Chapter 21

Proxy Sec 105

TOPICS COVERED
➢ Restriction on voting Rights Sec 106
➢ Sec 107

PROXY ETC
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SECTION 105 - PROXIES

CORE AREAS PROVISIONS

Appointment of (1)Any member of a company entitled to attend and vote at a meeting of the company
Proxy shall be entitled to appoint another person as a proxy to attend and vote at the meeting
on his behalf: Proxy may be a member or outsider.
Proxy- a member Provided that a proxy shall not have the right to speak at such meeting and shall not be
or outsider? entitled to vote except on a poll: Proxy can vote usually only on a poll. Proxy can also
demand poll
Provided further that, unless the articles of a company otherwise provide, this subsection
shall not apply in the case of a company not having a share capital:
Provided also that the company registered under section 8 shall not be entitled to appoint
another person as a proxy: In section 8 Company proxy has to be a member.

How many Proxy A person can act as proxy on behalf of members not exceeding fifty and holding in the
Forms can a aggregate not more than ten percent of the total share capital of the company carrying
proxy hold voting rights:
Max 50 members Provided that a member holding more than ten percent, of the total share capital of the
and Max Company carrying voting rights may appoint a single person as proxy and such person
shareholding shall not act as proxy for any other person or shareholder.
10% of TSC The appointment of proxy shall be in the Form No. MGT.11.
Carrying VR

QUESTION Mr.Dhobi has been appointed to act as a Proxy on behalf of Mr. Gabbar whose holding in
that particular company is 11% of the total share capital(carrying voting rights). Can
Mr.Dhobi act as a proxy for another member as per Sec 105 of the companies Act 2013?

ANSWERS If the holding of a particular person exceeds 10% of the total share capital in the company
carrying voting rights then such person may appoint a single person as proxy, who cannot
act as a proxy on behalf of any another member in that company.
Therefore Mr. Dhobi who has been appointed to act as a proxy on behalf of Mr. Gabbar
cannot act as proxy for any other member

Can Proxy be Proxy can be revoked at any time before the proxy votes.
Revoked?
Disclosure on (2)In every notice calling a meeting of a company which has a share capital, or the articles
Notice of GM 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.

Fine for non- (3)If default is made in complying with sub-section (2), every officer of the company who is
disclosure in default shall be punishable with fine which may extend to five thousand rupees.

Time limit for (4)Any provision contained in the articles of a company which specifies or requires a
depositing proxy longer period than forty-eight hours before a meeting of the company, for depositing with
form 48 hrs the company or any other person any instrument appointing a proxy or any other
before the document necessary to show the validity or otherwise relating to the appointment of a
meeting proxy in order that the appointment may be effective at such meeting, shall have effect as

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if a period of forty-eight hours had been specified in or required by such provision for such
deposit.

Example: Articles of Association of Yash Raj Films Limited provides that proxy form must be
deposited atleast 52 hours before the meeting. But Mr. Sharukh Khan appoints Mr.
Salman Khan as his proxy 50 hours before the meeting. Is appointment of Mr. Salman
Khan as proxy valid?

QUES Tues 11am is the GM date what is the last date for depositing proxy Form?

Ans Sun-11 am. As per SS-2, proxy will be accepted even on a holiday if the last day by which it
could be accepted is a holiday.

Multiple proxies If a member appoints more than one Proxy, then the proxy who is appointed at last is
appointed by considered as the valid proxy , provided his proxy form was deposited 48 Hrs before the
same Member meeting.

Example: AGM of SRK Limited was to be held on 15th October 1999. Mr. A, a member appoints ‘P’
as his proxy and the form dated 10.10.99 was deposited by Mr. ‘P’ at the registered
office. However, Mr. A changed his mind on 12.10.99, gives another proxy to Mr. ‘Q’
instead of Mr. P deposited on 12.10.99 with the Company. Another member Mr. B
appointed Mr. R as proxy on 12.10.99 and another proxy form in favour of Mr. S on
14.10.99. All the proxies Mr. P, Mr. Q, Mr. R, Mr. S were present at the meeting. Discuss

Can Proxy form ( (8) Every member entitled to vote at a meeting of the company, or on any resolution to be
be Inspected? moved thereat, shall be entitled during the period beginning twenty-four hours before
If AGM is on 28th the time fixed for the commencement of the meeting and ending with the conclusion of
Sep 10am- 2pm? the meeting, to inspect the proxies lodged, at any time during the business hours of the
Inspection starts company, provided not less than three days’ notice in writing of the intention so to
27th Sept 10 AM inspect is given to the company.

Requirements of (6) The instrument appointing a proxy shall--

instruments (a) be in writing; and
appointing proxy (b) be signed by the appointer or his attorney duly authorized in writing or, if the
appointer is a body corporate, be under its seal or be signed by an officer or an attorney
Proxy Form- duly authorized by it and stamped
MGT-11
An instrument appointing a proxy, in the form MGT 11 as may be prescribed, shall not be
questioned on the ground that it fails to comply with any special requirements specified
Revenue stamp
for such instrument by the articles of a company i.e If proxy form is as per MGT-11 it is
15p- Rs1
valid even if it does not comply with special requirements of AOA.

