This document discusses proxy voting in the context of corporate governance in India. It begins by acknowledging the supervisor and sources used. It then outlines the research methodology, which takes a descriptive and analytical approach relying on secondary sources. The document examines the existing legal regime for proxy voting in India, how it allows shareholders to vote via proxy even if not present. It explores who can vote by proxy, including shareholders, members, and beneficial owners. The document also discusses some cases related to receivers and bankrupts voting by proxy. Overall, the document analyzes India's laws around proxy voting in corporate meetings and shareholder participation.
Appointment of proxies - Changes in the Companies Act, 2013 - Dr S. Chandrase...D Murali ☆
Appointment of proxies - Changes in the Companies Act, 2013 - Dr S. Chandrasekaran - Article published in Business Advisor, dated - December 25, 2014 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
The document summarizes provisions related to meetings under the Companies Act, including:
- Types of meetings like statutory meetings, annual general meetings, extraordinary general meetings, and meetings of creditors/debenture holders.
- Requirements for statutory meetings like approving a statutory report within 3-6 months of commencement of business.
- Requirements for annual general meetings like holding the first AGM within 18 months of incorporation and subsequent AGMs within 4 months of financial year end.
- Provisions for extraordinary general meetings, including who can call them and notice requirements.
- Other meeting provisions around quorum, voting, proxies, and maintenance of minutes.
The document provides an overview of negotiable instruments under Indian law. It defines key terms like negotiable instrument, promissory note, bill of exchange, cheque, endorsement, holder, and holder in due course. It describes the essential characteristics and requirements for these instruments and roles. It also discusses concepts like negotiation, dishonour, noting, and protest. The document is an educational reference on the basic concepts, definitions, and principles regarding negotiable instruments under the Negotiable Instruments Act of 1881 in India.
It provides a comprehensive analysis of the SEBI Invetsor Protection Guideline 2000 from the point of view of the companies. It covers offer documents, exceptions, price discovery, green shoe option, e-IPO, etc.
Negotiable Instruments Act ,1881 - Legal Environment of Business Dona Sebastian
This document discusses negotiable instruments under Indian law. It defines negotiable instruments as documents that are freely transferable from one person to another. The three main types of negotiable instruments recognized under the Negotiable Instruments Act of 1881 are promissory notes, bills of exchange, and cheques. The document outlines the key parties, characteristics, and essential elements of each type of instrument. It also distinguishes between promissory notes and bills of exchange as well as bills of exchange and cheques.
This presentation explains about the legal position of directors.
Directors are the persons duly appointed by the company to direct and manage the affairs of the company.
Their legal position is sometimes described as agents, sometimes as managing partners, and sometimes as trustees.
(1) The document discusses various types of shares such as equity shares, preference shares, and their characteristics. It explains concepts like share capital, types of share capital, rights of shareholders, and types of preference shares.
(2) It also covers topics like allotment of shares, declaration of dividends, transfer of shares, transmission of shares, and increase of share capital. Methods to increase capital include further issue of shares, rights issues, and conversion of loans or debentures into equity.
(3) SEBI guidelines related to rights issues are also summarized, setting limits on fund raising and requiring measures like underwriting and minimum subscription.
Appointment of proxies - Changes in the Companies Act, 2013 - Dr S. Chandrase...D Murali ☆
Appointment of proxies - Changes in the Companies Act, 2013 - Dr S. Chandrasekaran - Article published in Business Advisor, dated - December 25, 2014 http://www.magzter.com/IN/Shrinikethan/Business-Advisor/Business/
The document summarizes provisions related to meetings under the Companies Act, including:
- Types of meetings like statutory meetings, annual general meetings, extraordinary general meetings, and meetings of creditors/debenture holders.
- Requirements for statutory meetings like approving a statutory report within 3-6 months of commencement of business.
- Requirements for annual general meetings like holding the first AGM within 18 months of incorporation and subsequent AGMs within 4 months of financial year end.
- Provisions for extraordinary general meetings, including who can call them and notice requirements.
- Other meeting provisions around quorum, voting, proxies, and maintenance of minutes.
The document provides an overview of negotiable instruments under Indian law. It defines key terms like negotiable instrument, promissory note, bill of exchange, cheque, endorsement, holder, and holder in due course. It describes the essential characteristics and requirements for these instruments and roles. It also discusses concepts like negotiation, dishonour, noting, and protest. The document is an educational reference on the basic concepts, definitions, and principles regarding negotiable instruments under the Negotiable Instruments Act of 1881 in India.
It provides a comprehensive analysis of the SEBI Invetsor Protection Guideline 2000 from the point of view of the companies. It covers offer documents, exceptions, price discovery, green shoe option, e-IPO, etc.
Negotiable Instruments Act ,1881 - Legal Environment of Business Dona Sebastian
This document discusses negotiable instruments under Indian law. It defines negotiable instruments as documents that are freely transferable from one person to another. The three main types of negotiable instruments recognized under the Negotiable Instruments Act of 1881 are promissory notes, bills of exchange, and cheques. The document outlines the key parties, characteristics, and essential elements of each type of instrument. It also distinguishes between promissory notes and bills of exchange as well as bills of exchange and cheques.
This presentation explains about the legal position of directors.
Directors are the persons duly appointed by the company to direct and manage the affairs of the company.
Their legal position is sometimes described as agents, sometimes as managing partners, and sometimes as trustees.
