Proxies – Section 105 of the Companies Act, 2013

Section 105 of the Companies Act, 2013 corresponds to Section 176 of the Companies Act, 1956. The provisions of section 105 is substantially the same as the provisions of section 176 except the following:

1) A person can be appointed proxy for upto 50 members and holding not more than 10% of the aggregate share capital carrying voting rights. In the 1956 Act, there is no specific limit laid down as above, but there (i.e. in the 1956 Act), the members of a private company is allowed to appoint only one proxy on the same occasion. 

Rule 7.17(1) specifies that a member of a section 8 company (i.e .charitable purposes company) is allowed to appoint only another member as a proxy and therefore outside person cannot be appointed as a proxy in such company.

The third and fourth proviso, i.e. the above two matters is not yet notified.

Again like in the 1956 proxies are not allowed to speak at the meeting and not allowed to vote except on a poll. I thought a modern company law would have allowed the proxies to speak as well as vote, otherwise what is the purpose of proxies except for the purpose of counting the numbers, because even for quorum, the members personally present are taken into account. In a modern era of corporate governance and increasing shareholder activism where there are specialised proxy firms which specialise in collection of proxies and whose members are in a better position to speak at the meetings regarding the affairs of the company rather than ordinary shareholders, it would have been prudent to have allowed the proxies to also speak at the general meetings. It would have made for better participation at the general meetings. Otherwise annual general meetings as we know of are pretty mundane affairs and the people who normally speak at these meetings are those who frequent every possible annual general meetings in order to collect their gift coupons and generally to make trouble for the company management. In such a situation, it would have made better corporate governance sense to have allowed proxies especially institutionalised proxies to speak at the general meetings.

Regarding the matter of not voting except on a poll, seriously who really counts the votes by show of hands. A resolution is moved, then seconded by some member and motion proposed for approval of show of hands and generally many members raise their hands – nobody really counts how many hands were raised for and against. So even if the proxies do raise their hands in voting by show of hands, nobody would know the difference. Therefore, this provision in infructuous.

Section 105

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 that the Central Government may prescribe a class or classes of companies whose members shall not be entitled to appoint another person as a proxy:
Provided also that a person appointed as proxy shall act on behalf of such member or number of members not exceeding fifty and such number of shares as may be prescribed.

(2) In every notice calling a meeting of a company which has a share capital, or the articles of which provide for voting by proxy at the meeting, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy, or, where that is allowed, one or more proxies, to attend and vote instead of himself, and that a proxy need not be a member.
(3) If default is made in complying with sub-section (2), every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees.

 (4) Any provision contained in the articles of a company which specifies or requires a longer period than forty-eight hours before a meeting of the company, for depositing with the company or any other person any instrument appointing a proxy or any other document necessary to show the validity or otherwise relating to the appointment of a proxy in order that the appointment may be effective at such meeting, shall have effect as if a period of forty-eight hours had been specified in or required by such provision for such deposit.

(5) If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the company’s expense to any member entitled to have a notice of the meeting sent to him and to vote thereat by proxy, every officer of the company who knowingly issues the invitations as aforesaid or wilfully authorises or permits their issue shall be punishable with fine which may extend to one lakh rupees:
Provided that an officer shall not be punishable under this sub-section by reason only of the issue to a member at his request in writing of a form of appointment naming the proxy, or of a list of persons willing to act as proxies, if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy.

(6) The instrument appointing a proxy shall—
(a) be in writing; and
(b) be signed by the appointer or his attorney duly authorised in writing or, if the appointer is a body corporate, be under its seal or be signed by an officer or an attorney duly authorised by it.
(7) An instrument appointing a proxy, if in the form as may be prescribed, shall not be questioned on the ground that it fails to comply with any special requirements specified for such instrument by the articles of a company.
(8) Every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, shall be entitled during the period beginning twenty-four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged, at any time during the business hours of the company,
provided not less than three days’ notice in writing of the intention so to inspect is given to the company.

Rule 7.17

7.17. (1) For the purpose of third proviso to the sub-section (1) of section 105, 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.
(2) No person shall act as proxy on behalf of members not exceeding fifty and holding in the aggregate not more than ten percent of the total share capital of the company carrying voting rights.
(3) For the purposes of sub-section (6) of section 105, the appointment of proxy shall be in the Form No. 7.11.