Designing Shareholder-Friendly Postal Ballots:

When Legal Compliance Meets Shareholder Experience

(An Analysis Inspired by Sun Pharmaceutical Industries Limited – Postal Ballot Notice dated 20 June 2025)

Postal Ballots issued by listed companies in India are traditionally treated as instruments of legal compliance. The drafting process usually begins and ends with ensuring adherence to the Companies Act, 2013, the Companies (Management and Administration) Rules, 2014, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. While this approach satisfies statutory requirements, it often ignores a crucial governance dimension—how effectively shareholders are able to read, understand, and act upon the information placed before them.

The Postal Ballot Notice issued by Sun Pharmaceutical Industries Limited in June 2025 provides a compelling illustration of how compliance can be achieved without sacrificing clarity, accessibility, or shareholder confidence. The document demonstrates that the law does not restrict thoughtful presentation; rather, it allows ample flexibility for companies willing to design their notices around shareholder decision-making.

Legal Foundation of Postal Ballots

The statutory framework governing Postal Ballots is primarily contained in Section 110 of the Companies Act, 2013, read with Rules 20 and 22 of the Companies (Management and Administration) Rules, 2014. These provisions regulate the mechanism of seeking shareholder approval through postal ballot and electronic voting. For listed entities, Regulation 44 of the SEBI (LODR) Regulations, 2015 governs the voting process, while Regulation 23(4) mandates prior shareholder approval for material related party transactions. Section 102 of the Companies Act, 2013 requires that all material facts concerning each item of business be disclosed through an explanatory statement.

Importantly, while these provisions are prescriptive about the substance of disclosures, they are largely silent on the structure and navigation of the notice. This distinction becomes central to understanding why the Sun Pharma notice stands out as a governance document rather than a mere compliance filing.

Resolution-Centric Access to Explanatory Statements

One of the most noticeable features of the Sun Pharma Postal Ballot Notice is the placement of hyperlinks to the explanatory statement immediately after each resolution. This drafting choice may appear simple, but its impact on shareholder understanding is significant. Instead of requiring shareholders to scroll through multiple pages to locate explanatory material, the document allows instant access at the exact point where a question or doubt is likely to arise.

From a legal standpoint, this approach fully satisfies Section 102 of the Companies Act, 2013. The law requires disclosure of material facts but does not mandate that such disclosure be presented in a single continuous block. By linking explanations directly to resolutions, the Company strengthens the quality of disclosure and enhances informed consent, which lies at the heart of shareholder approval requirements.

Navigation as a Governance Tool

Another feature that becomes immediately apparent upon opening the notice is the repeated availability of a clickable index. Rather than limiting the index to the opening pages, the document consistently offers a return-to-index option after resolutions, annexures, statutory notes, and voting instructions. This reflects a clear understanding that shareholders do not read statutory documents sequentially. They move between sections, compare disclosures, and revisit resolutions before forming a voting decision.

There is no regulatory restriction on such navigation aids. On the contrary, Regulation 4 of the SEBI (LODR) Regulations emphasises transparency and equitable treatment of shareholders. A live, repeated index directly supports these principles by reducing confusion and reader fatigue, particularly in notices involving multiple resolutions and extensive disclosures.

Annexures Designed to Support Decision-Making

In many Postal Ballot notices, annexures function as dense repositories of mandated disclosures, especially in cases involving material related party transactions. While Sun Pharma includes all disclosures required under SEBI regulations and applicable master circulars, the manner of presentation transforms the annexure into a decision-support tool rather than a compliance burden.

The annexures are structured in a clear, tabular format, separating transaction types, values, turnover percentages, pricing methodology, and justifications. Most notably, each annexure ends with clear references guiding the reader back to the relevant resolution numbers. This drafting choice encourages shareholders to reassess the resolution after reviewing detailed information, thereby reinforcing the objective of informed voting under Regulation 23 of SEBI (LODR).

