Companies Act Section 2(93) Voting Right

Voting Right Tribunal Section 2 (93)

1. Basic Concept:

A Voting Right is the entitlement of shareholders to participate in decision-making processes by casting votes on various resolutions put forth during company meetings, such as annual general meetings (AGMs) or extraordinary general meetings (EGMs).

2. Types of Voting Rights:

Equity Shareholders: Typically, each equity share carries one vote, granting the holder the right to vote on all matters requiring shareholder approval.

Preference Shareholders: Preference shareholders generally lack voting rights on routine matters but may gain them if dividends are unpaid or specific decisions affecting their rights are made.

3. Exercise of Voting Rights:

In Person: Shareholders can attend meetings in person and cast their votes.

Proxy: Shareholders can appoint a proxy to attend meetings and vote on their behalf.

Postal Ballot: For certain types of resolutions, companies may allow shareholders to vote by postal ballot, enabling them to cast votes remotely.

Electronic Voting: Many companies now offer e-voting facilities, allowing shareholders to vote electronically on resolutions.

4. Voting Methods:

Show of Hands: Each member present has one vote, regardless of the number of shares held.

Poll: Each member's vote is proportionate to the number of shares held. This method is used when a more precise voting count is needed.

Postal Ballot/Electronic Voting: Allows shareholders to vote without being physically present at the meeting.

5. Importance of Voting Rights:

Corporate Governance: Voting Rights enable shareholders to influence the company's management and governance by voting on the election of directors, approval of financial statements, mergers, acquisitions, and other significant matters.

Protection of Interests: Voting Rights empower shareholders to protect their interests and ensure that the company’s actions align with their expectations and best interests.

6. Regulatory Framework:

The Companies Act, 2013, along with the company’s articles of association, outlines the framework and procedures for exercising Voting Rights.

Examples of Resolutions Requiring Voting:

1. Ordinary Resolutions: 

Require a simple majority of votes cast by members present and voting (e.g., appointment of directors, approval of financial statements).   

2. Special Resolutions: 

Require a higher threshold, typically a three-fourths majority of votes cast by members present and voting (e.g., amendments to the articles of association, approval of significant mergers or acquisitions).