Voting, Resolutions and Postal Ballot under the Companies Act

Understand Voting, Resolutions and Postal Ballot

Key rules to remember

Ordinary resolution (s. 114(1))

Votes in favour > Votes against

Notice duly given. Casting vote of the Chairman, if any, is included in the count. Only votes of entitled members who vote are counted.

Special resolution (s. 114(2))

Votes in favour ≥ 3 × Votes against

Also needs the notice to specify the intention to propose it as a special resolution, and the notice to be duly given.

Default mode of voting (s. 107(1))

Show of hands, unless poll demanded under s. 109 or voting is electronic

The Chairman's declaration and the minute entry are conclusive evidence of the result on a show of hands (s. 107(2)).

Demand for poll, company with share capital (s. 109(1)(a))

Voting power ≥ 1/10 of total, OR shares with paid-up sum ≥ ₹5,00,000 (or higher prescribed amount)

Demand is by members present in person or by proxy, where allowed. The Chairman may also order a poll on his own motion. Timing is before or on the declaration of the show-of-hands result.

Demand for poll, company without share capital (s. 109(1)(b))

Voting power ≥ 1/10 of total

Members present in person or by proxy, where allowed.

Timing of poll (s. 109(3), (4))

Adjournment or Chairman: forthwith. Other questions: within 48 hours of demand

The Chairman fixes the time within the 48 hours. A demand may be withdrawn at any time by those who made it (s. 109(2)).

Voting rights on a poll (s. 47)

Equity vote ∝ share in paid-up equity capital; preference vote ∝ share in paid-up preference capital

Preference holders vote only on matters directly affecting their rights, winding up, or repayment or reduction of capital. If preference dividend is unpaid for two years or more, that class votes on all resolutions.

Special notice (s. 115)

Members holding ≥ 1% of total voting power, or shares with aggregate paid-up sum not exceeding the prescribed amount (up to ₹5,00,000)

Applies only where the Act or the articles require special notice of the resolution.

Postal ballot (s. 110(2))

Requisite majority by postal ballot = deemed passed at a general meeting

Not for ordinary business, or business on which directors or auditors have a right to be heard.

How to solve Voting, Resolutions and Postal Ballot questions

1. 1Identify the business and the type of resolution it needs: ordinary, special, or one needing special notice. State this first.
2. 2Check the notice. For a special resolution, did the notice specify the intention to propose it as special? If not, it cannot be a special resolution.
3. 3Pick out the votes that count. Only entitled members who actually vote are counted. Ignore abstentions and absent members.
4. 4Apply the test: for ordinary, in favour > against. For special, in favour ≥ 3 × against. Show the arithmetic.
5. 5Decide the mode of voting. Default is show of hands (s. 107), with a poll on a valid demand (s. 109), or e-voting or postal ballot where applicable (ss. 108, 110).
6. 6If a poll is involved, check who demanded it, the one-tenth or paid-up threshold, and the timing (forthwith or within 48 hours).
7. 7Write the conclusion in one clear sentence: resolution passed or not passed, and why. Cite the section.

Quickest way: Three-line check for resolution questions

Common mistakes in Voting, Resolutions and Postal Ballot

• Treating a special resolution as needing three-fourths of all members present.

  Students recall the 75% idea from older rules or from other laws.

  Fix: Use the section 114(2) wording: votes in favour not less than three times the votes against, counting only those who vote.

• Counting abstentions or absent members as votes against.

  Students take 'majority' to mean majority of members entitled to vote.

  Fix: The test uses votes actually cast by entitled members. Abstentions are left out of both sides.

• Forgetting that the notice must specify the intention to propose a special resolution.

  Students focus only on the vote ratio.

  Fix: Always check the three conditions in section 114(2): specified intention, due notice, and the three-times votes test.

• Saying a poll can be demanded only on the threshold of one-tenth of voting power.

  Students remember one limb and forget the paid-up alternative.

  Fix: For a company with share capital, the demand qualifies on one-tenth of total voting power or on shares with paid-up sum of at least ₹5,00,000 (or a higher prescribed amount). For a company without share capital, only the one-tenth test applies.

• Stating that every poll must be held within 48 hours.

  Students remember the 48-hour limit but not the exception.

  Fix: A poll on adjournment or on appointment of the Chairman is taken forthwith (s. 109(3)). Other polls are taken within 48 hours of the demand (s. 109(4)).

• Allowing postal ballot for any item, including ordinary business.

  Students treat postal ballot as a free alternative to a meeting.

  Fix: Under section 110(1)(b), a company may use it except for ordinary business and business where directors or auditors have a right to be heard. Items notified by the Central Government must go by postal ballot, with the e-voting route allowed by the proviso.

Worked examples