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Mar 24, 2015

Comparative Analysis of E-Voting Rules – Old Vs New

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Particulars Old Rule 20 New Rule 20 Remarks
Applicability Earlier, the provisions of Rule 20 were applicable from April 1, 2014 but MCA vide circular dt. 17th June, 2014 has extended the applicability of the cited rule till January 1, 2015 The provisions of this rule shall apply in respect of the general meetings for which notices are issued on or after the date of commencement of this rule New rules are effective from the date of publication in official gazette. i.e. from 19th March, 2014
Coverage Every listed company or a company having not less than 1,000 shareholders shall provide to its members facility to exercise their right to vote at general meetings by electronic means.
  • Every company other than a company referred to in Chapter XB or Chapter XC of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations' 2009 having its equity shares listed on a recognized stock exchange or
  • a company having not less than 1,000 Shareholder's

shall provide to its members facility to exercise their right to vote on resolutions proposed to be considered at general meetings by electronic means.
  • With this amendment exemption is provided to the Companies listed on SME Exchange or Institutional trading platform.
  • Now, only those company whose equity share are listed on recognized stock exchange shall required to provide e-voting facility at the general meeting venue earlier scope was wide and covers every listed company irrespective of type of security or stock exchange.
Definitions Explanation.- For the purposes of this rule.-
Earlier it was not provided		 Explanation.- For the purposes of this rule' the expression-
(i) "agency" means the National Securities Depository Limited' the Central Depository Services (lndia) Limited or any other entity approved by the Ministry of Corporate Affairs subject to the condition that the National securities Depository Limited, the Central Depository services (India) Limited or such other entity has obtained a certificate from the standardization Testing and Quality Certification Directorate, Department of information Technology' Ministry of Communications and Information Technology, Government of India including with regard to compliance with parameter specified under Explanation (vi);		 New Definition
Definitions Earlier it was not provided (ii) “cut-off date” means a date not earlier than 7 days before the date of general meeting for determining the eligibility to vote by electronic means or in the general meeting; New definition
Definitions (iii) the expression “Cyber security” means protecting information, equipment, devices, computer, computer resource, communication device and information stored therein from unauthorised access, use, disclosures, disruption, modification or destruction. (iii) "cyber security" means protecting information, equipment, devices' computer' computer resource, communication device and information stored therein from unauthorized access, use, disclosures, disruption, modification or destruction. No Change
Definitions (i) the expressions ‘‘voting by electronic means’’ or ‘‘electronic voting system’’ means a ‘secured system’ based process of display of electronic ballots, recording of votes of the members and the number of votes polled in favour or against, such that the entire voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralized server with adequate ‘cyber security’; (iv) “electronic voting system" means a secured system based process of display of electronic ballots, recording of votes of the member and the number of votes polled in favour or against' in such a manner that the entire voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralized server with adequate cyber security; No Change except the heading of the definition
Definitions Earlier it was not provided (v) "remote e-voting" means the facility of casting votes by a member using an electronic voting system from a place other than venue of a general meeting; New Definition
Definitions (ii) the expression ‘‘secured system’’ means computer hardware, software, and procedure that –

  1. are reasonably secure from unauthorized access and misuse;
  2. provide a reasonable level of reliability and correct operation;
  3. are reasonably suited to performing the intended functions; and
  4. adhere to generally accepted security procedures.
 (vi) "secured system" means computer hardware, software, and procedure that

  1. are reasonably secure from unauthorized access and misuse;
  2. provide a reasonable level of reliability and correct operation
  3. are reasonably suited to performing the intended functions; and
  4. adhere to generally accepted security procedures;
 No Change
Definitions Earlier it was not provided (vii) voting by electronic means" includes "remote e-voting" and voting at the general meeting through an electronic voting system which may be the same as used for remote e-voting. New Definition
Right of member to cast vote by electronic means (2) A member may exercise his right to vote at any general meeting by electronic means and company may pass any resolution by electronic voting system in accordance with the provisions of this rule. (3) A member may exercise his right to vote through voting by electronic means on resolutions referred to in sub-rule (2) and the company shall pass such resolutions in accordance with the provisions of this rule. No Change
Procedure (3) A company which provides the facility to its members to exercise their votes at any general meeting by electronic voting system shall follow the following procedure, namely; (4) A company which provides the facility to its member to exercise voting by electronic means shall comply with the following procedure, namely:- –
Mode of dispatch of General meeting notice (i) the notices of the meeting shall be sent to all the members, auditors of the company, or directors either –

