eVoting for Committee of Creditors under IBC
Overview
Under the Insolvency and Bankruptcy Code (IBC), 2016 Insolvency Resolution Professional (IRP) is required to provide eVoting option to creditors. A Committee of Creditors (CoC) is formed where all the creditors of the debtor company are members and their voting weightage is determined on the basis of the amount outstanding. Each member of the creditor’s committee has the right to vote on all important matters. The Insolvency Resolution Professional (IRP) / Resolutions Professional (RP) / Interim Resolution Professional (IRP) / Liquidator is expected to take opinion of all the members in form of vote on all important matters.
Is eVoting mandatory under IBC?
Yes, providing remote voting option in electronic form is mandatory under Insolvency and Bankruptcy Code (IBC), 2016. Although IBC explicitly does not insist on using eVoting platforms, however, it stipulates that all member of committee of creditors should be provided option to vote during the meeting and also after the meeting. It also provides that members of CoC should have the option to vote remotely. Few IRPs have interpreted it to mean that they can take the vote on email or WhatsApp. However, that is not the best practice and is avoidable. Using a proper government of India approved eVoting platform like Right2Vote not only ensures proper documentation and compliance with the process but also helps when result is to be filed with National Company Law Tribunal (NCLT).
Features recommended for Committee of Creditors Voting
Audit Trail: With AUDIT TRAIL feature, the system records IP address and time of voting of each and every voter. This helps in maintaining an audit trail and is useful in case of any dispute.
Voter Recipt: Each voter is sent a VOTER RECEIPT on his email. The receipt mentions the choice selected by the voter. This is very helpful feature for creditors or bankers who need the record of their eVoting for internal filing.
Allow vote change: ALLOW VOTE CHANGE feature allows the voter to change his vote any time before the close of voting. This feature is an additional feature for the member of creditor’s committee to use in case they receive instructions from their seniors / bank management to change the vote preference.
Weighted votes: WEIGHTED VOTES is a very useful feature for eVoting under IBC for committee of creditors. Unlike normal voting where each voter has one vote, in committee of creditor’s voting, the vote share is determined on the basis of outstanding amount of each creditor. With this feature, the result is automatically calculated after taking into account the respective vote share of each creditor. This saves lot of time and effort for the insolvency professional.
OTP based authentication: OTP BASED AUTHENTICATION feature ensures that only the authorised voter is able to vote. In case of committee of creditors there are multiple bank representatives who are involved in the process. Several members from the same bank might attend the meeting. However, OTP based authentication ensures that only the authorised voter is able to vote and nobody else is able to access or vote.
Time extension: TIME EXTENSION feature is very useful in case of creditors’ voting under IBC. For various reason including delay in approval from bank management or court instructions at times the voting duration has to be extended. Right2Vote offers free time extension feature where insolvency professional can extent the time of the poll multiple times free of charge.
Reminders: REMINDERS features allow the insolvency professional to send automated reminders to member of CoC who have not yet exercised their right to vote. The reminder only goes to voters who have not voted yet. Insolvency professional can send up to three reminders free of cost in Right2Vote online voting platform.
Detailed results in PDF and excel format: Right2Vote provide the result of the eVoting in both PDF and excel format. The PDF format gives the synopsis of the result with Right2Vote watermark. The PDF format is useful for circulation among creditors and for submission to court / NCLT. Right2Vote also provides result in excel format where audit trail details like IP address and time of voting is also available. This is to be used for audit purpose. As eVoting under IBC does not require SECRET BALLOT feature, the details excel result also provides individual voter vote preference.
Benefits of using Right2Vote eVoting platform for CoC voting
Tested, certified and approved by Government of India: Right2Vote’s eVoting software is tested and certified by Standardization, Testing and Quality Certification (STQC) Directorate under Ministry of Electronics and Information Technology (MeitY), Government of India. Right2Vote is also an approved eVoting agency of Ministry of Corporate Affairs (MCA), Government of India.
As eVoting results need to be presented in the court / NCLT, it is always better to use a government of India certified platform.
Right2Vote’s 24*7*365 DIY platform & responsive support team: Right2Vote’s eVoting platform is very easy to use and intuitive DO IT YOURSELF (DIY) platform. Insolvency professionals and their team can set up polls in the platform at any time of the day and setting up the poll does not take more than 15 minutes. Right2Vote support team is also very responsive and set up polls for the clients on short notice. Many a times during emergency, clients ask Right2Vote’s team to set up poll on 5-minute notice and Right2Vote team executes it without any delay. No other eVoting platform in India or abroad can match the responsiveness of Right2Vote’s support team.
Cost Effective: Right2Vote is the most cost-effective platform for eVoting under IBC. Right2Vote charges only Rs. 5000 + GST for Committee of Creditor’s eVoting for up to 200 creditors. Right2Vote also does not charge extra for long duration or for time extension in case of CoC eVoting.
