CHAPTER 6

PROXIES AND VOTING

WHAT IS PROXY?
• A proxy is an agent legally authorized to act on
behalf of another party or a format that allows
an investor to vote without being physically
present at the meeting. Shareholders not
attending a company's annual general meeting
(AGM) may vote their shares by proxy by
allowing someone else to cast votes on their
behalf, or they may vote by mail. In the world
of meetings proxy means a substitute sent by a
members to attend a meeting on his behalf. The
idea comes from the Companies Act. Sec. 176
of the Act provides that a member of a company
is entitled to send another person to attend a
meeting and to vote on his behalf.
PROXY

• The term “PROXY” has two meanings.

– The agents appointed by the members of the company to attend and vote at the meeting.
– It is the document by which such an agent is appointed.
• A Proxy can only vote by a poll.
• A member of private company cannot appoint more than one proxy to attend on the same
occasion/ meeting.
• A member of the company not having a share capital cannot appoint a proxy.
HOW DOES A PROXY WORK?
• While proxy voting is often an option, management
encourages shareholders to vote in person. If the shareholder
cannot attend, voting by proxy is another option. For a person
to act as a proxy for an individual, formal documentation
may be required that outlines the extent to which the proxy
can speak on the individual's behalf. A formal document may
be required to provide the permissions to complete certain
actions. The shareholder signs a power of attorney and
extends official authorization to the designated individual to
vote on behalf of the stated shareholder at the annual
meeting.
PROXY STATEMENTS
• Before the annual shareholder meeting, all shareholders receive a
packet of information containing the Proxy Statement. The proxy
documents provide shareholders with the information necessary to
make informed votes on issues important to the company's
performance. A Proxy statement offers shareholders and
prospective investors insight into a company's governance and
management operations. The proxy discloses important information
on agenda items for the annual meeting, lists the qualifications of
management and board members, serves as a ballot for elections to
the board of directors, lists the largest shareholders of a company's
stock, and provides detailed information about executive
compensation. There are also proposals from management and
shareholders.
BENEFITS OF PROXY
• Management ensures that ownership interests are fully represented
by often encouraging shareholders that are unable to attend annual
meetings to vote by proxy. Information presented during annual
meetings often affects the future direction of the company, which can
directly impact the value of a shareholder’s stake in the company.

• Proxy Card
• The Proxy Card showing the specific board members that were to be
voted on as well as some of the proposals by management. If the
shareholder wanted to vote, the proxy card could be mailed to the
corporation.
ACCORDING TO SEC. 176 OF THE COMPANIES
ACT:
(1) Any member entitled to attend a general meeting and to vote may send a proxy to attend the
meeting and to vote on his behalf.
–  In case of a company not having share capital, a proxy can be sent provided it is mentioned in the Articles
of the company.
– A member of a private company cannot send more than one proxy unless otherwise provided in the
Articles.
– A proxy can vote at the meeting only by poll unless otherwise provided in the Articles but he cannot speak.
– In the notice for the meeting it shall be clearly mentioned that a proxy can be sent and a proxy form is
attached to the notice.
– The proxy sent by a member need not be a member and may be an outsider.
2. A proxy is not counted when quorum is counted. But at an annual general meeting held
at the order of the Central Government (Sec. 167) or at a meeting of members held at the
order of the Company Law Board (Sec. 186), only one member on whose complaint
meeting has been so ordered, may be present by proxy and that proxy will make the
quorum.
3. It has to be noted that no proxy can be sent by a director to attend a Board meeting on
his behalf.
4. Generally associations other than companies do not allow proxy.
5. It is a duty of the secretary to collect the proxy forms and prepare a Proxy List.
6. In case of Government Companies, the shares are often held in the name of the President
of India or a Governor, who invariably sends a representative (Sec. 187 A). Same is true
when one body corporate (not necessarily a ‘company’) holds shares in another body
corporate then the shareholder body corporate send a representative to the meetings.
VOTING
• Many meetings use voting to evaluate group consensus
and confirm decisions. Some votes are formal and
binding, such as the votes on a motion during a board
meeting or other meeting using parliamentary
procedures. Other votes simply make it easier to see
the preferences and priorities of the group, such as
those cast during Dot-Voting or straw polls.
THE VOTING MAY BE:

• Voting is a method for a group, such as a meeting or an electorate, in order to make a

collective decision or express an opinion usually following discussions, debates or election
campaigns. 
• In smaller organizations, voting can occur in different ways. Formally via ballot to elect others
for example within a workplace, to elect members of political associations or to choose roles
for others. Informally voting could occur as a spoken agreement or as a verbal gesture like a
raised hand or electronically.
METHODS OF VOTING
1) Voting by Show of Hands (Section 107)

– At any general meeting, a resolution put to the vote of the

meeting shall in the first instance be decided on a show of
hands.
– A declaration by the Chairman of the meeting of the passing
of a resolution or otherwise, by show of hands shall be
conclusive evidence of the fact of passing of such resolution
or otherwise, unless a poll is demanded before or
immediately on the declaration by Chairman.
METHODS OF VOTING
2. Voting through Electronic Means (Section 108)

– Every listed company or a company having five hundred or

more shareholders may provide to its members facility to
exercise their right to vote at general meetings by electronic
means.
– A member may exercise his/her right to vote at any general
meeting by electronic means and company may pass any
resolution by electronic voting system.
– It may be noted that ‘voting by electronic means’ or ‘electronic
voting system’ means secured system based process of display
of electronic ballots, recording of votes of the members and the
number of votes polled in favor or against.
METHODS OF VOTING
3. Demand for Poll (Section 109)
– Before or on the declaration of the result of the voting on any
resolution on show of hands, a poll may be ordered to be taken by
the Chairman of the meeting on his own motion and shall be
ordered to be taken by him on a demand made in that behalf.
– The demand for a poll mat be withdrawn at any time by the
persons who made the demand. The result of the poll shall be
deemed to be the decision of the meeting on the resolution on
which the poll was taken.
METHODS OF VOTING
4. Postal Ballot (Section 110)
– As per section 2 (65) ‘postal ballot’ means voting by
post or through any electronic mode.
– The Act provides that a company shall in respect of
such items of business as the Central Government by
notification declare shall be transacted only by postal
ballot.
TUTORIAL

1. Who is Proxy? And how does Proxy works?

2. List down ALL of the point in Sec. 176 of the Companies Act.
3. What is Voting?
4. List and explain ALL of the methods of voting in company.