Companies Act Section 47 — Voting rights
CHAPTER IV SHARE CAPITAL AND DEBENTURES
Commercial / Corporate
Summary
Sub-section (1) covers members of a company limited by shares who hold equity share capital. Such a member has the right to vote on every resolution placed before the company. When a vote is taken by poll, the member's voting right is proportional to their share in the company's paid-up equity share capital.
Under clause (a) of sub-section (1), the right to vote applies to every resolution placed before the company, without any restriction on the type of resolution.
Under clause (b) of sub-section (1), when a vote is taken on a poll, the member's voting power is calculated in proportion to their share in the paid-up equity share capital of the company.
Sub-section (2) deals with members of a company limited by shares who hold preference share capital. In respect of such capital, a member has the right to vote only on resolutions that directly affect the rights attached to their preference shares, and also on any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital. When a vote is taken on a poll, the voting right is in proportion to the member's share in the paid-up preference share capital of the company.
The first proviso to sub-section (2) states that the proportion of voting rights of equity shareholders to the voting rights of preference shareholders must be the same as the proportion of paid-up capital in respect of equity shares to paid-up capital in respect of preference shares.
The second proviso to sub-section (2) states that if the dividend on a class of preference shares has not been paid for a period of two years or more, then that class of preference shareholders gets the right to vote on all resolutions placed before the company.
Official Text
(1) Subject to the 2[provisions of section 43, sub-section (2) of section 50 and sub-section (1) of section 188],—
(a) every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company; and
(b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital of the company.
(2) Every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares and, any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital and his voting right on a poll shall be in proportion to his share in the paid-up preference share capital of the company:
Provided that the proportion of the voting rights of equity shareholders to the voting rights of the preference shareholders shall be in the same proportion as the paid-up capital in respect of the equity shares bears to the paid-up capital in respect of the preference shares:
Provided further that where the dividend in respect of a class of preference shares has not been paid for a period of two years or more, such class of preference shareholders shall have a right to vote on all the resolutions placed before the company.