Depending on the type and category of the shares issued by the company and subscribed by the shareholder, the voting rights can differ. Section 47 (of the Act deals with voting rights bestowed on each shareholder in a company's equity and preference shareholder. Voting rights can be based on one person one vote' or based on the paid-up value of shares viz. Each member s only one vote on a show of hands, while a member's voting rights are proportionate to his shareholding in the paid-up share in the company's capital. It is important to remember that the shareholder's right to exercise that voting right is not automatic. A person owning shares with the right to vote would be entitled to exercise the right to vote only if his name appears in the membership registry of the corporation. This was held in Sharad Doshi v. Adjudicating Officer’ by the Securities Appellate Tribunal in 1998.
Therefore, the possession of a share certificate alone is not sufficient to be entitled to the exercise of the voting rights attached to the share, but the name of the holder must be registered in the registry of the members of the corporation. Regardless of the extent of the holding of a shareholder's equity/preference, a corporation cannot by its articles of incorporation, refuse, in whole or in part, the voting rights entitled to those shareholders. Also, a corporation does not place any threshold on any shareholder at a general meeting to exercise voting rights, such as allowing only certain voting rights to be exercised at a general meeting.
While an equity shareholder is entitled to vote on every proposal made before the company, a preferential shareholder is entitled to vote only on certain resolutions that specifically impact the rights attached to its preferential shares, i.e. any decision to liquidate the company or to repay or reduce its equity or preferential share resources. However, an exception has been made for preference shareholders under section 47 of the 2013 Act, which is to the degree that preference shareholders have not been paid a dividend by the company for 2 years or more, such preference shareholders will like equity shareholders, gain the right to vote on each resolution put before the company.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.