(1) The document discusses various types of shares such as equity shares, preference shares, and their characteristics. It explains concepts like share capital, types of share capital, rights of shareholders, and types of preference shares.
(2) It also covers topics like allotment of shares, declaration of dividends, transfer of shares, transmission of shares, and increase of share capital. Methods to increase capital include further issue of shares, rights issues, and conversion of loans or debentures into equity.
(3) SEBI guidelines related to rights issues are also summarized, setting limits on fund raising and requiring measures like underwriting and minimum subscription.
The document discusses share buybacks by company promoters. It provides three main reasons why promoters may offer to buy back shares: 1) to support falling share prices and boost investor confidence, 2) to increase their ownership stake and defend against potential takeover bids, and 3) if the share price is lower than the company's intrinsic value. The buyback indicates to investors that share prices could rise in the medium term as it shows the promoter's confidence in the company.
Presentation on Independent Director as per Companies Act 2013Vishal Dhona, ACS
Presentation is made for understanding what is independent director? what are its roles?
Also by means of this you can understand what are the various provisions applicable to independent director.
The document outlines the key stages in forming a company:
1. Promotion, where an individual called a promoter undertakes initial work to establish the company.
2. Incorporation, which occurs when the company registers with the Registrar of Companies by submitting important documents like the Memorandum and Articles of Association.
3. Capital subscription, where a public company can raise funds from public issue of shares and debentures through steps like SEBI approval and allotment.
4. Commencement of business, the final stage where the company receives a certificate from ROC allowing it to begin operations.
This document defines and discusses different types of companies under Indian law. It begins by defining a company as an association formed for business purposes that is separate from its owners. It then discusses key characteristics of companies like limited liability and perpetual succession.
It classifies companies based on incorporation, liability, number of members, and control. Private and public companies are discussed in detail based on their minimum member requirements, ability to invite public investment, and other rules. The document also covers conversion between private and public companies, holding/subsidiary relationships, government companies, and regulations for foreign companies operating in India. Special privileges of private companies are outlined.
The document discusses key aspects of Articles of Association (AOA), including that they contain the rules and regulations relating to a company's internal affairs, define the rights of management, and must not contradict the Memorandum of Association or Companies Act. It also provides details on what must be included in the AOA, the differences between the AOA and Memorandum of Association, requirements for prospectuses, and important considerations for investors reviewing prospectuses.
This document discusses the legal environment of business in India, specifically focusing on articles of association. It defines articles of association as the regulations or bye-laws of a company that carry out its objectives as defined in the memorandum of association and manage internal affairs. Certain companies, like private limited companies, companies limited by guarantee, and unlimited companies must have their own articles. The articles outline various aspects of company administration and management, including share capital, shareholder rights, meetings, borrowing powers, and alteration or winding up of the company. While companies have wide powers to alter articles, the articles must be consistent with and subordinate to the memorandum of association.
MEANING AND DEFINITION OF COMPANY, IT'S CHARACTERISTICS AND TYPES OF COMPANYKhushiGoyal20
This slide share is of subject company law . In this you will learn about meaning and definition of company , types / kinds of company (private , public , holding , subsidiary , limited liability and unlimited liability company etc.) , and its characteristics.
The document discusses the winding up process of a company. Winding up refers to the process of dissolving a company and liquidating its assets and debts. There are three main types of winding up: (1) compulsory winding up by court order, (2) voluntary winding up initiated by shareholders or creditors, and (3) winding up under court supervision where the court oversees the voluntary process. Key aspects of winding up include appointing a liquidator to dispose of assets and pay debts, calling meetings of shareholders and creditors, and ultimately dissolving the company.
The document defines and distinguishes between a holder and a holder in due course of a negotiable instrument under the Negotiable Instruments Act of 1881. [1] A holder is defined as any person entitled to possession of the instrument who has the right to receive payment. [2] A holder in due course must be a holder for valuable consideration, acquire the instrument before maturity, and acquire it in good faith without reason to suspect a defect in title. [3] Key differences between a holder and holder in due course include a holder not needing consideration but a holder in due course requiring valuable consideration, and a holder in due course acquiring protected rights not held by a regular holder.
This document discusses the definition and role of promoters in the formation of a company under Indian law. It provides definitions of promoters from various sources and outlines their fiduciary duties. The document also discusses the rights and liabilities of promoters, including any liability for misstatements in prospectuses or misfeasance. It notes that pre-incorporation contracts signed on behalf of a company are not binding on the company once formed, with the promoter taking personal liability instead.
KINDS OF DEBENTURES
CHARACTERISTICS OF DEBENTURES
Rules and Guidelines on Debentures
A debenture is the most important instrument and method of raising the loan capital by the company. A debenture is like a certificate of loan or a loan bond evidencing the fact that the company is liable to pay a specified amount with interest and although the money raised by the debentures becomes a part of the company’s capital structure, it does not become share capital.
The document discusses various aspects related to directors of a company under Indian law. It defines a director and outlines the minimum and maximum number of directors a company can have. It discusses the types of directors like independent, nominee, and alternate directors. It covers the appointment, tenure, duties, and removal of directors. The key ways directors can be appointed include by shareholders, board of directors, third parties, and the central government.
1) The document discusses the formation of a company, including the key steps of promotion, incorporation, and raising capital.
