Page 322 - DMGT407Corporate and Business Laws

Unit 13: Meeting of Directors and Shareholders

to do likewise. The Chairman then declares the result of the voting indicating whether the Notes
proposal has been carried or lost.

5. By ballot. Under this method, every person present records his vote on a ballot paper and
deposits it in the ballot box provided for that purpose. The counting of ballots cast for and
against the motion reveals the results. This method ensures secrecy in casting votes.

6. By poll. In company meetings, voting by poll is according to the number of shares held by
a member. The voting by show of hands may not always reflect the opinion of members
upon a value basis. Also, there may be a number of proxies who can vote only by poll and
not by show of hands.

Rules in respect of voting. As per the provisions of the Act, rules regarding voting may be noted
as follows:
(i) Every holder of equity shares shall have a right to vote [s.87(1)].

(ii) Right of an equity shareholder to vote cannot be prohibited on the ground that he has not
held his shares for any specified period before the meeting or on any other ground (s.182).
In Ananthalakshmi v. H. I. & F. Trust, AIR 1951 Mad. 927, a provision in the articles of a
company that only those shareholders would be entitled to vote whose names have been
there on the register for two months before the date of the meeting was held to be in
contravention of the Act.
The only ground on which the right to vote may be excluded is non-payment of calls by a
member or other sums due against a member or where the company has exercised the
right of lien on his shares (s.181).
(iii) A preference shareholder shall have the right to vote only on resolutions which directly
affect the rights attached to his preference shares [s.87(2)].
Where the directors proposed to increase the shares of the company by issue of further
equity shares, by capitalizing an amount standing to the credit of the company’s reserve
account and applying the same in paying-up the new equity shares and distributing the
same as fully paid among the equity shareholders, the proposed resolution was held to
affect the rights of the preference shareholders and could, therefore, be only carried out
with their sanction [Re John Smith’s Tadcaster Brewery Co. Ltd. (1952) 2 All ER 751].
However, rights of preference shareholders are not ‘affected’ by the issue of additional
ordinary shares, though their voting rights are thereby weakened [White v. Bristol
Aeroplane Co. Ltd. (1953) I All ER 40 (CA)].
(iv) Voting rights of a member are not affected by the fact that his shares have been attached or
pledged or a receiver has been appointed.
(v) Voting to be by show of hands in the first instance. Section 177 provides that at any general
meeting, a resolution put to vote shall, unless a poll is demanded under s.179, be decided
on a show of hands. A declaration by the chairman that on a show of hands, a resolution
has or has not been carried either unanimously or by a particular majority and an entry to
that effect in the Minutes Book of the company, shall be conclusive evidence of the fact. No
proof of the number or proportion of the votes cast in favour of or against such resolution
shall be required (s.178).
Demand for poll. Section 179 provides that before or on 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 person or persons specified below:

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