Capital market regulator SEBI has made it obligatory for listed companies to provide remote e-voting facility to its shareholders.
In this context, an interesting case has emerged between SBI and its shareholders. The bank which is trying its best to don an e-avatar, says the SBI Act 1955 does not allow for any such facility!:
Shareholders of the State Bank of India (SBI) are crying foul over the bank’s refusal to provide electronic voting (e-voting) facilities for its upcoming extraordinary general meeting (EGM). The country’s top bank has issued notices for a shareholders’ meeting in February to approve fresh capital-raising plans of up to Rs 15,000 crore. However, the notice is silent about e-voting, which has been made mandatory by the Securities and Exchange Board of India (Sebi).
In response to an email seeking comments, an SBI spokesperson said providing the facility was not feasible given the legal position. “Holding of a general meeting of shareholders and voting is governed by SBI Act, 1955, and SBI General Regulations,” he said.”In terms of the Regulation 31(2) of SBI General Regulations for voting, the shareholder has to be present at the venue of the general meeting or by proxy or through an authorised representative, in case of a company. Hence, providing e-voting facility is not feasible at present,” the spokesperson added.
Compliance experts are not convinced. “To claim that the SBI Act does not provide for e-voting is preposterous. It is a 60-year-old law. E-voting came into being in 2014,” said S N Anantha Subramanian, former president of the Institute of Company Secretaries of India.
Sebi first introduced e-voting requirements under clause 35 B of the Listing Agreement in 2014. Even then, SBI was among the violators of the provision. According to people familiar with the matter, the bank had then argued it was not a company under the Companies Act and therefore, could not be required to follow procedures under rules framed in the Act. However, the listing agreement provisions have now been strengthened in the form of LoDR Regulations, which have come into force from December 1. These regulations use the word ‘listed entity’, which has a broader meaning and encompasses structures that are not registered under the Companies Act too, say governance professionals.
Subramanian, who is also an adviser to public sector banks, pointed out other state-owned banks were also not registered under the Companies Act but had complied ever since the e-voting requirements came into being in 2014.
I don’t see a case really here. SBI will have to amend its 1955 Act to allow for this facility. Also a lesson for SEBI..