Voting Without Attending: Proxies, Polls, Show of Hands and Voting Limits Under Sections 105–108

Not every member can attend every meeting: investors travel, NRIs span time zones, holding companies vote through representatives. Sections 105 to 108 of the Companies Act, 2013 deal with how a member votes without attending. An entitled member may appoint a proxy (a person who votes for the member; the proxy may not speak and votes only on a poll, which is a formal count of votes as against a show of hands, where members simply raise their hands), meeting notices must carry a statement about proxies, instruments of proxy follow signing and timing rules, and a resolution is decided on a show of hands unless a poll is demanded or voting is electronic.

Legal basis: Companies Act, 2013, ss.105–108 — Effective: ongoing.

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The proxy right: anyone entitled may appoint, with built-in limits

"Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his behalf: Provided that a proxy shall not have the right to speak at such meeting and shall not be entitled to vote except on a poll" (s.105(1)). The proxy attends and votes, never speaks, and votes only when a poll is taken, not on a show of hands. Sending a proxy to a meeting that is decided entirely on a show of hands sends a person whose vote does not count. Under s.109(1), a poll may be ordered by the Chairman "before or on the declaration of the result of the voting on any resolution on show of hands", on his own motion, and "shall be ordered to be taken by him on a demand made in that behalf".

Three further provisos to s.105(1) bound the right. Unless the articles otherwise provide, it does not apply "in the case of a company not having a share capital". The Central Government may prescribe a class or classes of companies whose members are not entitled to appoint a proxy. And "a person appointed as proxy shall act on behalf of such member or number of members not exceeding fifty and such number of shares as may be prescribed": fifty members at most per proxy-holder, plus a prescribed share limit.

The notice must say so, and the instrument must be signed correctly

"In every notice calling a meeting of a company which has a share capital, or the articles of which provide for voting by proxy at the meeting, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy, or, where that is allowed, one or more proxies, to attend and vote instead of himself, and that a proxy need not be a member" (s.105(2)). The statement must appear in every such notice, with reasonable prominence, and must say two things: that proxies are allowed (possibly more than one), and that a proxy need not be a member. If default is made in complying with sub-section (2), "every officer of the company who is in default shall be liable to a penalty of five thousand rupees" (s.105(3)).

On the form of the instrument: "The instrument appointing a proxy shall— (a) be in writing; and (b) be signed by the appointer or his attorney duly authorised in writing or, if the appointer is a body corporate, be under its seal or be signed by an officer or an attorney duly authorised by it" (s.105(6)). A corporate appointer therefore signs under seal or through an authorised officer or attorney. Section 105(7) adds: "An instrument appointing a proxy, if in the form as may be prescribed, shall not be questioned on the ground that it fails to comply with any special requirements specified for such instrument by the articles of a company". An instrument in the prescribed form cannot be challenged for missing extra requirements in the articles.

Timing has a statutory ceiling. Under s.105(4), an articles provision requiring a period "longer than forty-eight hours before a meeting" for depositing the instrument of proxy "shall have effect as if a period of forty-eight hours had been specified in or required by such provision for such deposit". An articles clause asking for 72 hours is read as 48 by operation of law. Members also have an inspection right under s.105(8): every member entitled to vote at the meeting, or on any resolution to be moved there, is entitled "during the period beginning twenty-four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged, at any time during the business hours of the company, provided not less than three days' notice in writing of the intention so to inspect is given to the company".

No company-funded invitations to appoint named proxies

"If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the company's expense to any member entitled to have a notice of the meeting sent to him and to vote thereat by proxy, every officer of the company who issues the invitation as aforesaid or authorises or permits their issue, shall be liable to a penalty of fifty thousand rupees" (s.105(5)). The proviso narrows this: an officer is not liable "by reason only of the issue to a member at his request in writing of a form of appointment naming the proxy, or of a list of persons willing to act as proxies, if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy". A form or list supplied on one member's written request must be available on request to every member entitled to vote by proxy.

