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Several offences under the Companies Act provided for penalty. The penalty amounts on account of inflation and on account of the falling value of the currency itself have become inadequate. Therefore, across the Board most of the offences are now punishable with penalty amounts which have almost been increased ten times over and above the earlier amount.

There are several provisions with regard to ensuring corporate democracy. Clause 75 seeks to amend Section 192(A) of the principal Act. Earlier under the Companies Act the voting is essentially either by the shareholders of the company who are present or by proxy. For the first time, a provision for postal ballot has been introduced. The Standing Committee has suggested that the phrase `postal ballot’ be re-defined as also to include the new technologies which are available, namely, electronic voting. That is to say, that the shareholders who would neither attend the meeting of the company nor are represented through the proxy but are sitting in their own offices or houses at far flung places can exercise that right by a postal ballot which will also include electronic voting. The Government strongly commend that this suggestion also requires to be accepted.

Clause 75, provides for voting by ballot. The hon. Minister did make a reference to it. But I am afraid that this clause is likely to be misused. We know that voting can be done by ballot in some elections and how the voting takes place. A person goes a round, collects the ballots, puts the mark on them and then deposits them with the authority which can use that kind of a voting. In my opinion, this is likely to create many difficulties. The proxy voting in general elections will create difficulties and the voting by a ballot in taking the decisions in companies will create problems. These are two things. Here I would say that it is very strangely worded. You can have a look at the exact words which are used in clause 192A (1):

A very important question has been raised relating to exercise of ballot by a postal ballot. Let me elaborate upon this. Normally, the voting in the company takes place at the Annual General Meetings of the company or the Extraordinary General Meetings of the company. The traditional methods of voting are either you be present in person or you exercise your vote through a proxy. Now, in large public companies, it is not possible for shareholders to travel across the length and breadth of the country to be present in person only with regard to voting because the amount they spend in the process of attending those AGMs itself may be much more than the amount of dividend which they are realising.
Therefore, the practice, which Shri Patil fears, that people go around collecting proxies has been a practice which is in vogue.
It is precisely to do away with that practice, it has been suggested that there could be certain spheres of corporate governance in which a larger participation is required, which the Government could notify from time to time those spheres of corporate governance and those resolutions where voting would be by postal ballot. Electronic voting has been suggested by the Standing Committee - we accept that suggestion - and electronic voting should be included within the definition of `postal ballot'. So, postal ballot will enable a shareholder to say, "I cannot be present at the AGM of the Company. I am not prepared to cut my hands off and give my right to vote to somebody else as a proxy holder. I shall, by post, sitting in my house, register my ballot and the obligation is in the company to provide him with the resolution and all the facilities for exercising the right of postal ballot." Therefore, as far as postal ballot is concerned, it is a step which we have taken in the right direction, in order to have a more participatory involvement of the shareholders in certain crucial decisions which will be taken at the AGM or the EGM of the Company.