Talking about the E Voting system, it becomes much feasible for the shareholder’s to hold meetings in a virtual form, as it eliminates factors such as, geographical constraints, medical issues, or any other unforeseen situation. Also, to understand the concept of meetings among the shareholders, it is as similar as the democratic process, and the shareholders caste their votes in respect to the proposed agenda of the meeting. The shareholders, because of many circumstances are not able to cast their vote, which makes them deprive of their voting rights. The casting of vote through e-voting is surely a better way to address the problem of non-availability and non-casting of votes of the shareholders.
To note, this article reflects the Rules and Regulations, SEBI Guidelines and relevant case laws which will make the understanding of the topic much easy to grasp.
The procedural aspects of the e-voting process are covered under the Companies (Management and Administration) Rules, 2014. Also, to note the point that the Company Limited by Shares have to, in a mandate sense comply with the provisions of E-voting, but it puts no bar on the other established companies to opt for the system of E-voting keeping in mind the Rule 20 of Companies (Management and Administration) Rules, 2014.
20. Voting though electronic means.-
(2) Every company which has listed its equity shares on a recognised stock exchange and every company having not less than one thousand members shall provide to its members facility to exercise their right to vote on resolutions proposed to be considered at a General meeting by electronic means
Process of e-voting for shareholders
• The shareholders can login to the e-voting system using their user-id ( demat account number / folio number), PAN and password.
• After logging in, demat shareholders will have to confirm their personal details and compulsorily change their password. This password can be used by demat shareholders for voting on resolutions of any other company in which they are eligible to vote.
• During the voting period, the shareholders can visit the e-voting website and select the relevant EVSN / EVEN / company for voting.
• Shareholders can view the detailed resolutions on the website and cast their vote available for voting.
Process of e-voting for a company
• A company wanting to use the e-Voting system has to sign the agreement and accept the terms and conditions for usage of the e-Voting system with NSDL/CDSL.
• The notice of the meeting should mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means.
• The company through its Register and Transfer Agent (RTA) will set up the e-voting schedule on its website. The company will upload the resolutions on which voting is required and generate an Electronic Voting Sequence Number (EVSN) / Electronic Voting Even Number (EVEN). The Company will upload the Register of Members.
• CDSL / NSDL will generate the password for each shareholder and print the same in a secured manner, which is to be sent to all the shareholders.
• The company will then communicate the password, EVSN / EVEN and the procedure for e-voting along with the notice of resolution to all the shareholders.
• At the end of the voting period, the portal where votes are cast will be blocked and no additional votes will be accepted by the company.
• After the voting period is over, a scrutiniser prepares a report of the votes cast in favour or against, if any, forthwith to the Chairman.
• A scrutiniser is an individual who monitors the entire process of e-voting. Appointed by the company, a scrutinizer, may be a 16 E-Voting – Ready Reckoner practising chartered accountant, cost accountant, company secretary or an advocate. The scrutiniser scrutinizes the e-voting process in a fair and transparent manner.
• E-voting shall remain open for at least for one day and maximum for three days. In all such cases, such voting period should be completed three days prior to the date of the general meeting.
Case laws
Recently the Bombay High Court in scheme of amalgamation between Wadala Commodities Limited with Godrej Industries Limited has passed a judgment on postal ballot, e-voting and relevance of General Meetings which has raised issues of legislative requirement of the E-voting concept.
Sebi guidelines. The gist of the judgement dated May 8, 2014 is as under:
(i) Whether the provision of postal ballot, which includes voting by electronic means implies complete substitution of an actual meeting. That is, does the 2013 Act have the effect of all-together eliminating the need for an actual meeting being convened.
(i) An important right of shareholder democracy is not only to vote on any particular item of business so much as is the right to use the vote as an expression of an informed decision. Shareholder has an inalienable right to ask questions, seek clarifications and receive responses before he decided which way he will vote.
The CLB ought to have appreciated that e-voting was introduced for the convenience of shareholders to enhance the possibility of their participation and voting in general meetings. E-voting is intended only to supplement and not supplant the process of voting put in place by SVG. The circular dated 17.06.2014, issued by the Government of India, Ministry of Corporate Affairs (in short “MCA”), clarifies how voting by electronic means has to take place. The said circular, which sets out, clearly, that provisions of Section 108 of Companies Act, 2013 (in short 2013 Act) read with Rule 20 of the Company (Management and Administration) Rules, 2014, (in short CMA Rules) are to be followed, seek to ensure wider shareholder participation in the decision making process, concerning the affairs of the companies. Therefore, voting, which is an inalienable right of a shareholder cannot be emasculated, simply because e-voting process was put in place, which was not accessed by the controlling group to cast votes at the AGM. Disregarding the votes cast by nearly 57% of the shareholders, albeit, against the resolution seeking reappointment of Natarajan as a Director on the Board of SVG, would unfairly prejudice the majority shareholders.
