The Companies (passing of the resolution by postal ballot) Rules, 2001 Clarification reg. - Companies Law - 16/2001

General Circular No.16/2001 File No.1/15/2000-CL.V Government of India Ministry of Law, Justice Company Affairs Department of Company Affairs 5 th floor, A-wing, Shatri Bhawan Dr. R.P. Road, New Delhi-110001 Dated: 24 th July, 2001 To All Regional Directors All Registrar of Companies/ All Official Liquidators Subject: The Companies (passing of the resolution by postal ballot) Rules, 2001 Clarification reg. The section 192A (1) of the Companies Act, 1956 was inserted by the Companies (Amendment) Act, 2000 which came into force with effect from 13 th December, 2000. The provisions of the section give all listed companies an option of passing shareholder's resolution through postal ballot. Further, they are necessarily required to get certain businesses as notified by the Central Government vide notification number GSR.337 (E) dated 10 th May, 2001 to be passed through postal ballot. The Companies (passing of the resolution by postal ballot) Rules, 2001 which were notified on 10 th May, 2001 mention transactions to be transacted through postal ballot. Pursuant to section 2 of the Companies (Amendment) Act, 2000 a notification number S.O.523(E) dated 15 th June, 2001 was published indicating the date from which the provisions of section 192A shall come into force i.e. 15 th June, 2001. The Department has received a number of queries from the professionals, Chamber of Commerce Industry, corporate sectors etc. on the above subject. The points raised have been carefully examined and Department's views thereon are indicated below: - 1. The Companies (passing of the resolution by postal ballot) Rules, 2001 read with section 192A shall apply to notices calling meetings of the shareholders approved by the Board of Directors after 15 th June 2001. 2. According to the provisions of section 192A it is not mandatory for the company to release an advertisement giving the date of completion of despatch of postal ballots. However, as a measure of Good Corporate Governance companies in their own interest may release an advertisement for publishing the date of completion of despatch of postal ballots. 3. A specimen postal ballot form and items to be included in the calendar of events for conducting voting through postal ballot are enclosed for the use and convenience of the companies. The concerned companies must ensure that the postal ballots are serially numbered and have distinguishing water marks in order to avoid printing of any duplicate ballot papers. 4. The companies are required to specify the last date by which the postal ballot must be received by the company keeping in view the provisions contained in Rule 5(f) of the Companies (passing of the resolution by postal ballot) Rules, 2001 and the instructions at serial number 5 of the specimen postal ballot form. 5. It is clarified that voting right on postal ballot shall be in proportion to the shareholders share of the paid up equity share capital of the company. 6. The company secretary along with one of the functional directors should be made responsible for the entire postal ballot process by means of an appropriate board resolution. The resolution should be passed in the Board Meeting in which notice required to be sent to the shareholder under section 192A (2) is approved by the Board. A copy of the board resolution should be despatched alongwith item to be included in the calendar of events within one week of passing of the Board resolution to the concerned Registrar of Companies for information. 7. A query has been raised whether Companies (passing of resolution by postal ballot) Rules, 2001 is applicable only in respect of list of businesses as notified under rule 4 of the said rule. It is hereby clarified that the Central Government may at any time include or delete the items to be transacted through postal ballot, therefore, the procedure as specified in the rules has to be followed for any business to be transacted through postal ballot. 8. A query has also been raised whether passing of all resolution in respect of ordinary and special business other than those covered under rule 4 of the said Rules can be treated as sufficient compliance of provisions of section 166 of the Companies Act, 1956 and also whether the company is required to convene a general meeting in case the resolutions are to be passed through postal ballot. While the companies are required to hold annual general meetings which is a mandatory requirement under section 166 of the Companies Act, 1956 it is hereby clarified that any listed company which intends to transact such businesses as notified under rule 4 of the said Rules has to do so only in the general meeting along with other ordinary businesses and special business, if any. The companies are required to send notice only in respect of item to be transacted through postal ballot well in advance so that the reply is received from the shareholders before the date of the general meeting. This will enable the scrutinizer to be in a position to make an entry in the appropriate register maintained for the purpose and make it available to the Chairman of the general meeting who shall declare the results in the general meeting. The date of passing of the resolution will be the date of the General Meeting. 