Companies Act Section 108

Companies Act, Section 108: Voting Through Electronic Means

Section 108 of the Companies Act deals with the provision for voting through electronic means, recognizing the importance of modern technology in corporate governance. The section empowers the Central Government to prescribe regulations regarding which classes of companies are eligible to offer electronic voting and the manner in which shareholders can use this method to exercise their right to vote during company meetings.

Overview of Section 108

1. Introduction to Electronic Voting:

Electronic voting, commonly referred to as e-voting, is a system that allows members of a company to cast their votes on resolutions during meetings via digital platforms. This modern method is designed to make the voting process more convenient, accessible, and efficient, especially for members who may be unable to attend physical meetings. With the increasing adoption of technology, the need for alternative methods of voting, like e-voting, has grown significantly.

2. Empowerment of the Central Government:

The section grants the Central Government the authority to determine which types of companies (classes of companies) will be permitted to offer e-voting to their members. The Central Government may define specific criteria for eligibility, such as the size of the company, whether it is publicly traded, or the nature of its shareholder base.

These regulations will ensure that only companies that meet certain prerequisites are allowed to offer electronic voting to their members. The Central Government can issue guidelines or rules that govern how this process will be implemented within the corporate sector.

3. Manner of Exercise of Voting Rights through Electronic Means:

Section 108 also empowers the Central Government to prescribe the manner in which members can use electronic means to cast their votes. This may include specifying the technology or digital platforms that should be used, the procedures for registering votes electronically, and any required safeguards to ensure the authenticity and security of votes.

The guidelines will likely cover a variety of factors, such as how votes will be verified, how members will receive their electronic ballots, and how the company will communicate the results of the vote. The intention is to streamline the voting process and ensure it is fair, secure, and easily accessible.

4. Use of Electronic Voting in General Meetings:

Electronic voting may be offered for general meetings of the company, such as Annual General Meetings (AGMs) or Extraordinary General Meetings (EGMs). This provision ensures that even shareholders who are unable to physically attend the meeting can still participate in important decisions affecting the company.

By incorporating electronic voting, companies can widen participation in their decision-making processes, making it more inclusive for shareholders who might be geographically distant or unable to attend the meeting for any reason. This also aligns with global trends towards digitalization in corporate governance.