2) It outlines the roles and responsibilities of promoters in establishing a company. Promoters are responsible for initial planning, organization, and launching of the company.
3) The two most important legal documents for forming a company are the Memorandum of Association and Articles of Association. The Memorandum outlines the name, objectives, capital structure and liability of the company while the Articles provide internal regulations and procedures.
Companies Act - Companies Act, 1956 - Features - Types of Companies Act under the Act - Introduction of Companies act 2013 - Structural Comparison - Objectives of the Act - Meaning and Features of the Company - Monitoring and Regulatory Authorities - SFIO - NCLT - Challenges of Companies act 2013 - Provisions of Company Act 2013 -
This document discusses different ways to classify companies based on their incorporation, liability, number of members, control, and ownership. It outlines that companies can be chartered, statutory, or registered based on how they are incorporated. Based on liability, companies are either limited or unlimited. Private companies have fewer than 50 members, while public companies must have a minimum of 5 lakh paid-up capital. Holding companies control other subsidiary companies. Government companies are at least 51% owned by the central or state government, while foreign companies are incorporated outside of India.
The document discusses the doctrine of ultra vires, which refers to acts beyond the powers of a company as defined by its memorandum of association. It provides the historical case of Ashbury Railway Carriage & Iron Co. Ltd. vs. Riche, which established that a contract made for a purpose not allowed in the company's memorandum was void. The document also discusses an Indian case on an ultra vires donation and exceptions to the doctrine, noting that the ruling in Ashbury Railway Carriage still applies today in India without modification.
This case involves a challenge to the validity of certain provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. [1] The Supreme Court upheld the main provisions of the Act, including Section 13 which allows secured creditors to enforce security interests without court intervention. [2] However, the Court struck down the requirement under Section 17(2) that borrowers deposit 75% of the claimed amount before appealing to the Debt Recovery Tribunal, finding it to be arbitrary. [3] While the main structure of the Act was upheld, the judgment did not fully address the tensions between the Act and the Companies Act regarding the rights of secured vs. unsecured creditors when a company becomes insol
The document discusses various aspects related to shareholders and their ownership rights over company assets. It begins by defining shareholders and their roles and responsibilities as partial owners of the company who elect the board of directors. It then discusses different types of shareholders such as equity, preference, and debenture holders and their respective rights. The document also outlines key rights of shareholders like appointment of directors, taking legal action against directors, appointment of auditors, and voting rights. Finally, it examines the concept of ownership in the context of whether shareholders truly own the assets of the company.
This document discusses shareholders' rights and proxy voting. It provides information on shareholders' rights to vote on important company matters at annual general meetings, appoint directors and auditors, transfer ownership of shares, and inspect corporate books and records. It also defines proxy voting as exercising an investor's voting rights through a third party based on the investor's instructions, which generally takes place at shareholder meetings to approve or reject resolutions. Proxy voting rules can vary by country and company bylaws.
The document discusses share buybacks by company promoters. It provides three main reasons why promoters may offer to buy back shares: 1) to support falling share prices and boost investor confidence, 2) to increase their ownership stake and defend against potential takeover bids, and 3) if the share price is lower than the company's intrinsic value. The buyback indicates to investors that share prices could rise in the medium term as it shows the promoter's confidence in the company.
Presentation on Independent Director as per Companies Act 2013Vishal Dhona, ACS
Presentation is made for understanding what is independent director? what are its roles?
Also by means of this you can understand what are the various provisions applicable to independent director.
The document outlines the key stages in forming a company:
1. Promotion, where an individual called a promoter undertakes initial work to establish the company.
2. Incorporation, which occurs when the company registers with the Registrar of Companies by submitting important documents like the Memorandum and Articles of Association.
3. Capital subscription, where a public company can raise funds from public issue of shares and debentures through steps like SEBI approval and allotment.
4. Commencement of business, the final stage where the company receives a certificate from ROC allowing it to begin operations.
This document defines and discusses different types of companies under Indian law. It begins by defining a company as an association formed for business purposes that is separate from its owners. It then discusses key characteristics of companies like limited liability and perpetual succession.
It classifies companies based on incorporation, liability, number of members, and control. Private and public companies are discussed in detail based on their minimum member requirements, ability to invite public investment, and other rules. The document also covers conversion between private and public companies, holding/subsidiary relationships, government companies, and regulations for foreign companies operating in India. Special privileges of private companies are outlined.
The document discusses key aspects of Articles of Association (AOA), including that they contain the rules and regulations relating to a company's internal affairs, define the rights of management, and must not contradict the Memorandum of Association or Companies Act. It also provides details on what must be included in the AOA, the differences between the AOA and Memorandum of Association, requirements for prospectuses, and important considerations for investors reviewing prospectuses.
This document discusses the legal environment of business in India, specifically focusing on articles of association. It defines articles of association as the regulations or bye-laws of a company that carry out its objectives as defined in the memorandum of association and manage internal affairs. Certain companies, like private limited companies, companies limited by guarantee, and unlimited companies must have their own articles. The articles outline various aspects of company administration and management, including share capital, shareholder rights, meetings, borrowing powers, and alteration or winding up of the company. While companies have wide powers to alter articles, the articles must be consistent with and subordinate to the memorandum of association.
MEANING AND DEFINITION OF COMPANY, IT'S CHARACTERISTICS AND TYPES OF COMPANYKhushiGoyal20
This slide share is of subject company law . In this you will learn about meaning and definition of company , types / kinds of company (private , public , holding , subsidiary , limited liability and unlimited liability company etc.) , and its characteristics.
