Section 105 Companies Act: Restriction on voting rights

Section 105 of Companies Act: Proxies

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

1. 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:

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 Central Government may prescribe a class or classes of companies whose members shall not be entitled to appoint another person as a proxy:

Provided also that 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.

2. 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.

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

4. Any provision contained in the articles of a company which specifies or requires a longer period than forty-eight hours before a meeting of the company, for depositing with the company or any other person any instrument appointing a proxy or any other document necessary to show the validity or otherwise relating to the appointment of a proxy in order that the appointment may be effective at such meeting, shall have effect as if a period of forty-eight hours had been specified in or required by such provision for such deposit.

5. 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 knowingly issues the invitations as aforesaid or wilfully authorises or permits their issue shall be punishable with fine which may extend to one lakh rupees:

Provided that: an officer shall not be punishable under this sub-section 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.

6. 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.

7. 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.

8. Every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, shall be 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. Proxies.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 105

Section 105 codifies the fundamental statutory right of every member entitled to attend and vote at a company meeting to appoint a proxy, regulating proxy qualifications, the mandatory 48-hour lodging rule, and members' rights to inspect proxy instruments prior to the meeting.

Statutory Right of Proxy Appointment: Confers an absolute statutory entitlement on every member entitled to vote to appoint another person (who need not be a member) as their proxy to attend and vote on their behalf on a poll.
Statutory Limitations on Proxies: A proxy has no right to speak at the meeting and cannot vote on a show of hands; furthermore, no individual can act as proxy for more than fifty members or members holding over 10% of total voting capital.
Mandatory 48-Hour Lodging Window: Instruments appointing proxies (Form MGT-11) must be deposited at the registered office at least 48 hours before the meeting; any provision in the Articles requiring an earlier lodging deadline is void.
Inspection Rights of Members: Vests members with the statutory right to inspect all deposited proxies upon giving at least three days' advance notice, starting 24 hours before the meeting until its conclusion.

Key Landmark Precedents:

Vivekananda v. Vijaya Bank, (1991) 71 Comp Cas 489 (Kar): The Karnataka High Court held that the right to appoint a proxy is a mandatory statutory right that cannot be fettered or restricted by company articles; any article requiring proxies to be deposited earlier than 48 hours is invalid.
Cousins v. International Brick Co. Ltd., [1931] 2 Ch 90: Landmark ruling: held that the appointment of a proxy does not deprive the shareholder of the personal right to attend and vote; if the shareholder attends the meeting and casts a vote in person, the proxy's authority is automatically revoked and superseded.
Swadeshi Polytex Ltd. v. V.M. Rao, (1987) 62 Comp Cas 848 (SC): The Supreme Court examined the validity and scrutiny of proxy forms in bitter corporate control contests, affirming that technical, non-prejudicial defects in proxy forms cannot be used by the board to disenfranchise voting rights.

Courtroom Practice & Strategic Litigation Guidance:

In proxy battles during contested EGMs, issue a Section 105(8) notice demanding inspection of all proxies lodged by rival factions at least three days before the meeting. During the 24-hour pre-meeting inspection window, systematically examine Form MGT-11 submissions for missing revenue stamps, mismatched specimen signatures, or proxies exceeding the 50-member / 10% voting cap, lodging formal written objections before voting commences.

Section 105: Restriction on voting rights

Section 105 of Companies Act: Proxies

Legal Commentary & Landmark Judgments: Section 105