  1. by registered post or speed post ; or
  2. through electronic means like registered e-mail id
  3. through courier service;
 (i) the notice of the meeting shall be sent to all the members' directors and auditors of the company either –

  1. by registered post or speed post ; or
  2. through electronic means, namely, registered e-mail lD of the recipient; or
  3. by courier service;
 No Change
Display on website (ii) the notice shall also be placed on the website of the company, if any and of the agency forthwith after it is sent to the members; (ii) the notice shall also be placed on the website, if any, of the company and of the agency forthwith after it is sent to the members; No Change
Content of notice (iii) the notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means; (iii) the notice of the meeting shall clearly state –

  1. that the company is providing facility for voting by electronic means and the business may be transacted through such voting;
  2. that the facility for voting, either through electronic voting system or ballot or polling paper shall also be made available at the meeting and members attending the meeting who have not already cast their vote by remote e-voting shall be able to exercise their right at the meeting;
  3. that the members who have cast their vote by remote e-voting prior to the meeting may also attend the meeting but shall not be entitled to cast their vote again.
 Notice content made specific
Content of notice (iv) the notice shall clearly indicate the process and manner for voting by electronic means and the time schedule including the time period during which the votes may be cast and shall also provide the login ID and create a facility for generating password and for keeping security and casting of vote in a secure manner; (iv) the notice shall –

  1. indicate the process and manner for voting by electronic means ;
  2. indicate the time schedule including the time period during which the votes may be cast by remote e-voting
  3. provide the details about the login lD;
  4. specify the process and manner for generating or receiving the password and for casting of vote in a secure manner.
 No Change
News Paper advertisement publication and its contents                 (v) the company shall cause an advertisement to be published, not less than five days before the date of beginning of the voting period, 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 sent the notice of the meeting and specifying therein, inter alia, the following matters, namely:-

  1. statement that the business may be transacted by electronic voting;
  2. the date of completion of sending of notices;
  3. the date and time of commencement of voting through electronic means;
  4. the date and time of end of voting through electronic means;
  5. the statement that voting shall not be allowed beyond the said date and time;
  6. website address of the company and agency, if any, where notice of the meeting is displayed; and
  7. contact details of the person responsible to address the grievances connected with the electronic voting;
 (v) the company shall cause a public notice by way of an advertisement to be published' immediately on completion of dispatch of notices for the meeting under clause (i) of sub-rule

(4) but at least twenty-one days before the date of general meeting' 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 country-wide circulation' and specifying in the said advertisement, inter-alia the following manners namely :-

  1. statement that the business may be transacted through voting by electronic means;
  2. the date and time of commencement of remote e-voting;
  3. the date and time of end of remote e-voting;
  4. cut-off date;
  5. the manner in which persons who have acquired shares and become members of the company after the dispatch of notice may obtain the login ID and password.
  6. the statement that –
    1. remote e-voting shall not be allowed beyond the said date and time;
    2. the manner in which the company shall provide for voting by members present at the meeting; and
    3. a member may participate in the general meeting even after exercising his right to vote through .emote e-voting but shall not be allowed to vote again in the meeting; and
    4. a person whose name is recorded in the register of members or in the register of beneficial owners maintained by the depositories as on the cut-off date only shall be entitled to avail the facility of remote e-voting as well as voting in the general meeting;
    5. website address of the company, if any, and of the agency where notice of the meeting is displayed; and
    6. name, designation, address, email id and phone number of the person responsible to address the grievances connected with facility for voting by electronic means:

      Provided that the public notice shall be placed on the website of the company, if any, and of the agency;

