Defined under the Companies Act, 2013, voting is the process through which members of a company exercise their rights to approve or reject resolutions at general meetings. Common methods include voting by show of hands, voting through a poll, electronic voting (e-voting), and postal ballot, subject to the applicable provisions and rules.
The required majority for voting also differs. For example, an ordinary resolution generally requires votes in favour to exceed votes against, while a special resolution requires votes in favour to be at least three times the votes cast against. The Act provides different voting methods and approval thresholds depending on the type of resolution and the circumstances of the company.
How Votes are Counted? Rights Under Section 47
The method of voting directly changes how much each member’s vote is worth:
- On a show of hands: The rule is one member, one vote. Each member present has a single vote regardless of how many shares they hold.
- On a poll or through e-voting: Votes are proportional to the member’s paid-up equity shareholding. A member holding 10,000 shares has ten times the voting weight of a member holding 1,000 shares.
Under Section 47, every holder of equity shares has a right to vote on every resolution placed before the company. Voting rights may also be suspended where a member has not paid calls due on their shares or where the company has otherwise exercised a lien (Section 106).
Finally, in the case of an equality of votes, the chairman of the meeting may have a second or casting vote, provided the company’s articles specifically allow it.
1. Section 107: Voting by Show of Hands
At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded under Section 109 of the Companies Act 2013, 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 passing of such resolution or otherwise.
2. Section 108: Voting Through Electronic Means
Section 108 of the Companies Act 2013 provides that the Central Government may prescribe the classes of companies or manner in which a member may exercise his right to vote by electronic means. Rule 20, amended by the Companies (Management and Administration) Rules 2015 and 2016 in this regard, provides that:
- Companies having their equity shares listed on a recognized stock exchange or a company or a company having not less than 1 thousand members shall provide to its members the facility to exercise their right to vote on resolutions proposed to be considered at general meetings by electronic means.
- The aforesaid rule shall, however, not apply to:
i) small and medium enterprises, namely, companies whose post-issue value capital is up to Rs. 25crores and whose shares are listed on SME Exchange.
ii) companies listed on the Institutional Trading Platform.
3. Section 105: Voting by Proxy
A member who is entitled to attend and vote at a general meeting but cannot be present in person may appoint another person — a proxy — to attend and vote on their behalf. The proxy need not be a member of the company.
Key rules under Section 105 of the Companies Act, 2013:
- The appointment must be made in writing using Form MGT-11, signed by the member, and deposited with the company at least 48 hours before the meeting. Articles cannot demand a longer notice period than 48 hours.
- A proxy can vote only on a poll, not on a show of hands. On a show of hands, only members present in person cast votes. The proxy’s vote is counted only if a poll is demanded or e-voting is used.
- A single person can act as proxy for a maximum of 50 members, holding in the aggregate not more than 10% of the total share capital carrying voting rights.
- A proxy may attend and vote but has no right to speak at the meeting.
- Section 105 does not apply to companies without share capital unless the articles provide otherwise, and members of a Section 8 (not-for-profit) company can appoint a proxy only if that proxy is also a member.
4. Section 109: Demand for Poll
Section 109 of the Companies Act 2013 provides that, before or on the declaration of the result of the voting on any resolution on a show of hands, a poll may be ordered to be taken by the chairman of the meeting of his own motion, and shall be ordered to be taken by him on a demand made in that behalf by the persons specified below, namely :
a. In the case of a company having a share capital by any member or members present in person or by proxy and holding shares in the company:
- which gives the power to vote on the resolution not being less than 1/10th of the total voting power.
- The total sum of a minimum of 5 lakhs or such a higher amount as may be prescribed has been paid up.
b. In the case of any other company, by any member or members present in person or by proxy and having not less than 1/10th of the total voting power.
The demand for a poll may be withdrawn at any time by the persons who made the demand.
5. Section 110: Passing of Resolutions by Postal Ballot
Section 110 of the Companies Act 2013 allows the casting of votes by a member through the postal ballot in certain cases and is subject to certain conditions. Voting by postal ballot means voting by post or through any electronic mode.
The provisions of Section 110 with respect to voting by postal ballot are as follows:
- Shall in respect of such items of the business as the Central Government may by notification declare to be by means of postal ballot.
- May, in respect of any item of business (other than ordinary business and any business in respect of which directors or auditors have a right to be heard at any meeting), transact by means of postal ballot, instead of transacting such business at a general meeting.
Voting under the Companies Act, 2013 provides a structured way for company members to participate in important decisions. Whether through a show of hands, poll, e-voting, or postal ballot, companies must follow the applicable procedure and approval threshold for each resolution.
