Column: Vote online for corporate governance

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: In order to ensure greater investor participation in various decision making processes of a listed company and thus usher in better corporate governance, the National Securities Depository and Central Depository Services are in the process of introducing online voting for shareholders.

Under electronic mode, shareholders would be able to vote using the Internet. Currently, Section 192A of the Companies Act 1956 makes it mandatory for all listed companies to pass a resolution by postal ballot that also includes electronic voting. It was never implemented as there was no clarity on the process, and bandwidth issues became a major dampener. The current system of postal ballot imposes a cost.

In fact, the new Companies Act has also suggested electronic voting for special resolutions such as preferential allotment and buybacks. Typically, about 10% of shareholders take part in any AGM by being present physically. Internet proxies could empower regional members to vote on changes affecting them without having to travel for the meetings that are usually held where the company is headquartered.

Globally, investors in the US have been voting online for more than a decade. Subsequently, countries like the UK, France, Japan and Germany have also introduced e-voting at shareholders’ meet and it has made a big difference for shareholder activism. The online platform should enable shareholders to question their rights in real time just the way they would have done if they were present physically at the meeting. Shareholders need to keep in mind the technical glitches that may crop up. By voting

online, they cannot dispute decisions later if the transmission is discontinued by technical interruptions that may have prevented them from casting their votes. Secondly, the Web site has to be secured with a proper authorisation number given to shareholders.

With the Satyam scandal still in recent memory, it is important that shareholders participate in the governance process through online voting, instead of just complaining to the authorities about poor management and lack of transparency in a company.