Company Secretary as Scrutinizer, Role & Responsibility, Functions

The company secretary as scrutinizer, ensures the freedom and accuracy of the e-voting process. Know their important role, legal requirements, and appointment process.

As the company secretary, The company secretary has important roles within an organization. In addition to his regular duties, they also serve as an investigation for e-voting. 

In this role, they ensure that the e-voting process runs smoothly and efficiently. They are chosen through a democratic process to gain confidence in the organization. As the company secretary scrutinizer, they enable directors to vote easily from any place and at any time, making the e-voting system effective.

Company Secretary as Scrutinizer

In simple words, an investigator is the one who looks carefully at the voting process for the company independently. They ensure that everything is done correctly when people vote electronically. The role of a company secretary as a scrutinizer in e-voting is mentioned in sections 108, 109, and 110 of the Companies Act, 2013.

Who is a scrutinizer?

A scrutinizer is an independent professional who has been appointed to oversee and verify the voting process during corporate meetings, including postal ballots and e-voting. The role is to ensure that the voting process is conducted properly, transparently, and according to the applicable laws. 

In the context of the company's law in India, a company secretary in behavior is one of the professionals who deserves to be appointed as an investigator.

Who Can Act as a Scrutinizer?

The following professionals are eligible to act as an investigator: 

  • A company secretary in practice. 
  • A chartered accountant in practice. 
  • A cost accountant in practice. 
  • A lawyer. 

The person should not be in the company's employment and be free to avoid conflicts of interest. 

Which company needs the company scrutinizer

For e-voting (Section 108): 

Companies have to appoint an investigator in the following cases: 

  • No company has been covered by the SEBI Regulation, 2009, chapters XB and XC.
  • Companies with 1000 or more members offer voting rights in general meetings. 

For postal ballot (Section 110): 

Companies have to appoint a scrutinizer if: 

  • Not a person company (OPC). 
  • There are more than 200 members. 

This is not just an option, but there is a legal need to be a scrutineer during e-voting. According to the company's (management and administration) rules, 2014, specified companies should comply. If the company falls under the relevant category, the board of directors should appoint one or more investigators.

Functions of Scrutinizer 

  • For e-voting (Section 108): Companies have to appoint an investigator in the following cases: No company has been covered by SEBI Regulation, 2009, Chapters XB and XC. Companies with 1000 or more members offer voting rights in general meetings. 
  • For postal ballots (Section 110): Companies have to appoint a scrutinizer if: Not a person company (OPC). There are more than 200 members. This is not just an option, but there is a legal need to have a scrutineer during e-voting. According to the rules of the company (management and administration), 2014, specified companies should comply. If the company falls under the relevant category, the board of directors should appoint one or more investigators.
  • Postal ballot: (A) As a company secretary, the scrutinizer will have to make a detailed report within seven days of receiving the postal ballot. (B) Maintaining electronic registers with members' details, shares, and other necessary information. 

Special Notes: According to the MCA rules, the scrutinizer must submit a report (Form Number MGT-13) to the chairman within seven days of the poll, which is signed by the scrutinizer(s), if more than one, and underlines the voting results.

Role and Responsibilities of Scrutinizer 

The role of the investigator is important to ensure the sanctity of the voting process. Their responsibilities include 

1. Voting process oversight: The scrutinizer oversees the entire voting process, including distance e-voting, physical ballots, and postal ballots, and ensures that it is appropriate and by legal provisions. 
2. Counting of votes: After the voting period ends, the scrutineer unblocks the e-votes and counts the votes in the presence of at least two witnesses who are not employees of the company. 
3. Maintaining privacy: To ensure that the voting process is confidential until the official announcement of the results.
4. Verification: The list of shareholders confirms their voting rights and the authenticity of votes. 
5. Preparation of scrutinizer report: The scrutinizer prepares a comprehensive report that indicates the total number of votes. Valid votes and invalid votes. Vote against and resolutions in favor. 
6. Presenting report: The scrutinizer presents the report to the chairman of the meeting or an authorized person, who then declares the results. 
7. Protection of records: The scrutinizer ensures proper custody of voting papers and other relevant documents for the specified period.