Rules and regulations
SEBI GUIDELINES
Under Regulation 44 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, listed entities are required to provide remote e-voting facility to its shareholders, in respect of all shareholders’ resolutions. However, it has been observed that the participation by the public non-institutional shareholders/retail shareholders is at a negligible level.
Disadvantages of Electronic Voting
1. Vulnerability to hacking
Research conducted by the Congressional Research Service Vendors and election services for Election Reform and Electronic Voting Systems According to the laws of most jurisdictions, the results of elections are not transmitted Prospects may transmit their data via the internet, but they can also use a direct modem.
You can connect to a VPN or create one. Even so, it may not be the ideal solution. Especially vulnerable to cyber attacks if encryption and authentication are not in place Insufficient.
The reason for this is that telephone systems are insufficient Computers and the internet connect them to an ever-increasing degree Local area networks (LANs) can be used to connect the receiving server Internet access is possible.
2. Voter verified paper audit trails
They are all fully electronic (touch screens, wireless connectivity, etc. There are risks and limitations associated with DRE and internet voting Technology relating to computers.
Examples include detecting the presence of computers The potential for intentional or accidental use of hardware and/or software Change the outcome of an election.
Verifying voter signatures on paper ballots (VVPB) is an auditable method for ensuring voters’ identity Votes will be counted when they are available.
There will be no VVPB without it. The results of the election should be independently audited.
3. Susceptibility to fraud
There is no widespread voter fraud either Everything is either absent or nonexistent.
This has always been the case in our country.
All losing political parties have accused each other of fraud. The degree of fraud varies.
You can add increments as well. This voting system was created by one vendor and distributed by another.
Millions of votes can be systematically falsified at hundreds of thousands of polling booths
The results of the vote. Many may disagree that electronic voting is impervious to tampering.
In spite of the difficulty of creating machines, computer scientists have tampered with them.
In order to demonstrate how easy it is to accomplish. But, if people know about it, they can accomplish it in a much more efficient way.
As long as they’re familiar with the machines, they can remove the storage card.
Their own memory card is put in the voting machine that keeps the votes.
The vote can be manipulated with a virus. The fraud is massive and widespread.
From a wholesale perspective. Stuffing a ballot box, in contrast, works at a retail level.
A tamperer, however malicious and skilled, can stuff only as many ballots as might plausibly be cast at the polling place, but a faulty and corrupted voting system (malicious DRE software) could affect far more votes.
4. Accuracy in capturing voters’ intent
If the device is equipped with a touch screen It is possible to knock sensor alignment out of whack during elections During transport, shocks and vibrations can occur.
The sensors must be protected against these Before the voting begins, the touch screen is realigned at the polling place Voters’ intentions can be misinterpreted by machines.
If a voter touches a button, it may not be interpreted correctly. Candidates X and Y would both light up on the screen, but candidate Y wouldn’t Alternatively.
5. Political ties of manufacturers
In the present government, a decision has been made to not Next general elections will be held under the provision of the caretaker government.
An election commission has attempted to conduct the election under a political government.
The use of e-voting systems is considered unfair and unreasonable. Choosing our election commission.
Manufacturers or companies are undeniably affected by the political climate E-voting machines will be tailored by the company hired for the project Political party’s ‘needs’ at the moment.
They are a great complement Every other political party scrutinizes, distrusts, and inquires about the country has economy.
6. Malicious software programming
Almost all software is a computer program Programming and coding are the sources of software.
The software can be anything An engineer who has access to the source code has tampered with it.
During testing The security of electronic voting systems is an issue, especially if they are hacked It is basically impossible to introduce and conceal something intentionally. This would be on purpose.
Commercial software contains code inserted by programmers Through the computer keyboard, obscure command combinations and keystrokes are entered Changes in election results are possible.
7. Physical security of machines
When it comes to hardware controls, Direct recording electronic voting machines (DRE) fall into one or more of the following categories: The examination revelation controls were found to be weak in the examination.
All the locks on a building were found to be covered by rust, according to Specific DRE models could be picked easily, and they were all controlled by the same computer Wallets.
The DRE model was also linked with other types of DRE to form a universal model The network is rudimentary. Accidental or malicious destruction of one of these machines would be devastating. In a network with other machines, voting is possible on those machines that aren’t connected to the others Disruption is likely. The switch used to turn a computer on and off may also be broken The DRE system, along with the systems for closing the polls during one election, should be turned on or off There was no protection for DRE terminals.
8. Secure storage of cast votes
In the computer memory of the voting machines, electronic votes are stored in a safe place.
In Secure Electronic Voting, Doug Jones, Ph.D., professor of computer science at the University of Iowa, points out that “for more than 15 years” Since the 1990s, all direct recording electronic voting machines have been required to have redundant storage.
However, this redundant storage does not provide an independent copy of the votes, since it is generated by the same software that created the original record.