After mooting a proposal for 25 per cent minimum public holding in listed companies, the government is likely to make it mandatory to conduct voting through ‘electronic mode’. This would be part of the new Company Law, said an official closely attached to the development. This would ensure greater participation of shareholders especially in case of listed companies.

Under electronic mode, shareholders would be able to vote using any electronic means like Internet, electronic voting machines and SMS. Online voting by shareholders could be made mandatory by the time the new companies law comes into force two to three years down the line, the official said. In the present scenario, Section 192A of the Companies Act 1956 makes it mandatory for all listed companies to pass a resolution by postal ballot. As per existing laws, a postal ballot includes voting by electronic mode.

“Increasing shareholder participation is the need of the hour,” said Institute of Company Secretaries of India (ICSI) council member H K Vaid. “If you attend any AGM of a listed company having more than 100,000 shareholders, you will find that not more than 300 people attend. If the company uses the postal ballot system, it would not get more than 3,000 responses. Now in the era of the e-world, it is required to go online for registering higher shareholder participation.”

According to Preeti Malhotra, former ICSI president and member of the J J Irani Committee which presented its report on the new companies’ law in May 2005, “We had thought of voting by electronic machines at different centres of the country to increase shareholders’ participation. But I think that it would be more appropriate to widen the definition of electronic mode. The government should bring online voting within the meaning of voting through electronic mode.”