Proxy invitation (5) If invitation to appoint specified person as proxy for GM is circulated to all members at
not allowed Company`s expense, then every officer in default shall be punishable with a fine of Rs 1
After Companies lakhs.
Amendment Act It shall not be an offence if the company provides a list of suggest proxies to any member
2020 penalty is on request if the list is available to all members on request
Rs 50000

Regulation 59 A vote given in accordance with the terms of an instrument of proxy shall be valid,

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Table F notwithstanding the previous death or insanity of the principal or the revocation of the
If the Co. is not proxy or of the authority under which the proxy was executed, or the transfer of the
aware about the shares in respect of which the proxy is given:
death/insanity of Provided that no intimation in writing of such death, insanity, revocation or transfer shall
the original have been received by the company at its office before the commencement of the meeting
shareholder then or adjourned meeting at which the proxy is used.
proxy is valid.

QUES 1. A’ and ‘B’ are joint holders of 1,000 equity shares, in MNO Ltd. which adopted Table A as its
Articles. For the general meeting of the Co., ‘A’ where name stands first in the order of names in
the register of members executes a proxy authorizing ‘X’ to attend the meeting. On the other
hand ‘B’ appoints ‘Y’ as the proxy for the meeting.
I)If the two proxies ‘X’ and ‘Y’ who will have the right to attend and vote at the meeting.
ii)Would it make any difference to your answer if ‘A’s’ proxy is registered with the Co. and
thereafter ‘B’s’ proxy is registered?
iii) what would be your answer if ‘B’ presently attends the meeting ?

ANS In the case of joint shareholders, the senior member has the right to vote either personally or by
proxy. For this purpose, seniority is determined by the order in which names appear in the register
of members.
i) In(i) In the present case as ‘A’ is the senior shareholder, therefore, A’s proxy X will have the right to
attend and vote at the meeting.
ii) t (ii)The answer will be same as (i)
(iii) If any of the joint shareholders personally attend the meeting it will automatically revoke the
proxy appointed earlier. Therefore ‘B’ will have the right to attend and vote at the meeting

QUES 2. Can a chairman exercise casting vote and declare a special resolution to be passed?
ANS Casting vote can be exercised if two following conditions are satisfied.
1.EQUALITY of votes.
2 - AOA should give power to chairman to exercise casting vote.

QUES 3. Annual General Meeting of MGR Limited is convened on 28th December, 2013. Mr.Jwho is a
member of the company, approaches the company on 28th December, 2013 and demands
inspection of proxies lodged with the company. Explain the legal position as stated under the
Companies Act, 2013 in this regard.

ANS MR.J is NOT entitled to inspect proxies.

Since a member who intend to inspect the proxies has to give notice to the company of his intention
to do so, at least 3 days before the commencement of GM.

QUES 4. Golden Private Limited in its Articles of Association provides a format of ‘proxy form’ different
from the one prescribed under the Companies (Management and Administration) Rules, 2014. The
company rejects the proxy on the ground that it is not in the form as prescribed in Articles of
Association of the company. Is the rejection valid under the provisions of Companies Act, 2013?
Decide giving reasons.

ANS THE rejection of proxy form by the company is not valid.

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Note: 1. As per MCA Circular Section 105 can be excluded by private Company as per its Articles of
Association.
2.Sec 106, 107 will not apply to a private company if its Articles provide otherwise.

Note: A member need not fill the proxy form again for adjourned meeting unless he wants to change his proxy.

SECTION 106 - RESTRICTION ON VOTING RIGHTS

CORE AREAS PROVISIONS
Grounds on (1) The articles of a public company may provide that no member shall exercise any
which Voting voting right in respect of any shares registered in his name on which any calls or other
rights can be sums presently payable by him have not been paid, or in regard to which the company has
restricted by exercised any right of lien.
articles

No prohibition on (2)A company shall not, except on the grounds specified in sub-section (1), prohibit any
any other ground member from exercising his voting right on any other ground.
(3) 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

Note :-Sec 106 do not apply private company. It means a private company can restrict on many other
grounds as per Articles.
Note :- If AOA is silent and Table F is not excluded voting rights are still restricted for calls in arrear.

SECTION 107- VOTING BY SHOW OF HANDS

CORE AREAS PROVISIONS
Voting in the first (1) At any general meeting, a resolution put to the vote of the meeting shall, UNLESS A
instance to be by POLL IS DEMANDED under section 109 or the voting is carried out electronically, be
show of hands decided on a show of hands.
(2) 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.

