Introduction

A postal ballot is a voting process where shareholders of a company can cast their votes by mailing their ballots to the company. This process is typically used for important matters, such as passing a resolution, when all shareholders may not be able to attend a physical meeting. Passing a Resolution by Postal Ballot is not possible through e-voting as well.

In the case of a listed entity, the process for passing a Resolution by Postal Ballot is governed by the Securities and Exchange Board of India (SEBI) and the Companies Act, 2013.

As per SEBI regulations, a listed entity can pass resolutions through postal ballot only for certain specified matters, such as altering the memorandum of association, changing the name of the company, or approving related party transactions.

The listed entity must first obtain approval from the stock exchanges where its shares are listed, and then send the ballot notice and accompanying materials to all shareholders. The notice must include information on the resolution being proposed, the rationale for the proposal, and instructions on how to vote.

Once the ballot has been conducted and the deadline for submitting ballots has passed, the votes are counted and the result is announced to the stock exchanges and the shareholders. For the resolution to be passed, it must be approved by a majority of the votes cast by the shareholders.

Following matters can be passed by postal ballot in a listed entity

1. Alteration of the memorandum and articles of association of the company
2. Change in the object clause of the company
3. Issue of shares with differential voting rights
4. Variation in the rights attached to a class of shares or debentures
5. Buyback of shares
6. Election of directors (except for independent directors)
7. Appointment of auditors

In addition to the above matters, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 require listed entities to pass certain other matters through resolution by postal ballot, including:

1. Related party transactions
2. Approval of material-related party transactions
3. Appointment or removal of independent directors
4. Approval of annual financial statements

The Process to Pass the Resolution by Postal Ballot:

1. Issue Notice: The first step is to issue a notice to all the shareholders of the company, along with the necessary documents and an explanation of the resolution. The notice must include the details of the resolution to be passed, the last date for receiving the postal ballot forms, and the date on which the result of the resolution by postal ballot will be declared.
2. Shareholder Communication: The company must ensure that the notice is communicated to all the shareholders in the manner prescribed by the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
3. Form: The resolution by postal ballot form should be sent to the shareholders along with the notice. The form must contain the details of the resolution and the options available to the shareholder, i.e., for, against, or abstain.
4. Receive Postal Ballot Forms: The company must receive the resolution by postal ballot forms from the shareholders within the specified timeframe. The postal ballot forms can be sent by post or through electronic means.
5. Counting of Votes: After the last date of receiving the resolution by postal ballot forms, the company must count the votes received and declare the result of the resolution by postal ballot within a certain timeframe. The company must also communicate the result to the stock exchanges where the shares of the company are listed.
6. Compliance: The company must ensure compliance with all the legal requirements related to passing a resolution by postal ballot, including the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The votes received through the resolution by postal ballot are then counted and the result is declared by the company within a certain timeframe. The result is also communicated to the stock exchanges where the shares of the company are listed.

As per the Companies Act, 2013, the Prerequisites Resolution by Postal Ballot

1. The company must have a valid reason for conducting the Resolution by Postal Ballot, which may include matters such as alteration of the company’s articles of association, change in the company’s capital structure, approval of related party transactions, approval of employee stock options, etc.
2. The company must issue a Postal Ballot Notice to all the shareholders, which should contain the text of the proposed resolution(s) along with an explanatory statement.
3. The company must appoint a scrutinizer, who will be responsible for receiving and scrutinizing the Postal Ballots and preparing a report of the Postal Ballot results.
4. The company must give adequate time to the shareholders for casting their Postal Ballots, which should not be less than 21 days from the date of dispatch of the Postal Ballot Notice.
5. The Postal Ballot results must be declared by the company within 30 days from the date of closure of the Postal Ballot.
6. The company must file a copy of the Postal Ballot Notice, Postal Ballot Form, and the Postal Ballot results with the Registrar of Companies within 7 days of the declaration of the results.

It is important to note that the Resolution by Postal Ballot process should be conducted in compliance with the relevant provisions of the Companies Act, 2013 and the rules made thereunder.

As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), the following are the prerequisites for conducting a Postal Ballot by listed companies:

1. The company must have a valid reason for conducting the Postal Ballot, which may include matters such as alteration of the company’s articles of association, change in the company’s capital structure, approval of related party transactions, approval of employee stock options, etc.
2. The company must issue a Resolution by Postal Ballot Notice to all the shareholders, which should contain the text of the proposed resolution(s) along with an explanatory statement.
3. The company must appoint a scrutinizer, who will be responsible for receiving and scrutinizing the Postal Ballots, and preparing a report of the Postal Ballot results.
4. The company must give adequate time to the shareholders for casting their Postal Ballots, which should not be less than 3 days and not more than 30 days from the date of dispatch of the Postal Ballot Notice.
5. The Postal Ballot results must be declared by the company within 48 hours from the conclusion of the Postal Ballot.
6. The company must disclose the Postal Ballot results to the stock exchanges and on its website within 2 working days from the date of declaration of results.
7. The company must file a copy of the Postal Ballot Notice, Postal Ballot Form, and the Postal Ballot results with the stock exchanges and with the Registrar of Companies within 2 days of the declaration of results.

It is important to note that the Resolution by Postal Ballot process should be conducted in compliance with the relevant provisions of the SEBI (LODR) Regulations, 2015 and other applicable laws.

Key Changes in Process Post Covid 19

The Resolution by Postal Ballot process in a listed entity has become even more relevant post-COVID-19, as it provides an alternative way for shareholders to exercise their voting rights without physically attending the general meetings of the company. Here are some key changes and updates to the postal ballot process post-COVID-19:

1. Electronic Communication: The Companies Act, 2013 has been amended to allow for electronic communication between the company and its shareholders, including the issuance of notices and postal ballot forms.
2. Relaxation of Timeframes: The Ministry of Corporate Affairs (MCA) has relaxed the timeframes for various compliances related to ballots, including the sending of notices, receipt of postal ballot forms, and declaration of results.
3. Use of Digital Signatures: The MCA has also allowed the use of digital signatures for signing the ballot forms and other documents related to the postal ballot process.
4. Increased Transparency: The Securities and Exchange Board of India (SEBI) has mandated that the results of the postal ballot should be announced within two days of the conclusion of the voting period, which increases transparency and enables shareholders to make informed decisions.
5. Technology-enabled Voting: Companies are increasingly using technology-enabled platforms to conduct postal ballot processes, which enable shareholders to vote electronically using their unique login credentials.

Overall, the COVID-19 pandemic has accelerated the adoption of digital technology and remote working, which has had a positive impact on processes in a listed entity. The increased use of electronic communication, digital signatures, and technology-enabled platforms has made the process more efficient, transparent, and accessible for shareholders.

References

1. https://www.mca.gov.in/bin/dms/getdocument?mds=JBdXGa0hUFPRoITMEqTz6g%253D%253D&type=open
2. https://www.mca.gov.in/bin/ebook/dms/getdocument?doc=MjMxNjgzNjA2&docCategory=Circulars&type=open