Time and effort saving: Conducting Committee of Creditor’s eVoting using Right2Vote’s online voting technology saves lot of time and effort for the insolvency professionals. From setting up the poll, to sending invite, sending reminders, creditor authentication, vote recording, calculating results – everything is done by the system automatically saving lot of time and effort for IRPs. This enables busy IRPs to focus their energies and resources on other important and urgent matters.
Convenience for creditors leading to better participation: Creditors are busy people and it is not possible for them to attend all meeting of CoC or physically visit the IRP office for voting on all matters. Online voting enables committee members to vote anytime from anywhere. This not only saves time and effort of the creditors but also lead to better participation and higher voter turnout in voting.
Security and transparency: Right2Vote’s eVoting platform is not only secured with encryption, OTP based authentication and other features but is also very transparent with features like audit trail, voter receipt and vote record.
Feature rich: Right2Vote provides many other optional features like Team election, voter selfie, double authentication, biometric authentication and multiple votes - limited. Based on specific required of the poll, insolvency professionals can use these additional features. Unlike most other platform Right2Vote offers flexibility to use advanced features in critical and more sensitive polls like selection of Insolvency professional or approval of resolution plan.
Trusted by leading insolvency firms: Leading insolvency firms and insolvency professional including AAA Insolvency, Sumedha Management, PwC, KPMG, Deloitte, Alvarez and Mashal are using eVoting, Video Conference, Virtual Data Room and eAuction services of Right2Vote for insolvency matters.
Kinds of eVoting for Committee of Creditors
Resolution voting:Voting on resolutions is the most common type of eVoting done in IBC matters. After almost each CoC meeting eVoting is required on important matters. Generally, in such matters there are three options: Accept / Yes / Approve Reject / No / Disapprove Abstain
Appointment or selection of professionals / firms: Right2Vote’s eVoting platform also provides option of setting up eVoting on matters like selection of resolution professional, authorised representatives, auditors, valuer, lawyer or other service providers. In such eVoting additional features like picture of the candidate on the ballot page, multiple selection, team election can be used based on specific requirement.
Approval of resolution plan: Approval of resolution plan is one of the most important matters put up to vote under in IBC matters. As high stakes are involved it is very important to maintain security and transparency in such matters. Right2Vote also provides a feature to upload the resolution plan on the voting platform so that it can be viewed and evaluated by the creditors before voting. Right2Vote also provide Virtual Data Room (VDR) facility for uploading and sharing important document with restricted access with creditors and others. Right2Vote also provide eAuction facility in case the need arises as part of the liquidation process or for disposing off assets.
Procedure of Committee of Creditors eVoting
Disclaimer:Right2Vote is an online voting platform and not a qualified legal advisor. Kindly consult qualified legal advisors for better understanding of the law and process relating to CoC meeting and eVoting. The below text is only for guidance purpose based on our limited understanding. The law keeps on changing and evolving. You are requested to consult and confirm with a qualified lawyer and use this for guidance only.
For committee of Creditors eVoting following points should be kept in mind:
- Members of the committee of creditors have the option to vote during the meeting or post circulation of minutes. If few members opt to vote during the meeting and few post circulation of the minute of the meeting, online voting option can be given only to those who opt to vote remotely post circulation of minutes. However, as a best practice, IRP / RP / Liquidator can request all the members to register the vote on the online platform for transparency and record purposes.
- Minutes of CoC meeting should be circulated within 24 hours of the end of CoC meeting.
- eVoting should start only after the circulation of minutes of the meeting and within 48 hours of the end of CoC meeting.
- Voters should be provided a minimum of 24 hours of voting window to enable them to vote.
- IRP / RP / Liquidator can extend the voting window on the request of one or more creditors; however, it should be maximum for one day at a time (recent amendment).
- For general resolutions, voters with a vote share of more than 50% should accept or approve the resolution. If the voter does not vote or abstain from voting, that also effectively means a negative vote, as the requirement is more than 50% positive vote. Note: The rule is different in the case of voters in a class / home buyer voting.
- For special resolutions, voters with a vote share of more than 66% should accept or approve the resolution. If the voter does not vote or abstain from voting, that also effectively means a negative vote, as the requirement is more than 66% positive vote. Note: The rule is different in the case of voters in a class / home buyer voting.
- In CoC voting, all members do not have equal vote share. Vote share is determined based on the outstanding amount of each creditor.
- Once the eVoting is set up and invite sent to voters, there should not be any change in voting agenda. Voting agenda is frozen at the time of circulation of minutes. Change of text of the resolutions when the voting has started can lead to frauds and hence is not allowed. If there is no option but to change the text of the resolutions, then the current voting should be cancelled and fresh voting should be initiated with revised text.
- In matters where creditors in a class are there, they are represented in the CoC meeting through an Authorised Representative (AR). Creditors in a class might be home buyers, unsecured creditors, debenture holders or any other class.
Right2Vote’s sister company https://Time2Justice.ai also provides legal assistance service with help of AI. You can visit the website of time2justice if you have any further queries.
If you want to try out our eVoting services please contact us by emailing us at contact@right2vote.in or call us at 9920591306.