Voting

Voting by show
Voting by poll
of hands

Every Vote according

shareholder has to the No.of
1 vote Shares

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QUES 1 On 5th January, 2018 in a general meeting a motion for removal of a director was put to vote. The
Chairman declared the motion passed as ordinary resolution by show of hands. In the next general
meeting held on 28th September, 2018, a member questioned the validity of the said resolution
which was declared as passed by the Chairman alleging that majority votes were against the motion
and asked the chairman to disclose number of votes cast in favour of and against the said
resolution. Referring to the provisions of the Companies Act, 2013 discuss if the demand of member
is tenable. (4 marks)

Ans According to section 107 of Companies Act, 2013 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. A declaration by the Chairman of the meeting of the
passing of a resolution or otherwise by show of hands 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.
Hence the demand of members is not tenable.

PAST EXAM QUESTIONS

QUES 1 Mr. Hanky , Mr. Banky and Mr. Chinky are the members of the Gheewala Ltd. They are entitled to
vote at the meeting on the basis of “show of hands” But due to some urgent work, they cannot
attend the meeting and hence the proxies are appointed in their place to attend and vote. Advice
whether the provision contained in the act has been duly complied or not?

Ans As per Sec 105 of The Companies Act 2013 any member of the company entitled to attend and vote at
a meeting can appoint another person as a proxy to attend and vote on his behalf provided that the
proxy shall not have a right to speak (i.e participate) at the meeting and shall not be entitled to vote
except on poll. Hence in this case proxies not allowed.

QUES 2 Mr. Badal has been appointed to act as a proxy on behalf of thirty members in Romantic Ltd. The
aggregate of holding between Mr. Badal Mundra and its thirty members is 12% of the total share
capital of the company carrying voting rights
Advice as per Sec 105 of The Companies Act 2013 whether the provision contained in the act has
been duly complied or not?

Ans A person can act as a proxy on behalf of members not exceeding 50 and the aggregate of holding not
more than 10% of the total share capital of the company carrying voting rights.

QUES 3 Mrs. Pagli has been appointed to act as a proxy on behalf of 50 members in Pagla Ltd. The
aggregate of holding between Mrs. Pagli and its 50 members is 10% of the total share capital of the
company carrying voting rights. Advice as per Sec105 of the companies Act2013 whether the
provision contained in the act has been duly complied or not?

Ans Yes. Because not exceeding 50 and its aggregate of holding do not exceed 10% of the share capital of
Pagla Ltd.

QUES 4 Mr X holds 15% Equity share Capital appoints Mr Y to act as proxy. Mr Y also holds 5% equity share
capital in Individual Capacity Can Y be appointed as proxy of X?
Ans Proxy valid provided Y does not hold proxy for any other member

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QUES 5 The articles of ABC Limited provided that only those shareholders would be entitled to vote whose
names have been there on the Register of Members for two months before the date of the
meeting. X, a member, of the ABC Limited was holding 200 equity shares of the Company. X
transferred his shares to Y before one month from the date on which the meeting was due. The
name of Y could not be entered in the Register of Members as the application of transfer of shares
was pending attended the meeting but he was prohibited by the company from exercising his
voting right on the ground that he has not hold his share for specified period as provided in the
articles before the date of the meeting.
State whether Y can exercise his voting right in the meeting? State also the grounds upon which Y
may be excluded from exercising his voting rights in the meeting of the shareholders.

Ans Section 106 of Companies Act, 2013 provides that a public company shall by its Articles can put a
restriction on the voting rights of a member only in the following 3 cases:
1. Any sum of call money which is due but is not paid on the shares registered in the members
name.
2. Any other sum of money is due from the shareholder
3. The company has exercised a right of lien on the shares.
In the present case the restriction of ABC Ltd. To allow only those shareholder to vote whose names
appear on the register of members for 2 months is therefore invalid as it would violate the provisions
of the Act.
Mr. Y can therefore exercise his right to vote.
Mr. Y can be excluded from his right to vote only if he incurs the 3 disqualifications mentioned above

QUES 6 A company received a proxy form 54 hours before the time fixed for the start of the meeting. The
company refused to accept the proxy form on the ground that the Articles of the company provided
that a proxy form must be filed 60 hours before the start of the meeting. Define proxy and decide
under the provisions of the Companies Act, 2013, whether the proxy holder can compel the
company to admit the proxy in this case? (3 Marks)

Ans Section 105 of the Companies Act, 2013 deals with the provisions of proxy for meetings.
Section 105(1) of the Act provides that 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.
Further, Section 105(4) of the Act provides that a proxy received 48 hours before the meeting will be
valid even if the articles provide for a longer period.
In the given case, the company received a proxy form 54 hours before the time fixed for start of the
meeting. The Company refused to accept proxy on the ground that articles of the company provides
filing of proxy before 60 hours of the meeting. In the said case, in line with requirement of the above
stated legal provision, a proxy received 48 hours before the meeting will be valid even if the articles
provide for a longer period. Accordingly, the proxy holder can compel the company to admit the
proxy.

Note :- 1) Minor can Exercise Voting Rights through guardian

2) Unsound Mind Votes through Legal Guardian
3) Insolvent can vote Until his name appears in the register of members.

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