The document discusses the winding up process of a company. Winding up refers to the process of dissolving a company and liquidating its assets and debts. There are three main types of winding up: (1) compulsory winding up by court order, (2) voluntary winding up initiated by shareholders or creditors, and (3) winding up under court supervision where the court oversees the voluntary process. Key aspects of winding up include appointing a liquidator to dispose of assets and pay debts, calling meetings of shareholders and creditors, and ultimately dissolving the company.
The document defines and distinguishes between a holder and a holder in due course of a negotiable instrument under the Negotiable Instruments Act of 1881. [1] A holder is defined as any person entitled to possession of the instrument who has the right to receive payment. [2] A holder in due course must be a holder for valuable consideration, acquire the instrument before maturity, and acquire it in good faith without reason to suspect a defect in title. [3] Key differences between a holder and holder in due course include a holder not needing consideration but a holder in due course requiring valuable consideration, and a holder in due course acquiring protected rights not held by a regular holder.
This document discusses the definition and role of promoters in the formation of a company under Indian law. It provides definitions of promoters from various sources and outlines their fiduciary duties. The document also discusses the rights and liabilities of promoters, including any liability for misstatements in prospectuses or misfeasance. It notes that pre-incorporation contracts signed on behalf of a company are not binding on the company once formed, with the promoter taking personal liability instead.
KINDS OF DEBENTURES
CHARACTERISTICS OF DEBENTURES
Rules and Guidelines on Debentures
A debenture is the most important instrument and method of raising the loan capital by the company. A debenture is like a certificate of loan or a loan bond evidencing the fact that the company is liable to pay a specified amount with interest and although the money raised by the debentures becomes a part of the company’s capital structure, it does not become share capital.
The document discusses various aspects related to directors of a company under Indian law. It defines a director and outlines the minimum and maximum number of directors a company can have. It discusses the types of directors like independent, nominee, and alternate directors. It covers the appointment, tenure, duties, and removal of directors. The key ways directors can be appointed include by shareholders, board of directors, third parties, and the central government.
1) The document discusses the formation of a company, including the key steps of promotion, incorporation, and raising capital.
2) It outlines the roles and responsibilities of promoters in establishing a company. Promoters are responsible for initial planning, organization, and launching of the company.
3) The two most important legal documents for forming a company are the Memorandum of Association and Articles of Association. The Memorandum outlines the name, objectives, capital structure and liability of the company while the Articles provide internal regulations and procedures.
Companies Act - Companies Act, 1956 - Features - Types of Companies Act under the Act - Introduction of Companies act 2013 - Structural Comparison - Objectives of the Act - Meaning and Features of the Company - Monitoring and Regulatory Authorities - SFIO - NCLT - Challenges of Companies act 2013 - Provisions of Company Act 2013 -
This document discusses different ways to classify companies based on their incorporation, liability, number of members, control, and ownership. It outlines that companies can be chartered, statutory, or registered based on how they are incorporated. Based on liability, companies are either limited or unlimited. Private companies have fewer than 50 members, while public companies must have a minimum of 5 lakh paid-up capital. Holding companies control other subsidiary companies. Government companies are at least 51% owned by the central or state government, while foreign companies are incorporated outside of India.
The document discusses the doctrine of ultra vires, which refers to acts beyond the powers of a company as defined by its memorandum of association. It provides the historical case of Ashbury Railway Carriage & Iron Co. Ltd. vs. Riche, which established that a contract made for a purpose not allowed in the company's memorandum was void. The document also discusses an Indian case on an ultra vires donation and exceptions to the doctrine, noting that the ruling in Ashbury Railway Carriage still applies today in India without modification.
This case involves a challenge to the validity of certain provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. [1] The Supreme Court upheld the main provisions of the Act, including Section 13 which allows secured creditors to enforce security interests without court intervention. [2] However, the Court struck down the requirement under Section 17(2) that borrowers deposit 75% of the claimed amount before appealing to the Debt Recovery Tribunal, finding it to be arbitrary. [3] While the main structure of the Act was upheld, the judgment did not fully address the tensions between the Act and the Companies Act regarding the rights of secured vs. unsecured creditors when a company becomes insol
The document discusses various aspects related to shareholders and their ownership rights over company assets. It begins by defining shareholders and their roles and responsibilities as partial owners of the company who elect the board of directors. It then discusses different types of shareholders such as equity, preference, and debenture holders and their respective rights. The document also outlines key rights of shareholders like appointment of directors, taking legal action against directors, appointment of auditors, and voting rights. Finally, it examines the concept of ownership in the context of whether shareholders truly own the assets of the company.
This document discusses shareholders' rights and proxy voting. It provides information on shareholders' rights to vote on important company matters at annual general meetings, appoint directors and auditors, transfer ownership of shares, and inspect corporate books and records. It also defines proxy voting as exercising an investor's voting rights through a third party based on the investor's instructions, which generally takes place at shareholder meetings to approve or reject resolutions. Proxy voting rules can vary by country and company bylaws.
17 rights and_privileges_of_shareholdersMark Anders
The document discusses the rights and privileges of shareholders in a company. It outlines several key rights including the right to obtain company documents, transfer shares, attend general meetings, vote, receive dividends, inspect meeting minutes, and participate in director elections. It also discusses how strong investor protections are important for effective corporate governance and can help reduce agency costs by aligning manager and shareholder objectives.
