Companies Act Section 105

Companies Act, Section 105: Proxies

Section 105 of the Companies Act outlines the provisions related to proxies in company meetings. A proxy is an individual who is appointed by a member of the company to attend and vote at a meeting on their behalf. The section addresses who may appoint a proxy, the rights of a proxy, the necessary procedures for appointing a proxy, and the obligations of the company to inform its members of their right to appoint a proxy. Proxies are a crucial mechanism that enables members who cannot attend the meeting in person to still participate in the decision-making process of the company.

Subsection (1): Appointment of a Proxy

1. Right to Appoint a Proxy:

Any member of the company who is entitled to attend and vote at a company meeting has the right to appoint another person as a proxy. This proxy can then attend the meeting on the member's behalf and vote on the member's behalf.

However, there are certain limitations on the role of a proxy. While the proxy can vote at the meeting, the proxy cannot speak during the meeting and is only entitled to vote on a poll. This means that a proxy’s participation is restricted to casting votes on behalf of the member, without being involved in discussions or debates at the meeting.

2. Exceptions and Restrictions:

In cases where the company does not have a share capital, this section does not apply, unless the articles of the company provide otherwise. This means that in some companies, particularly those with no share capital, proxies may not be allowed unless specified in the governing documents of the company.

The Central Government has the power to prescribe a class or classes of companies whose members shall not be entitled to appoint a proxy. This could apply to specific types of companies that may be restricted from using proxies based on their structure or regulatory requirements.

3. Limit on Number of Members Represented by a Proxy:

The proxy appointed by a member can represent up to fifty members. Additionally, there may be a prescribed limit on the number of shares that the proxy can represent, which is determined by the company’s regulations.

Subsection (2): Notice of Proxy Appointment

1. Information in Meeting Notice:

When a company is calling a meeting where voting by proxy is permitted, the notice for the meeting must clearly inform the members of their right to appoint a proxy. The notice should explicitly state that a member who is entitled to attend and vote at the meeting can appoint one or more proxies to attend and vote instead of themselves.

Furthermore, the notice should specify that the proxy does not need to be a member of the company. This allows members to appoint individuals who are not affiliated with the company to represent them in the meeting.

Subsection (3): Penalty for Default in Providing Proxy Information

1. Penalty for Non-compliance:

If the company fails to comply with the requirements of subsection (2) by not informing the members about their right to appoint a proxy, the officers of the company who are responsible for this default will be liable to a penalty of five thousand rupees. This penalty serves as an incentive for the company to follow the proper procedures for informing its members about their rights regarding proxies.

Subsection (4): Deposit of Proxy Appointment Instrument

1. Period for Proxy Instrument Deposit:

The articles of the company may specify a longer period than forty-eight hours for depositing the instrument appointing a proxy or any other document necessary for the appointment to be valid. However, if the company’s articles require a longer period, it will be considered as if the period is limited to forty-eight hours for practical purposes. This means that proxies must be deposited with the company at least forty-eight hours before the meeting for the appointment to be valid.

Subsection (5): Invitation to Appoint Proxies

1. Company’s Expense for Proxy Invitations:

If the company issues invitations to its members to appoint a proxy, either by listing specific individuals or allowing members to choose proxies at their discretion, and if these invitations are issued at the company’s expense, the officers who issue the invitations or authorize their issuance will be liable to a penalty of fifty thousand rupees.

However, the officers will not be liable under this subsection if the invitations are issued to a member at their request, either providing a form for the appointment of a proxy or listing available proxies. The form or list must be available to every member entitled to vote at the meeting.

Subsection (6): Form and Signing of Proxy Instrument

1. Form of Proxy Appointment:

The instrument appointing a proxy must be in writing and must be signed by the appointer or by their duly authorized attorney. If the appointer is a body corporate, the proxy instrument must be under the seal of the body corporate or signed by an officer or attorney duly authorized by the body corporate.

Subsection (7): Validity of Proxy Instruments

1. Non-compliance with Articles:

Even if the proxy instrument does not comply with any specific requirements set out in the articles of the company, it will still be deemed valid if it follows the prescribed form. This ensures that minor technical issues in the proxy instrument do not invalidate the appointment, as long as it meets the essential requirements.

Subsection (8): Right to Inspect Proxies

1. Inspection of Proxies:

Every member entitled to vote at the meeting has the right to inspect the proxies lodged with the company. This right to inspect extends from twenty-four hours before the meeting begins until its conclusion. The inspection can take place during the business hours of the company, and members must give three days’ notice in writing to the company if they wish to inspect the proxies.