Steps for Appointment of Scrutinizer

To appoint a company secretary in your organization as an inquiry, you need to follow these steps: 

Step 1: Get consent before appointing the company secretary. From the company secretary to the company secretary, it is important to ensure their desire to play this role. This involves formally demanding their consent or approval. This step ensures that the company secretary is aware of his responsibilities and agrees to fulfill them. 
Step 2: After obtaining the consent of the board meeting, the next step is to inform all the directors of the company about the upcoming board meeting. This notice should be sent within seven days of receiving the approval of the secretary. It should have a meeting agenda, which should be discussed and decided. The notice should be sent to the registered address of all directors, ensuring that they are informed about the purpose of the meeting and given enough time to prepare.
Step 3: After the notice is issued, the board's meeting is conducted to appoint a scrutinizer, and the directors are informed. A board meeting is intentionally called, and the appointment of the scrutinizer is decided. During this meeting, the director will discuss and consider the suitability of the company secretary for the role of the scrutinizer. After intensive discussion and evaluation, it will be decided to appoint the scrutinizer. 
Step 4: Finalize the appointment and broadcast the decision. After the board meeting, the selected scrutinizer will proceed to document the minutes of the entire meeting, which will capture all discussions and decisions. Subsequently, within 15 days of the board meeting, a draft decision is prepared about the appointment of a scrutinizer. This draft is then circulated among all directors for their response and response. Directors are allowed to review the decision and provide any input that they are required to.

Summary 

The role of a company secretary as a scrutinizer is indispensable in maintaining the integrity of the corporate administration. By ensuring that polling processes are legally, independently, and transparently conducted, investigators protect the rights of shareholders and increase confidence in the company's decision-making processes.

As the standards of corporate administration continue to develop, the role of scrutinizer will become even more important, especially with increasing loud emphasis on e-governance and digital voting systems. For the company's secretaries, acting as an investigator not only enhances their professional profile but also contributes to maintaining moral standards of the corporate sector.

FAQs

Who can appoint a company secretary as a scrutinizer?

The board of directors of a company appoints a company secretary in practice as a scrutinizer through a board resolution before the general meeting or voting process begins, ensuring compliance with the Companies Act, 2013.

What is the main role of a company secretary as a scrutinizer?

The main role is to oversee the entire voting process, verify votes, ensure fairness and legality, and submit a detailed scrutinizer’s report on the voting results to the chairman within the stipulated timeframe.

Is it mandatory to appoint a scrutinizer for e-voting?

Yes, under Section 108 of the Companies Act, 2013, it is mandatory for companies offering e-voting to appoint a scrutinizer to ensure the integrity and transparency of the electronic voting process.

Can a company secretary in employment act as a scrutinizer?

No, only an independent company secretary in practice is eligible to act as a scrutinizer. A CS in the employment of the company cannot be appointed due to conflict-of-interest concerns.

What is included in the Scrutinizer’s report?

The report includes total votes cast, valid and invalid votes, votes in favor or against each resolution, and any procedural observations, ensuring a clear and transparent disclosure of voting outcomes.

What legal provisions govern the Scrutinizer’s role?

The scrutinizer’s role is governed by Sections 108 and 110 of the Companies Act, 2013, along with Rules 20 and 22 of the Companies (Management and Administration) Rules, 2014, and SEBI regulations for listed companies.

What is the timeline for submitting the scrutinizer’s report?

The scrutinizer must submit the report within 48 hours of the conclusion of the voting process, enabling the chairman or authorized person to declare the results promptly to shareholders.

Can a company secretary act as a scrutinizer for postal ballots?

Yes, a company secretary in practice is eligible to act as a scrutinizer for postal ballots, ensuring proper receipt, verification, and counting of the votes as per the prescribed legal procedures.

Why is independence important for a Scrutinizer?

Independence ensures unbiased verification and transparency. A scrutinizer must not have any vested interest in the company’s resolutions, preserving trust in the voting process and protecting shareholders’ rights.

What happens if the Scrutinizer fails to perform duties properly?

Non-compliance or negligence by the scrutinizer can lead to penalties under the Companies Act, 2013. It can also damage the credibility of the company’s governance and lead to disputes over voting results.