Simplifying the E-Voting Experience

Electronic voting is a legally mandated mechanism under Rule 20 of the Companies (Management and Administration) Rules, 2014. However, the effectiveness of this mechanism depends not merely on availability but on usability. Sun Pharma’s notice distinguishes itself by presenting voting instructions in a structured and logical flow that differentiates between NSDL and CDSL users, registered and unregistered shareholders, and demat and physical holders.

Clear sequencing, identifiable start and end points, and step-wise progression reduce the intimidation often associated with e-voting, particularly for first-time shareholders. This approach does not dilute legal compliance; rather, it strengthens the practical enforceability of shareholder voting rights.

Strategic Visibility of Timelines

Another attractive feature of the notice is the prominent and repeated display of the e-voting timeline. Instead of burying critical dates within statutory notes, the document places voting timelines at the beginning and reiterates them across sections. This repetition ensures that shareholders remain constantly aware of voting windows, supporting timely participation and compliance with Regulation 44 of SEBI (LODR).

Transparent Disclosure of Director Interest

The notice also demonstrates best practice in disclosing directors’ interests in related party transactions. Names, relationships, and resolution-specific interests are disclosed clearly and factually, without unnecessary legal defensiveness. This approach aligns with Section 102 of the Companies Act, 2013 and Regulation 23 of SEBI (LODR), while simultaneously fostering trust through transparency.

What Readers Should Observe in the Attached Notice

When readers review the attached Sun Pharmaceutical Industries Limited Postal Ballot Notice, what stands out is not a single design element but a consistent philosophy. The document feels predictable, navigable, and calm. Shareholders are never left wondering where to find information, how to return to a previous section, or what action is required next. Every structural choice appears to anticipate a shareholder’s question before it arises.

This sense of ease is achieved without altering statutory language or omitting disclosures. Instead, it is the sequencing, accessibility, and cross-referencing of information that elevate the notice from a compliance document to a governance communication.

How Other Companies Can Adopt a Similar Approach

Other listed companies can replicate this approach without any change in law or regulatory interpretation. The first step lies in recognising that compliance and clarity are not competing objectives. Providing resolution-level access to explanatory statements, using recurring navigational aids, and drafting annexures as decision-support instruments are all achievable within the existing legal framework.

Equally important is drafting voting instructions from the perspective of a first-time user rather than a legal reviewer. Legal completeness remains non-negotiable, but usability determines whether shareholders actually participate.

Concluding Perspective

The Postal Ballot Notice of Sun Pharmaceutical Industries Limited demonstrates that effective corporate governance is not merely about meeting statutory thresholds but about enabling meaningful shareholder participation. The law prescribes what must be disclosed; governance quality is reflected in how that disclosure is delivered.

As shareholders increasingly engage with corporate actions through electronic means, the future of Postal Ballots lies in documents that respect both legal mandates and human attention. In that context, shareholder-friendly drafting is no longer a creative choice—it is an emerging governance expectation.-

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Disclaimer

Every effort has been made to ensure the accuracy and completeness of the information contained in this article. However, despite due care, inadvertent errors or omissions may occur. Any mistake, error, or discrepancy noticed may be brought to our attention and will be suitably addressed in subsequent updates or editions.

This article is intended solely for informational and educational purposes and does not constitute legal advice or professional opinion. The author shall not be liable for any direct, indirect, incidental, special, or consequential loss or damage arising from or in connection with the use of, or reliance upon, the information contained herein.

The content has been prepared after considering various publicly available and authoritative sources, including newspapers, journals, bare acts, judicial precedents, professional publications, research papers, and other relevant reference materials.

The reference to the Postal Ballot Notice of Sun Pharmaceutical Industries Limited has been made purely for academic and knowledge-sharing purposes to illustrate governance and drafting practices. No endorsement, representation, or association with the said company is intended or implied.

Mayank Garg

LegalMantra.net team