, Duties and Responsibilities of a Scrutinizer during e-voting under the Companies Act, 2013 ~ CS GAURAV SHARMA

May 15, 2017

Duties and Responsibilities of a Scrutinizer during e-voting under the Companies Act, 2013

Guest Article By Pronamika Bhattacharya



Duties and Responsibilities of a Scrutinizer during e-voting under the Companies Act, 2013

Companies Act 2013 introduced several changes in the way companies in the Country would operate. One of the major objective of the legislature was to improve corporate governance. Transparency and compliances are two pillars of good corporate governance practices. Shareholders of the company are those who do not monitor the day to day operations of the company but, they have their money at stake and they come together to form the company. The shareholders under the Companies Act 2013 (hereinafter referred to as “Act”) & the SEBI (LODR) Regulations, 2015 (hereinafter referred to as the “Regulations”) are placed at a pedestal.

Companies (other than One Person Companies) usually call at least one meeting in a year for the shareholders, the Annual General Meeting. In this meeting, ordinary and special businesses of the company are transacted as per requirements stated in the Act. Now shareholders may be living in any part of the country or world but the Annual General Meeting has to be conducted either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate and only during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday. To satisfy a competing need of, ensuring “Rights of the shareholders” as per the Regulations, with such kind restrictions in built in the Act, advancement in technology came to the rescue of the law makers. Hence, along with paper Postal Ballots, the era of E-voting was introduced by way of Section 108 in the Act.

For the conduct of E-voting, law defines role of a “scrutinizer”. The Board of Directors of the Company appoint a scrutinizer who is willing to act in such capacity and who has the eligibility to act as such. This officer is responsible for ensuring that the e voting process is carried out in a fair and transparent manner in accordance to the timelines and compliance requirements prescribed by the Act. The scrutinizer needs to have high levels of professional integrity and presence of mind to ensure that technical lapses in an e-voting process are not misused to the disadvantage of the minority shareholders.
It is a concept of legal jurisprudence that, where there is a right or a privilege (of the shareholders to vote in a shareholders meeting) there is an opposite duty (on the company & the scrutinizer appointed by the company). Rule 20 of the Companies (Management & Administration) Rules, 2014 (hereinafter stated as the “Rules”) states the process to be followed for conducting a voting through electronic means. These Rules are applicable to listed companies and to companies having more than 1000 shareholders.
Clause (ix)-(xviii) sub-rule (4) of Rule 20 states the following express duties and responsibilities of the scrutinizers[1]-
(1) 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.
(2) The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) Subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant general meeting of members.
Thus, the Scrutinizer has to fulfill, not just the statutory duties placed but also the implied duties & responsibilities underlined in the aforesaid paras here.

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, 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 and it includes “remote e-voting” which refers to the facility of casting votes by a member using an electronic voting system from a place other than venue of a general meeting.[2]

In view of the concept of the electronic voting system, a scrutinizer should also endeavor to gain optimum knowledge about the following concepts as defined in the Rules -
a) 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;
b) Secured system means computer hardware, software, and procedure that –
(i) are reasonably secure from unauthorized access and misuse;
(ii) provide a reasonable level of reliability and correct operation;
(iii) are reasonably suited to performing the intended functions; and
(iv) adhere to generally accepted security procedures.

Thus, a working knowledge of the Information Technology Act 2000 (and amendments thereto) along with applicable Rules thereunder would add to enhanced efficiency in performance by the Scrutinizer.






[1] Rule 20 of Companies (Management & Administration) Rules, 2014
[2] Refer supra



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