii) of clause (a) of section 43;
  6. Variation in the rights attached to a class of shares or debentures or other securities as specified under section 48;
  7. Buy-back of shares by a company under sub-section (1) of section 68;
  8. Election of a director under section 151 of the Act;
  9. Sale of the whole or substantially the whole of an undertaking of a company as specified under subclause (a) of sub-section (1) of section 180;
  10. Giving loans or extending guarantee or providing security in excess of the limit specified under subsection (3) of section 186. [Rule 22(16)]

One Person Company and other companies having members up to two hundred are not required to transact any business through postal ballot. [Proviso to Rule 22(16)]

Procedure for Postal Ballot

Notice to Shareholders:

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 there for 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 30 days from the date of dispatch of the notice.

Mode of dispatch: 

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.

Publish advertisement:

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.

Details of Advertisement:

  • 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;
  • the date of end of 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; and
  • contact details of the person responsible to address the grievances connected with the voting by postal ballot including voting by electronic means.

Place notice on website:

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.

Appoint Scrutinizer:

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.

Obligation of Scrutinizer:

  • The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority.
  • 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 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.
  • 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 who shall preserve such ballot papers and other related papers or register safely.
  • 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.
  • The results shall be declared by placing it, along with the scrutinizer’s report, on the website of the company.

The resolution shall be deemed to be passed on the date of at a meeting convened in that behalf.

The provisions of rule 20 regarding voting by electronic means shall apply, as far as applicable, mutatis mutandisto this rule in respect of the voting by electronic means.

Conclusion

The above all the information Prepared on the basis of the Relevant Provisions under the Companies Act 2013. For better Understanding Cross check the Companies Act 2013. For any doubts and quarries comment below.