 
  • Now, public notice by way of advertisement shall be published immediately on completion of dispatch of general meeting notices, at least 21 days before the general meeting date. Earlier such publication was required at least 5 days before the beginning of e-voting
  • Moreover, publishing of advertisement in an English newspaper having country wide circulation required. Earlier the circulation was only limited to the district.
  • Now  advertisement in English newspaper will be required to be given having country wide circulation earlier wide circulation in district required Previously such publication was required at least 5 days before the beginning of e-voting.
  • Now additional disclosures to be made regarding:
    1. date & time of commencement/end of remote e-voting
    2. Cut off date
    3. the manner in which persons who have acquired shares and become members of the company after the dispatch of notice may obtain the login ID and password.
  • A statement that – new provision

    has to be disclosed in the notice

    1. remote e-voting shall not be allowed beyond the said date and time;
    2. the manner in which the company shall provide for voting by members present at the meeting; and
    3. a member may participate in the general meeting even after exercising his right to vote through r-emote e-voting but shall not be allowed to vote again in the meeting; and,
    4. a person whose name is recorded in the register of members or in the register of beneficial owners maintained by the depositories as on the cut-off date only shall be entitled to avail the facility of remote e-voting as well as voting in the general meeting; Further public notice now required to be placed on website of the Company and agency.
  • Further, public notice required to be placed on website of the Company if any and agency.
E-voting period (vi) the e-voting shall remain open for not less than one day and not more than three days:

Provided that in all such cases, such voting period shall be completed three days prior to the date of the general meeting;

 (vi) the facility for remote e-voting shall remain open for not less than three days and shall close at 5.00 p.m. on the date preceding the date of the general meeting;
  • Now, remote E-voting facility to remain open for at least 3 days previously E-voting was to remain open for at least 1 day and maximum 3 days
  • Further, e- voting facility shall close at 5.00 pm on date preceding the date of general meeting earlier voting period shall be completed 3 days prior the date of general meeting
Members eligibility to cast vote electronically (vii) during the e-voting period, shareholders of the company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically:

Provided that once the vote on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently.

 (vii) during the period when facility for remote e-voting is provided, the members of the company' holding shares either in physical form or in dematerialized form, as on the cut-off date' may opt for remote e-voting:

Provided that once the vote on a resolution is cast by the member' he shall not be allowed to change in subsequently or cast the vote again.

Provided further that a member may participate in the general meeting even after exercising his right to vote through remote e-voting but shall not be allowed to vote again;
  • Now, if company has provided remote e-voting facility then member who holds shares either in physical form or in dematerialized form may opt for remote e-voting as on the cut of date. (which cannot be less than 7 days prior to the date of general meeting
  • Further, right of member to attend general meeting even after casting vote through remote e-voting but shall not be entitled to vote again, specifically mentioned now.
Blocking of E-voting facility (viii) at the end of the voting period, the portal where votes are cast shall forthwith be blocked. (viii) at the end of the remote e-voting period, the facility shall forthwith be blocked Provided that if a company opts to provide the same electronic voting system as used during remote e-voting during the general meeting, the said facility shall be in operation till all the resolutions are considered and voted upon in the meeting and may be used for voting only by the members attending the meeting and who have not exercised their right to vote through remote e-voting. If Company opts for using the same electronic voting facility during general meeting which it has used during remote e-voting period , then such facility shall remain open for members attending the general meeting.
Scrutinizer (ix) the Board of directors shall appoint one scrutinizer, who may be chartered Accountant in practice, Cost Accountant in practice, or Company Secretary in practice or an advocate, but not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinize the e-voting process in a fair and transparent manner:
Provided that the scrutinizer 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;		 (ix) the Board of Directors shall appoint one or more scrutinizer, who may be Chartered Accountant in practice, Cost Accountant in practice, or Company Secretary in practice or an Advocate' or any other person who is not in employment of the company and is a person of repute who' in the Opinion of the Board can scrutinize the voting and remote e-voting process in at air and transparent manner: Provided that the scrutinizer so appointed may take assistance of a person who is not in employment of the company and who is well-versed with the electronic voting system; Now, Board of directors may also appoint any other person who is not in the employment of the company besides CA /CS in practice or an advocate, to scrutinize the voting process.
Consent of Scrutinizer (x) the scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority; (x) the scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority; No Change
Casting of vote by members present at General meeting Earlier it was not provided (xi) the Chairman shall, at the general meeting at the end of discussion on the resolutions on which voting is to be held, allow voting & as provided in clauses (a) to (h) of sub-rule (l) of rule 21' as applicable, with the assistance of scrutinizer' by use of ballot or polling paper or by using an electronic voting system for all those members who are present at the general meeting but have not cast their votes by availing the remote e-voting facility' Members present at general meeting shall be allowed to cast vote after discussion on all resolutions by use of ballot or polling paper or electronically who are present at the meeting but not voted  
Scrutinizer Report (xi) the scrutinizer shall, within a period of not exceeding three working days from the date of conclusion of e-voting period, unblock the votes in the presence of at least two witnesses not in the employment of the company and make a scrutinizer’s report of the votes cast in favour or against, if any, forthwith to the Chairman;