The document defines a company and outlines its key characteristics such as registration, separate legal entity status, transferable shares, and limited liability. It also describes the different types of companies (public, private, limited by shares or guarantee, unlimited) and key company documents like the memorandum of association and articles of association. Finally, it covers various company concepts like members, meetings, share capital, and prospectus.
The Chartered Accountants contribution in protecting minority interest for th...CA. (Dr.) Rajkumar Adukia
In order to function the corporate affairs effectively and successfully and to increase the corporate governance, the interest of the minority need to be protected.
The Company law had given a protection to such minority shareholders by giving an option to go to Tribunal for relief and the tribunal on such application shall take to prevent such oppression and mismanagement.
This document defines accounting and discusses its purpose of providing quantitative financial information to support economic decision making. It outlines the accounting process, including the accounting cycle of recording, summarizing, and reporting transactions and financial information. Accounting information has various users, both internal and external to an organization. The document also defines and compares partnerships and corporations as business entities, including their formation, characteristics, advantages, disadvantages, and classifications.
The document defines a company and discusses its key characteristics such as separate legal entity, perpetual succession, transferable shares, and limited liability. It outlines the different types of companies including registered companies that are further divided into companies limited by shares, companies limited by guarantee, and unlimited companies. The document also discusses the memorandum of association, articles of association, membership of a company, rights and liabilities of members, and key concepts like depositories, register of members, foreign registers, annual returns, and prospectus.
Corporate meetings, whether of directors, shareholders, or members, can be regular or special. Meetings allow for a majority to make binding decisions for the corporation, provided proper notice was given and the meeting was properly called and conducted. Key elements of meetings include quorum requirements, voting procedures such as by proxy, and rules for joint ownership of shares. Stock certificates must be issued following certain requirements and signed by corporate officers, and transfers recorded by the corporation in order to be valid against the company. Consideration for shares cannot be less than par or issued value, and can include assets, labor, or previous debt as well as cash.
The document discusses the concept of shareholder ownership of company assets. It defines shareholders as owners of shares who have rights to dividends and voting, but are distinct from the company as a separate legal entity. While shareholders provide capital and own the company, they do not own its assets. Courts have ruled that shareholders only have a right to participate in profits, not ownership of assets, which are controlled by the company through its board of directors. The document concludes that the concept of shareholders owning company assets is a myth, as legal precedent has clearly established that assets are owned and managed by the company itself.
The document discusses the rights of shareholders in corporate governance. It outlines several key rights including:
- The right to attend annual general meetings and vote on major issues affecting the company.
- The right to transfer ownership of shares to other parties.
- The entitlement to receive dividends from company profits.
- The opportunity to inspect corporate books and records.
- The ability to sue directors for wrongful acts through shareholder class action or derivative lawsuits.
- Statutory rights provided under the Companies Act and OECD principles to protect shareholder interests and promote transparency and equitable treatment.
The document summarizes key aspects of The Companies Act 1956 in India, including its history and evolution. It discusses the meaning and contents of important legal documents like the Memorandum of Association (MoA), Articles of Association (AoA), and Prospectus. It outlines the roles and powers of different committees in revising the Act over time. It also describes important concepts like ultra vires, membership and rights of shareholders in a company.
ESOP Participants and Shareholder RightsSES Advisors
This chapter discusses the rights of ESOP participants as shareholders. It begins by explaining that ESOPs allow employees to feel like owners through stock ownership, but the legal ownership rests with trustees. ESOP participant rights are governed by ERISA, while shareholder rights come from state corporate law. It then summarizes some typical shareholder rights like voting, financial disclosures, dissenting from major decisions. For ESOPs, the trustee has authority over unallocated shares but must allow participants to direct voting of allocated shares, if decisions are made freely and without pressure. The trustee still has responsibility to ensure directions follow fiduciary duties.
Authored by: James R. Copland, David F. Larcker, and Brian Tayan Stanford Closer Look Series, May 30, 2018
Proxy advisory firms have significant influence over the voting decisions of institutional investors and the governance choices of publicly traded companies. However, it is not clear that the recommendations of these firms are correct and generally lead to better outcomes for companies and their shareholders. This Closer Look provides a comprehensive review of the proxy advisory industry and the influence of these firms on voting behavior, corporate choices, and outcomes, and it outlines potential reforms for the industry.
We ask:
• How accurate are the voting recommendations of proxy advisory firms?
• How influential are they over voting practices and corporate choices?
• Should steps be taken to reduce their influence or improve the reliability of their recommendations?
• Would greater transparency, back-testing, and regulation improve the market for their services?
A joint stock company is a voluntary association of individuals having a capital divided into transferable shares. It is an artificial legal entity separate from its members, with perpetual existence. A company's members have limited liability and can transfer their shares freely. It takes a large number of members and capital to operate on a large scale and undertake complex operations, which allows for professional management, efficiency, and social benefits like employment and development. However, companies also face limitations like difficulty forming, potential for control by groups, speculation, and delays in decision making.
A joint stock company has several key characteristics:
1. It is an artificial legal entity that exists separately from its shareholders and has rights like a natural person such as the ability to sue or be sued.
2. It has a perpetual existence since its existence is not affected by changes in ownership as shareholders can freely transfer their shares.
