Wednesday, March 25, 2015

India Cements, proxy advisory lock horns over e-voting

Company says law and Sebi provisions don't strictly apply to meets convened by court order; SES insists otherwise, citing Bombay HC order
India Cements Ltd has slammed a report from Stakeholders’ Empowerment Services (SES), a proxy advisory company, which alleges the former has ignored the e-voting requirement for a shareholder meet convened to approve a restructuring scheme, on court order.

The cement maker is holding a court-convened meeting (CCM) on Wednesday, to get a nod for a scheme of amalgamation between Trinetra Cement and Trishul Concrete Products (both subsidiaries) with India Cements.

SES does not object to the scheme itself but has recommended that shareholders vote against “purely on account of the company’s attempt to discourage shareholder participation”.

In a report last week, it firm said, “The company has not providing e-voting facility to shareholders despite it being a condition under the Companies Act, 2013, and Listing Agreement.” It cited Section 108 of the 2013 Act and the new listing agreement brought into effect in April 2014.

India Cements replied, “The proposed amalgamation-cum-arrangement with two of our subsidiary companies is in terms of Section 391-394 of the Companies Act, 1956. These sections or any other section of the Companies Act, 1956, do not provide for compulsory e-voting facility to shareholders.”

SES says Section 108 of the 2013 Act, read with the Companies (Management & Administration) Rules, 2014, compulsorily requires an e-voting facility to be provided to shareholders by every listed company at “General Meetings”. And, that Clause 35B of the Listing Agreement pursuant to the amendment, vide a circular dated April 17, 2014, of the Securities and Exchange Board of India, requires all listed companies to provide the facility for any shareholder resolution to be passed at “general meetings or through postal ballot.”

India Cements argues the “present shareholders’ resolution sought to be passed is a court-convened meeting and is not sought to be passed in any general meeting or through postal ballot”. Therefore, the Companies Act, 2013, and Clause 35B of the Listing Agreement need not apply. It cited other recent instances of companies also involved in merger schemes and not giving a e-voting facility, in the recent past, for the same reason.

SES has issued an addendum to its report which includes the letter from India Cements but has also drawn attention to a
Bombay High Court judgement in the matter of Godrej Industries. Wherein it was ruled that an e-voting facility has to be provided for all shareholders, including those physically present at a venue, even in a court-convened meet.

In the May 2014 judgement, which discussed the issue extensively, judge G S Patel said, “If, as I have said, electronic voting is not limited to voting from a remote location but must also include electronic voting at the meeting, in addition to postal ballots received, then it is a sum total of all these votes that must be taken into account. This means that while a meeting must be held, provision must also be made for electronic voting at the meeting by those shareholders who desire it. Every shareholder being given that option of exercising their votes by postal ballot or by electronic voting, the latter being either from a remote location or at the meeting itself.”

Courtesy - Business Standard    


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