Proxies As Per Section 105 Of Companies Act 2013

What is a Proxy?

The term ‘proxy’ is used in two ways under the Companies Act, 2013. The first refers to the individual appointed by a member to attend and vote in the meeting on his behalf as a representative. The other refers to the instrument/ document by which such an individual is appointed as a proxy. The facility of proxy allows a member to vote in a meeting that he cannot attend due to any reason. The concept of proxy is extensively dealt with under Section 105 of the Companies Act, 2013, Rule 19 of the Companies (Management and Administration) Rules, 2014, and Point 6 of Secretarial Standards-2 (SS-2).

A proxy is a person, who is appointed by a member to attend and vote at a meeting in the absence of the member. Thus, the proxy may be the agent or any other person authorized by the member of the company who is appointing him. The term ‘proxy’ is also used to refer to the instrument by which a person is appointed as a proxy. Section 105 of the Companies Act, 2013 provides that a member, who is entitled to attend to vote, can appoint another person as a proxy to attend and vote at the meeting on his behalf. This section also provides the manner of appointing a proxy.

Who can appoint a proxy?

Any member of a company who is 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. A proxy need not be a member. A proxy shall be a Member in case of companies with charitable objects etc. and not for profit registered under the specified provisions of the Act. A Proxy can act on behalf of Members not exceeding fifty and hold in the aggregate not more than ten percent of the total share capital of the company carrying Voting Rights. However, a member holding more than ten percent of the total share capital of the company carrying Voting Rights may appoint a single person as Proxy for his entire shareholding and such person shall not act as a Proxy for another person or shareholder. If a Proxy is appointed for more than fifty Members, he shall choose any fifty Members and confirm the same to the company before the commencement of the specified period for inspection. In case, the Proxy fails to do so, the company shall consider only the first fifty proxies received as valid.

Disabilities of proxy

· A person appointed as proxy shall not have the right to give views on the agenda for which the meeting is conducted at the meeting.

· A proxy cannot vote on a show of hands. A proxy is not counted for quorum.

Rights of proxy

· A proxy has the right to attend the meeting.

· A proxy has the right to vote only on a poll. A proxy, if eligible under section 109, has the right to demand a poll.

Restriction on proxy

· A member of a company registered under section 8 shall not be entitled to appoint any other person as his proxy unless such other person is also a member of such company.

· A person appointed as proxy shall not act as proxy on behalf of more than fifty members and members holding in the aggregate more than ten percent of the total share capital of the company carrying voting rights.

· A member holding more than 10% of the total share capital of the company carrying voting rights may appoint a single person as a proxy, provided that such person shall not act as a proxy for any other person or shareholder.

Inspection and record of proxies

This is given under Section 105(8) of CA. The request to inspect proxies has to be given in writing by a member entitled to vote at least three days before the meeting. Upon acceptance of the request, such members can inspect the lodged proxies from 24 hours before the start of the meeting till its conclusion. Inspection will be permitted from 9 AM to 6 PM (business hours) in this period as per 6.8 of SS-2. A fresh request for inspection will have to be filed if the original meeting gets adjourned.

The received proxies have to be recorded chronologically in a register. The reasons for the rejection of a proxy have to be given in the ‘remarks’ column of such proxy’s entry.

In Nutshell

The concept of proxy was introduced to facilitate the participation of the shareholders in the affairs of the company even if they cannot attend personally. However, the restrictions placed on the proxy by not allowing them to speak, or not entitled to vote by show of hands renders this motive of participation fruitless. The management’s fear of nuisance or harassment by allowing proxies to speak, though not unfounded, cannot be allowed to become an obstacle to expanding engagement and contribution from these persons. Certain rules and penalties can be included to keep a check on such unruly behavior.

However, even if voting through the show of hands is permitted, a proxy representing many members would be unable to put forward conflicting interests of these members at once. Voting through the show of hands is feasible only when such a proxy represents a single member or many members with the same interest.

Hence, the need of the hour is to revise these laws relating to proxy to give room for more participation to assist in democratic decision making and better management of the company’s affairs.

Section 105 of the Companies Act, 2013

[Proxies]

Section 105 - (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 t