In one of the first rulings dealing with interpretation of provisions of new Companies Act, 2013, the Bombay High Court held that that the provisions for compulsory voting by postal ballot to the exclusion of an actual meeting do not apply to court-convened meetings in a scheme of amalgamation.
Interpreting Section 110 of the new Companies Act, the Court pointed out that meetings called under Sections 230 and 232 of new Act for approval of a scheme of arrangement are not called by the company but are instead ordered by the court and the court has the power to dispense with such meetings irrespective of any provisions for postal ballot.
However, in a broader view, the Court said that the elimination of all shareholder participation at an actual meeting is anathema to some of the most vital of shareholders’ rights. It is strongly recommended that till this issue is fully heard and decided, no authority or any company should insist upon such a postal-ballot-only meeting to the exclusion of an actual meeting.
The Court observed that the underlying principle behind voting is not merely a right to vote on any particular item of business but it also encompasses the right of the shareholder to ask questions, seek clarifications and receive responses before he decides to vote. Therefore to say, that no meeting is required and that the shareholder must cast his vote only on the basis of the information that has been sent to him by post or email seems to be completely contrary to the legislative intent and spirit of the impugned provisions of the new Companies Act.