3. Shareholders have limited liability, meaning they are not responsible for company debts beyond the value of their share holdings.
The document then discusses several merits and demerits of joint stock companies. Key merits include the ability to raise huge capital from many shareholders, perpetual existence regardless of ownership changes, limited liability attracting investors, and democratic management. Key demerits include complex
This document discusses various types of partnerships under Indian law, including general partnerships, limited partnerships, partnership at will, and partnership for a particular undertaking. It explains the key characteristics of each type, such as unlimited liability for general partners versus limited liability for limited partners. The document also covers topics like duties of partners, rights of minor partners, and rights and obligations of partners generally as laid out in partnership agreements or statutes.
The Company Act of India : Articles and MemorandumsAkash Jauhari
The document provides an overview of the Memorandum of Association and Articles of Association under the Company Act of 1956 in India. It defines key clauses that must be included in the Memorandum of Association, such as the name, registered office, capital, liability, and association clauses. It also describes how the Memorandum can be altered. The document then explains the essential constituents of the Articles of Association and provisions that must be included. It concludes by describing the differences between the Memorandum and Articles of Association and the effects they have on members and the company.
Shareholder disputes: Practical tips to prepare shareholder agreements and co...LE & TRAN | Trial Lawyers
When setting up a business entity, it is critical that the process is performed correctly to avoid future issues. This week, we would like to share with you our experience in drafting shareholder agreements and company charters. These instruments are essential for business investors when setting up a joint venture or in seeking protection for their investment in the period following a M&A project. This Insight will provide some practical tips for ensuring the validity of these instruments, minimizing the possibility of shareholder disputes, and ensuring that your business operations remain uninterrupted should a shareholder dispute arise.
This document summarizes the key rights of shareholders and members in Malaysian corporate law. It discusses the differences between shareholders and members, the importance of registration in the register of members, and the rights and liabilities that come with shareholder and member status. It also outlines various classes of shares like preference shares and their associated rights, as well as shareholders' pre-emptive rights and how share dilution can occur. The document concludes by discussing how class rights can be varied and the process for objecting to such variations.
The document discusses Look-Out Circulars (LOCs) in India, which are notices issued by law enforcement agencies to monitor individuals wanted in criminal cases who may try to leave the country. LOCs can restrict travel or lead to arrest. While not defined in law, they are commonly used to prevent individuals from absconding. Different types of LOCs have varying levels of restriction, from informing authorities of travel to arrest. Guidelines state that LOCs must be approved by senior officials and include identifying details. They are valid for one year unless extended. The Supreme Court has held that anticipatory bail can still be granted even if an LOC has been issued against an individual.
After dismissal of review petition, final challenge to order or judgment of Supreme Court. Concept evolved by Supreme court to have statutorily recognized the right to approach supreme court in curative jurisdiction
Discussion of Jurisdiction of Article 136 of Constitution of India
Why, where and when to approach Supreme Court
Right of litigant after judgment passed by High Court
Central banks have two main methods for controlling credit in an economy: quantitative and qualitative. Quantitative methods like adjusting the bank rate, conducting open market operations, and setting reserve requirements aim to broadly restrict or encourage credit across all sectors. Qualitative or selective controls target specific uses of credit and can include imposing margin requirements, regulating consumer loans, issuing directives, and rationing credit for certain purposes. Both approaches influence monetary conditions but qualitative controls allow distinguishing essential vs non-essential credit uses.
The document discusses the evolution and development of the Indian banking sector. Some key points:
- Banking concepts existed in India prior to British rule through money lending practices mentioned in ancient texts. The modern concept of banking was introduced by the British in the 18th century.
- Several private banks were established between the 18th-early 20th century like the Bank of Hindustan, Bank of Calcutta. Limited liability for banks was introduced in 1860.
- Between 1906-1913, several Swadeshi movement banks were started in response to the British. The period was followed by a crash in 1913-1917.
- In 1920, the Imperial Bank of India was formed through the merger of
1) The document discusses various principles of lending that banks follow such as safety, liquidity, profitability, security, purpose of loan, social responsibility, and risk diversification.
2) It also describes different types of loans and advances provided by banks including cash credits, overdrafts, bill discounting, letters of credit, and term loans.
3) The evaluation of borrowers, types of securities, and RBI's role in selective credit control are also summarized.
This document is a project submitted by Ronak Karanpuria to Prof. N.L. Mitra at the National Law School of India University in Bangalore for the subject of Investment & Securities Law during the 2013-14 trimester. It examines India's foreign direct investment policy after 2002. The project includes an acknowledgment, index, introduction discussing the opening of FDI in India in 1991 to boost the economy, and sections on FDI policy and regulation, the changing dynamics of foreign investment including major investing countries and sectors, and issues with FDI in India.
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Proxy voting
1. 1
NATIONAL LAW SCHOOL OF INDIA UNIVERSITY
BANGALORE
PROJECT ON
“PROXY VOTING”
SUBJECT: CORPORATE GOVERNANCE
TRIMESTER-IV
2013-14
UNDER THE SUPERVISION OF
Dr. Versha Vahini
National Law School of India University, Bangalore
SUBMITTED BY:-Ronak Karanpuria
LL.M. (Business Law)
Student ID No.: 534
2. 2
Acknowledgement
I express my deep sense of obligation and gratitude to Dr. Versha Vahini, National Law
School of India University, Bangalore, for his invaluable guidance and persistent
encouragement in the preparation of this project work.
