CRUX of Section 108, 109 & 110 of Companies Act, 2013

Section 110 of the Indian Companies Act, 2013 contains the provisions of the ‘postal ballot’, Section 109 of the Indian Companies Act, 2013 contains the provisions of ‘Demand for poll’, and Section 108 of the Indian Companies Act, 2013 contains the provisions of ‘Voting by Electronic means’. This article provides an insight into the crux of sections 108, 109 & 110 of the Companies Act, 2013.

Section 108 of the Companies Act, 2013

This section comes into force when voting on any decision or action to be taken at any company meeting. This section increases the desire for voting power by the company’s shareholders. Electronic voting gives members greater flexibility and access to ensure that everyone can participate in the company’s operations and important decisions about the company’s operations.

This section is supplemented by the Companies (Management and Administration) Act, 2014 as amended by the Companies (Management and Management) Act, 2015 and 2016. It provides the following:

• The rules provide that the following companies need to close this voting system for their members at regular meetings: (1) companies whose shares are listed on a recognized stock exchange and (2) a company with less than a thousand members.
• According to the rules, a ‘Nidhi company’ or institutional investor is not required to provide this facility.
• The above rule does not apply to (1) small and medium business (companies with a mailing fee amounting to Rs 25 crores and whose shares are listed by SMEs (2) listed on the institution’s trading platform.

Section 109 of the Companies Act, 2013

In line with the Legislature’s experience of the Demand for Poll, Section 109 seeks to bring about the declaration of the result of the vote on any such ‘raising of hands’. It complies with ‘sections 179, 180, 184, and 185’ of the Companies Act, 2013. This clause also provides that applicants may withdraw an unchanging request/demand. To this end, the chairperson of the Assembly shall appoint an inspector who will monitor the votes cast in the survey and report on them and the voting process. In addition, the conference’s hearing about that decision was taken as a result of voting. The chairperson will take control of how the voting will take place.

• In the case of a Demand for Poll, subsection (1) of section 109 aims to provide for the Chairperson of the Assembly alone or as required by a vote of the member, at any decision ‘by the raising of hands’ thereafter or by the announcement of the voting result.

In addition, when using the ‘suo motu,’ such polling power is intended to be optional. If the stated number makes the demand for members, this decision is intended to be taken or finalized.

There are estimated numbers of members responsible for applying for voting, which is as follows: –

• In cases where a registered company has a budget, by self-employed members or by the representative, where permitted, and with a power of not less than 1/10 of all voting power or shares in which the total amount is not less than 5 lakh rupees or such higher/larger amount much that can be planned has been paid/compensated;
• In cases where other companies by any member or members have attended in person or by the representative, where permitted, and not less than 1/10 of the total voting power.

• Any requirement to vote may be waived by the applicants, provided for in subsection (2) of the Act. Except a business where the survey (as required) is incomplete, it can be expected that any business can thrive without coming up with such a business of the desired survey results.
• Whenever the Appointment of the Chairperson of the Meeting or voting is required to be adjourned to the Meeting, voting shall be taken immediately. It will be taken within 48 hours of seeking the vote as the chairperson may direct it if it concerns any other question.
• The chairperson has the power to control the conduct of voting under subsection (6) of section 109. In this regard, this power falls within the other provisions of the section. In terms of Level 2 of the Secretary in terms of section 9.2, you have the power to allow any member to appear during the counting of votes at the Assembly.
• In the light of the votes cast in the survey, the referendum process, and the report, the Chairman of the Meeting shall appoint a company inspector at the Meeting. The outcome of the survey will consider the decision of the Assembly, depending on the solution. In addition, the chairperson will oversee the conduct of the survey.
• The result of the poll will be considered as a decision of the meeting by a decision taken to vote.

Section 110 of the Companies Act, 2013

According to the provisions of section 110 (1) of the Companies Act, 2013 read with Act 22 (16) of the Companies (Management and Administration) Act, 2014, the following business transactions shall be effected only by postal ballot: 

• amendment of the purpose of a memorandum of intent; 
• the modification of portions of the organization in respect of the insertion or removal of provisions, under subsection (68) of section 2, which are required to be included in company records to form an independent company; 
• to replace a registered office outside the local boundaries of any town or village as contemplated in subsection (5) of section 12; 
• a change in the purposes for which the company has raised money from the public through the prospectus and still has any potential expenditure on money collected under subsection (8) of section 13; 
• the issuance of shares with different voting rights or shares or otherwise under subsection (ii) of subsection (a) of section 43;
• exceptions to rights relating to the category of shares or dues or other securities as defined under section 48; 
• repurchase of shares by a company under subsection (1) of section 68; 
• directors’ election under section 151 of the Act; 
• the sale of all or all of the company’s operations as defined under subsection (a) of subsection (1) of section 180; 
• to provide a loan or extended guarantee or to provide security above the threshold referred to under subsection (3) of section 186

However, the following businesses are not transacted by postal ballot: 

• Ordinary business (in terms of section 102 (2) of the Act: 

The following matters are considered at the annual general meeting: 

• Review of financial statements and board report and auditor report; 
• dividend declaration;
• appointments of directors;
• appointment and fixing of auditor’s remuneration
  • Any business in which directors or auditors are entitled to be heard at any meeting (directors are entitled under section 169 (3) and Auditors under sections 140 (1) and 146) However, the ordinary business as mentioned can be done through the e-voting process.

Final words

Companies must ensure that all additional compliance related to the provisions relating to regular meetings or disclosure of information, authorization to vote by corporate organizations, examination of related documents/registers by members, etc. as set out in the Act. In addition, company meeting articles should be made in electronic mode only. Thus the crux of sections 108, 109 & 110 of the Companies Act, 2013 has been discussed in this article.

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