(xii) the scrutinizer shall, immediately after the conclusion of voting at the general meeting, first count the votes cast at the meeting, thereafter unblock the votes cast through remote e-voting in the presence of at least two witnesses not in the employment of the company and make' not later than three days of conclusion of the meeting' a consolidated scrutinizer’s report of the total votes cast in favour or against, if any, to the Chairman or a person authorized by him in writing who shall countersign the same: Provided that the Chairman or a person authorized by him in writing shall declare the result of the voting forthwith;

Explanation.- lt is hereby clarified that the manner in which members have cast their votes' that is' affirming or negating the resolution, shall remain secret and not available to the Chairman' Scrutinizer or any other person till the votes are cast in the meeting'
  • Now, Scrutinizer shall immediately after the general meeting and thereafter unblock the votes casted through remote e-voting and make consolidated scrutinizer report with in 3 days of general meeting. Earlier total time to submit the report with the company was 3 days and there were no concept of counting the votes at the general meeting venue.
  • Until casting of votes at general meeting, the vote casting by respective member to remain secret.
  • Now, rule specifically provides that voting result shall be declared by chairman or a person duly authorized by him.
Restriction on casting vote at general meeting, if vote casted through remote e-voting Earlier it was not provided (xiii) For the purpose of ensuring that members who have cast their votes through remote e-voting do not vote again at the general meeting, the scrutinizer shall have access' after the closure of period for remote e-voting and before the start of general meeting, to details relating to members' such as their names, folios, number of shares held and such other information that the scrutinizer may require, who have cast votes through remote e-voting but not the manner in which they have cast their votes: New Provision
Scrutinizer to maintain certain records (xii) the scrutinizer shall maintain a register either manually or electronically to record the assent or dissent, received, mentioning the particulars of name, address, folio number or client ID of the shareholders, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights; (xiv) the scrutinizer shall maintain a register either manually or electronically to record the assent or dissent received, mentioning the particulars of name, address, folio number or client ID of the members, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights; No Change
Custody of Register and records of e-voting (xiii) the register and all other papers relating to electronic voting shall remain in the safe custody of the scrutinizer until the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the register and other related papers to the company. (xv) the register and all other papers relating to voting by electronic means shall remain in the safe custody of the scrutinizer until the Chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall hand over the register and other related papers to the company. No Change
Voting result  (xiv) the results declared along with the scrutinizer’s report shall be placed on the website of the company and on the website of the agency within two days of passing of the resolution at the relevant general meeting of members;

(xvi) the results declared along with the report of the scrutinizer shall be placed on the website of the company, if any, and on the website of the agency immediately after the result is declared by the Chairman :

Provided that in case of companies whose equity shares are listed on a recognised stock exchange, the company shall, simultaneously, forward the results to the concerned stock exchange or exchanges where its equity shares are listed and such stock exchange or exchanges shall place the results on its or their website.

 Now, rules specifically provides for reporting of result immediately to the concerned stock exchange so that the results shall be displayed on their website
Passing of Resolutions (xv) subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant general meeting of members.

(xvii) subject to receipt of requisite number of votes, the resolution shall be deemed to be passed on the date of the relevant general meeting.

Explanation.- For the purposes of this clause, the requisite number of votes shall be the votes required to pass the resolution as the 'ordinary resolution' or the 'special resolution', as the case may be, under section 114 of the Act.

 Explanation is provided for the purpose of determining requisite number of votes.
Withdrawal of resolution proposed to be considered by electronic means Earlier it was not provided (xviii) a resolution proposed to be considered through voting by electronic means shall not be withdrawn. Now a resolution proposed to be considered through voting by electronic means shall not be withdrawn.

 

Credit: Amit Gupta, Amit Gupta & Associates, Lucknow

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