Voting limits: unpaid calls, lien, and split votes on polls

"Notwithstanding anything contained in this Act, the articles of a company may provide that no member shall exercise any voting right in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid, or in regard to which the company has exercised any right of lien" (s.106(1)). Section 106(2) then limits this: "A company shall not, except on the grounds specified in sub-section (1), prohibit any member from exercising his voting right on any other ground". Unpaid calls or other sums presently payable, and an exercised lien, are the only grounds, and only where the articles provide for it.

Section 106(3) deals with votes on a poll: "On a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy, where allowed, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses". A member with several votes may use some and not others, or cast them in different directions, on a poll.

Show of hands by default, with the chairman's declaration

"At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded under section 109 or the voting is carried out electronically, be decided on a show of hands" (s.107(1)). Section 108 provides that "the Central Government may prescribe the class or classes of companies and manner in which a member may exercise his right to vote by the electronic means". Section 107(2) says: "A declaration by the Chairman of the meeting of the passing of a resolution or otherwise by show of hands under sub-section (1) and an entry to that effect in the books containing the minutes of the meeting of the company shall be conclusive evidence of the fact of passing of such resolution or otherwise". Where the result is declared on a show of hands and entered in the minute book, that declaration and entry are conclusive evidence of the result. Because a proxy cannot vote on a show of hands (s.105(1), first proviso), a poll is where proxies are counted.

A meeting-day checklist drawn from these sections

Five points to tick off. State the proxy statement prominently in every notice (s.105(2)). Treat prescribed-form instruments deposited up to forty-eight hours before the meeting as in time, whatever the articles say (s.105(4), (7)). Allow inspection of proxies from twenty-four hours before the meeting where three days' written notice has been given (s.105(8)). Do not issue company-funded invitations naming proxies (s.105(5)). Apply voting bars only on the s.106(1) grounds, and minute the Chairman's declaration on a show of hands (s.106(1), s.107(2)).

What to do now

Next step: check the last notice of a general meeting for the s.105(2) statement (entitled member may appoint a proxy, or where allowed more than one, and a proxy need not be a member), and compare the articles' proxy-deposit period with forty-eight hours. Source: Companies Act 2013, s.105(2) and (4).
Deadline on the text: proxy deposit cannot be required earlier than forty-eight hours before the meeting (s.105(4)); a member's inspection of proxies needs not less than three days' written notice to the company (s.105(8)).
Consequence: every officer in default on the notice statement is liable to a penalty of five thousand rupees (s.105(3)); an officer who issues or authorises company-funded invitations naming proxies is liable to a penalty of fifty thousand rupees (s.105(5)).

Have a CA review your facts before you act or file.

FAQ

Can any member appoint a proxy?
Any member "entitled to attend and vote" may appoint "another person" as proxy (s.105(1)). The right does not apply by default to a company without share capital, and a proxy-holder may act for not more than fifty members, subject to the prescribed share limit. The proxy may not speak and votes only on a poll.

What must the meeting notice say about proxies?
With "reasonable prominence": that a member entitled to attend and vote may appoint a proxy (or more, where allowed) to attend and vote instead of himself, and that a proxy need not be a member (s.105(2)). Default makes each officer in default liable to a penalty of five thousand rupees (s.105(3)).

How late can proxy instruments be deposited?
An articles provision requiring a longer period than forty-eight hours before the meeting has effect as if forty-eight hours had been specified (s.105(4)).

Can the company pay to invite members to appoint named proxies?
Invitations naming a proxy or proxies, issued at the company's expense, attract a penalty of fifty thousand rupees on each officer who issues or authorises them (s.105(5)). The proviso covers a form or list supplied on a member's written request, if it is available on written request to every member entitled to vote by proxy.

How are resolutions decided by default?
"On a show of hands", unless a poll is demanded under section 109 or voting is carried out electronically (s.107(1)). The Chairman's declaration and the minute-book entry are "conclusive evidence" of the result (s.107(2)).

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