Why Sebi has made E-voting mandatory for top 500 cos

Market regulator SEBI today decided to make it mandatory for top 500 listed companies to facilitate e-voting, making it easier for shareholders to participate in key decisions without being physically present in the meetings.

“In line with the budget proposal…to make it mandatory for top-listed companies to provide for electronic voting facilities, it has been decided to implement the said proposal by making electronic voting mandatory…in respect of those businesses to be transacted through postal ballot,” SEBI said in a statement after its board meeting here.

An _Economic Time_s report pointed out earlier that Sesa Goa and Sterlite Industries managed to get shareholders’ nod for the merger after a large number of votes were found invalid at the court-convened meeting.“But the huge number of invalid votes cast in the secret ballot by sophisticated institutional investors was not expected. It set alarm bells ringing and brought to focus the crying need for corporates to switch to electronic voting at the earliest,” the report said.

Some of the advantages of e-voting include accuracy in counting of votes, elimination of postal ballots getting lost in-transit and sufficient time for shareholders to vote till the end of voting cycle. Moreover with a transparent voting system confidence of investors abroad will also rise and FIIs are likely to be more interested in investing in Indian markets

Sebi said the decision would be implemented in a phased manner, beginning with “top 500 listed companies at BSE and NSE based on market capitalisation. Listed companies may choose any one of the agency which is currently providing the e-voting platform”.

Besides, the Securities and Exchange Board of India (SEBI) said that in order to enhance the quality of financial reporting done by listed entities it would create a Qualified Audit Report review Committee ( QARC) represented by accounting regulator ICAI and stock exchanges.

The committee would process qualified annual audit reports filed by the listed entities with stock exchanges and reports where accounting irregularities have been pointed out by Financial Reporting Review Board of the Institute of Chartered Accountants of India (ICAI-FRRB).

“Cases wherein the qualifications are significant and explanation given by company is unsatisfactory would be referred to the ICAI-FRRB.

“If ICAI-FRRB opines that the qualification is justified, SEBI may mandate a restatement of the accounts of the entity and require the entity to inform the same to the shareholders by making the announcement to stock exchanges,” it said.

Further, the regulator said it has modified the minimum subscription requirements for infrastructure companies coming out with IPOs.

“The minimum subscription shall not be less than 90 per cent of the offer, subject to allotment of minimum 25 percent or 10 percent, as the case may be, of the securities offered to the public,” SEBI said.

Agencies