I am deeply indebted to all the Indian and foreign writers and judges whose writings and
decisions have been duly cited in this work and have given me inspiration and light during
preparation of this work.
3. 3
RESEARCH METHODOLOGY
Aim and Objective
The Aim of the research paper is to determine the scope of “Electronic Evidence” w.r.t.
modern digital environment.
Research Question
The researcher will address proxy voting in context with its right and power
to vote by proxy, proxy holder unauthorised acts, revocation and
termination of proxies.
Research Methodology
In this paper the researcher has primarily used descriptive and analytical methodology
of research. The researcher mainly relied upon the secondary sources which include
books, Reports, Journal, magazines, online articles and legal databases.
Scope
The scope of this paper is to find out the legal aspects of proxy voting
Limitation.
The field study would have been desirable but due to paucity of time this paper is
limited only to the theoretical aspect of electronic evidence which have been gathered
from various sources including books, articles, and journals.
Sources
In this paper various secondary source have used by the research student in the form of
books, article from various journals and also internet sources have been used.
Mode of Citation
A Uniform mode of citation is followed throughout this paper.
4. 4
Table of Content
S. No. Particulars Page No.
1 Introduction 6
2 The existing regime 7
3 Misuse & Fraud’s 8
4 Proxy fight
5 Revocation of proxies
6 Conclusion 11
7 Bibliography 12
5. 5
INTRODUCTION
Every company has a mission or objective bearing social responsibility using common
fiduciary tools to enhance their mission and protect the investment where their portfolios to be
managed in a way vision by shareholders. Capital market dealing with crores of transaction
involving billions invested in equity of the companies with more responsibility to pay towards
how publicly traded companies managed their portfolios. Some institutional investors such as
pension funds and mutual funds are required to manage their funds in a way that support both
their mission and their financial goals. Securities regulations allow investors to engage
management of companies they hold on important governance and social issues. Also in India,
shareholders do not study much while investing in companies & unconsciously vote their
proxies, reluctant to monitor every issues raised in meetings, unaware of their rights, foster
abuses of accounting and management issues. Such abuses resulted in fall of big tycoons or
scandal of billions of rupees of profit from financial market. Voting allows them to make their
voice to be heard against a proposed plan which if they believe in the best interest of the
company. The outcomes of votes at meetings may affect the value of your shares.
In Cousins v International Brick Co Ltd1
, defined proxy as a person representative of
shareholder. Similarly, in the same case, Lawrence U (at 102) stated '[t]he proxy is
merely the agent of the shareholder, and as between himself and his principal is not
entitled to act contrary to the instructions of the latter'. Whitlam v Australian Securities
and Investments Commission2
, where the Court commented (at 160) that a proxy 'certainly
had a duty as a fiduciary to the proxy givers to act in accordance with their directions'.
Proxy voting promotes and protects shareholders value and the company objectives like
proposal getting approval from directors now getting sanction from shareholders. But at the
same time adverse effects of fraud committed in proxy voting cannot be undermine. So it is
puzzling that many foundations get many proposals for voting by proxy generally in a public
limited company where shareholders are diversified and improbable for them to attend the
meeting.
By not thoughtfully voting on proxy issues, many foundations are ceding the considerable
power of their shareholder status to engage management on social and environmental issues
that are often at the heart of a foundation’s work. Due to this number of times efficacy of
corporate accountability has been in question about shareholder participation which in turns
affect the growth of the company and its general welfare.
Why participation is needed at all? It is consistent with the principles of shareholders
democracy, which provide equal opportunity to all shareholders to participate in democratic
system of corporate governance.
1 [1931] 2 Ch 90,100.
Lord Hanworth MR defined a proxy as '[a] person representative of the shareholder who
may be described as his agent to carry out a course which the shareholder himself has
decided upon'
2 [2003] NSWCA 183
6. 6
THE EXISTING REGIME
The principles of corporate governance like the role played by shareholders indirectly in the
managing the company affairs, where management is vested in the board of directors and in
the annual general meeting which is required to held within 15 months3
and in each year, so
shareholders are not invited for day to day transaction. In terms of participation shareholder
control certain rights mainly a) Election & removal of directors b) Adoption, repeal or
amendments of byelaws, resolutions c) Approval of extra-ordinary matters. The shareholders
controls the affairs and give further direction to directors whether to continue with project or
look in different ways by voting at annual general meeting. Voting can be done by show of
hands or one can demand for poll and unless the articles of the company provide for a larger
number, five members personally present in case of public company and two in case of private
company, if the meeting is adjourned then a quorum is not present within half an hour from the
time appointed for holding the meeting, the members present shall be a quorum. The issues
attached with it is the length of notice, service of notice, persons to be called, voting rights in
shares held in trust etc. but researcher confined the discussion to the proxy voting issues.
Generally, under principles of corporate law, management issue the proxy application to give
notice of an upcoming shareholders' meeting, to form a quorum and to notify shareholders of
corporate matters. The management of company affairs is a tedious task involving adjournment
of meeting or meeting on a day where involvement of all the shareholder mainly in public
limited company is difficult to attain the meeting in person, so overcome this and encourage
them to participate in corporate affairs they vote on the decision by issue of proxies. Instead,
they generally execute proxies which authorize other interested parties to represent and vote
for them.