9. The Department is separately taking following actions for amending the Companies (passing of the resolution by postal ballot) Rules, 2001: - (i) Insert new Rule 2A as under : "The notices may be issued by the Companies under certificate of posting and an advertisement shall be published in a leading English Newspaper and in one vernacular Newspaper circulating in the State in which the registered office of the company is situated about having despatched the ballot papers; (ii) In rule 4 the word 'may' is proposed to be substituted by the word shall ; (iii) In rule 4 (b) the words 'deletion or' is proposed to be omitted; (iv) In rule 4 (h) the word `proviso to' to be inserted after the word 'under'; (v) Rule 4 (i) is proposed to be deleted; (vi) Rule 5 (c) is proposed to be substituted by :- 'scrutinizer will submit his report as soon as possible after the last date of receipt of postal ballot'; (vii) Rule 5 (f) is proposed to be substituted by :- 'the consent or otherwise received after 30 days from the date of issue of notice will be strictly treated as if reply from the member has not been received' ". (Thakur Sharan) Under Secretary to the Govt. of India XYZ LIMITED Registered Office .............................. Postal Ballot Form 1. Name(s) of Shareholder(s) ______________________________ (in block letters) ______________________________ (including joint holders, if any) ______________________________ 2. Registered address of the sole/first named shareholder 3. Registered folio No./DP ID No./Client ID No.* (* Applicable to investors holding shares in dematerialized form) 4. Number of shares held 5. I/We hereby exercise my/our vote in respect of the ordinary/special resolution to be passed through postal ballot for the business stated in the notice of the Company by sending my/our assent or dissent to the said resolution by placing the tick ( _/ ) mark at the appropriate box below. Item No. No. of shares I/We assent to the resolution I/We dissent to the resolution Place: Date: ________________________ (Signature of the shareholder) Instructions 1. A member desiring to exercise vote by postal ballot may complete this Postal Ballot Form and send it to the company in the attached self-addressed envelope. Postage will be borne and paid by the company. However, envelopes containing postal ballots, if sent by courier at the expenses of the registered shareholder will also be accepted. 2. The self-addressed envelope bears the address of the scrutineer appointed by the Board of Directors of the company. 3. This form should be completed and signed by the shareholder. In case of joint holding, this form should be completed and signed (as per the specimen signature registered with the company) by the first named shareholder and in his absence, by the next named shareholder. 4. Unsigned Postal Ballot Form will be rejected. 5. Duly completed Postal Ballot Form should reach the company not later than the close of working hours on ----------- (day)------------- (date). Postal Ballot Form received after this date will be strictly treated as if the reply from the member has not been received. 6. Voting rights shall be reckoned on the paid up value of shares registered in the name of the shareholders on the date of despatch of the notice. Items to be included in the calendar of events 1. Date of Despatch of notice of Meeting in which the business as notified by the Central Government will also be transacted through Postal Ballot. 2. Date of completion of despatch of notice along with Postal Ballot. 3. Date of appointment of scrutinizer. 4. Date on which consent given by the scrutinizer to act as scrutinizer. 5. Last date for receiving Postal Ballot papers by scrutinizer. 6. Date of signing of the minutes book by the Chairman in which the results ballot is recorded. 7. Date of returning the Ballot papers, register required to be maintained by the scrutinizer under rule 5(e) of the Companies (passing of the resolutions by postal ballot) Rules, 2001 and other related papers to the Chairman by the Scrutinizer. 8. Date of Board resolution authorising one of the functional directors and the secretary to be responsible for the entire poll process. 9. Date of handling over the ballot papers to the designated authority. ********