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Powers of shareholders
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Powers of shareholders


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  • 1. Powers of the Shareholders:Shareholders transact business at the general body meeting by passing resolutions. The resolutions passed by the shareholder are of two types, namely, Ordinary resolution:- A resolution shall be an ordinary resolution when the votes given in favour of the resolution by the members exceed the votes cast against the resolution. Thus, a majority of more than fifty percent is required to get the ordinary resolutions passed. Thus a group of shareholders holding fifty one percent or more shares in a company may get a motion which is put to vote by poll, passed by ordinary resolution. Special resolution:- A resolution, to be special resolution, the following conditions should be fulfilled, namely, -the intention to propose the resolution as a special resolution is to be duly specified in the notice calling the meeting. -the votes given in favour of the resolution by the members are NOT LESS THAN THREE TIMES THE VOTES , if any, given against the resolution. Thus, a group of shareholders holding at least three fourths of the total number of shares in a company can, acting together, can ensure that the special resolutions before a general body meeting are decided in their favour. A resolution put before a general meeting shall, in the first instance, be decided (unless a poll is demanded) by a show of hands. In a voting by show of hands, it is ONE PERSON-ONE VOTE. In a voting by poll, ONE SHARE-ONE VOTE. Some of the important transactions which can be passed by an ordinary resolution are as follows :-To rectify the name of the company ( section 22) -To change the terms of contracts in prospectus/statement in lieu of prospectus ( section 61) -To issue shares at a discount. (section 79) -To alter share capital of the company (section 94) -To cancel or redeem debentures (section 121) -To declare dividend (section 205) -To approve annual accounts and balance sheet (section 210) -To appoint directors (section 255) -To appoint directors by rotation (section 256) -To appoint a director who is not a retiring director (section 257) -To increase or decrease the number of directors (section 258) -To remove a director and appoint another director in his place (section 284) -To give consent for the exercise of power by the Board (section 293) -To approve appointment of sole selling agents (section 294) -To approve the appointment and remuneration of director (section 269 and 309) -To appoint an alternate director in the absence of any power given by the articles of association (section 313) ----2
  • 2. Some of the important matters requiring special resolution are as follows:-To alter the provisions of the Memorandum of Association (M/A) so as to change the registered office of the company from one state to another(confirmation of Company Law Board is also necessary) or to change the objects clause of the company (section 17) -To change the name of the company with the approval of the central govt.(section 21) -To alter the Articles of Association (A/A) (section 31) -To authorize buy back of securities of the company(section 77A) -To authorize issue of sweat equity shares( section 79A) -To issue further shares to persons other than existing members [section 81(1A)] -To issue debentures having conversion option. [section 81(3)] -To decide that any part of the uncalled share capital shall not be called up except for the purpose of winding up (section 99) -To reduce the share capital subject to the confirmation of the court(section 100) -To vary the rights of different classes of shareholders. This can be done either by obtaining the consent in writing of the holders of 3/4ths of issued capital of that class or by special resolution of shareholders of that class.(section 106) -To remove the registered office of the company outside the local limits of the city, town or village in which it is situated.(section 146) -To commence any new business [section 149(2A)] -To keep registers and returns in a place other than a place within the city, town or village in which the registered office of the company is situated.(section 163) -To pay interest on share capital under certain circumstances (section 208) -To determine the remuneration payable to any director including managing director, if articles so require(section 309) -To authorize a director, a relative or partner of such director, director of a private company of which he is a director or manager to hold office or place of profit in the company(section 314) -To alter the M/A for rendering the liability of its directors or manager unlimited (section 323) -To make loan to or give guarantee or provide security, make investment in shares of other bodies corporate beyond a certain limit (section 372A) xxxxxxx@xxxxxxx