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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