WHO CAN VOTE
The power of shareholder to execute proxies are governed by sec- 1764
, which entitle any
member of the company to attend and vote at the meeting to appoint any person whether he is
member of the company or not to vote on his behalf but rights of proxy shall be limited with
no right to speak, which means proxy can only vote.
The word “member”5
instead of shareholder is used in the sec-176 which means proxy
appointment is not limited to shareholder. So to become member either he subscribes to
memorandum of a company or his name is register of members or an equity holder whose name
3 The Companies Act, 1956: Sec- 166 ANNUAL GENERAL MEETING
4 The Companies Act, 1956: Sec- 176 PROXIES
5 Companies Act, 1956: Sec-41 Definition of “Member”
(1) The subscribers of the memorandum of a company shall be deemed to have agreed to become
members of the company, and on its registration, shall be entered as members in its register of
members.
(2) Every other person who agrees in writing to become a member of a company and whose name is
entered in its register of members, shall be a member of the company.
[(3) Every person holding equity share capital of company and whose name is entered as beneficial
owner in the records of the depository shall be deemed to be a member of the concerned company
7. 7
is registered as beneficial owner in the records of depository. The word “registered owner”
means who hold shares either directly with the company, as the registered owner or record
holder, or indirectly (for example, through a bank or broker-dealer), as a beneficial owner.
Beneficial owners holding their shares at a broker-dealer or bank are sometimes said to be
holding shares in “street name”. There are no significant differences between registered and
beneficial owners regarding the value of your shares. Both have the same rights to dividends,
stock splits, and any appreciation or depreciation in the value of the stock. But in case of voting
Registered owners (or record holders) receive a proxy and cast votes directly with the company
that issues the shares. Beneficial owners, on the other hand, receive a “voting instruction form”
directing their broker or other financial institution how to vote their shares.
In Strang v. Edson6
, court held that receiver has the power to vote stock placed in his care by
the court. In Atkinson v. Foster7
, Also, where a receiver has been appointed and the property
assigned includes stock of a corporation, the court may compel the giving of a proxy to the
receiver enabling him to vote the stock at meetings of the stockholders of the corporation.
In White v. Ferris8
, A bankrupt has the right to vote stock in his name on the books of a
corporation, even though his property vests in the trustee.
The instrument appointing proxy must be in writing and signed by the appointer and in case if
its body corporate then such instrument must be sealed and signed by duly officer authorised
by it. Also the proxy rules are not applicable in case if the company not having a share capital.
Another issue raised, where securities may be held in the name of banks, broker-dealers and
trust companies. Increasing numbers of these financial institutions deposit their securities with
depositories that register and hold the securities in their own nominee name. Such depositories
effect deliveries of securities among participating financial institutions. The broker-dealer then
casts the proxy vote with the company after receiving instructions from its customer, the
beneficial owner. Large institutional investors like FII, bank trust department, who possess
substantial amount of corporate share shows the great discretionary power and their
involvement in the proxy system has a profound impact on corporate behaviour.
Similarly the President of India & the Governor of state under sec- 187, 187-A of the act and
in case of public company a member can issue more than one proxy to vote on behalf of them.
Proxies to be deposited within company or to authorize person before 48 hours of meeting to
be held valid or as provided under articles of association. However, proxy cannot appoint
another proxy with exception for body corporate being an artificial person and President &
Governor.
6 Strang v. Edson, (C. C. A. 8th, 1912) 198 F. 813.
7 27 Ill. App. 63 (1887), affd. 134 11. 472, 25 N. E. 528 (189o).
8 42 Conn. 560 (1875)
8. 8
MISUSE & FRAUD
The appointer and proxy holder relation are based on trust, acting in the fiduciary relation, in
the same way as director and shareholder relation but sometimes an arrangement is made where
shareholders agrees to vote its shares are directed by another in exchange for consideration
personal to shareholder.9
The vote buying arrangement even in the interest of corporation &
stakeholders to be determine subject to the intrinsic fairness test. In 1982 Schreiber case10
and
the 2002 Hewlett-Packard case11
through some light on the arrangement whether such
arrangement is void per se or voidable.
In Schreiber case: The Court held, however, that “[b]ecause vote-buying is so easily
susceptible of abuse it must be viewed as a voidable transaction subject to a test for intrinsic
fairness.” Finding no fraud in the fact that no warrant holder other than Jet Capital received
a loan from TIA, and fi nding that TIA’s decision was based on the stockholders’ best interests,
the Court ultimately held that the loan transaction “was not void per se because the object and
purpose of the agreement was not to defraud or disenfranchise the other stockholders but
rather was for the purpose of furthering the interest of all [TIA] stockholders.12
In HP case13
: There is no reason for management to disclose preliminary reports that are
generated early in a planning process, based on imperfect information, and limited both by the
unfamiliarity of the people creating the report with the business and by the desire of those
people to commit to conservative numbers that are definitely attainable. The court's willingness
to hold an expedited three-day hearing provides a warning that shareholder votes can be set
aside for 'vote-buying' through improper influence by management or for material
misstatements to shareholders.14
To overcome this situation, corporate bodies issue proxy rules which require full disclosure of
material information, prohibit proxy fraud, installing proxy management machinery &
prohibition of false & misleading statements.
9 See Hewlett v. Hewlett-Packard Co., 2002 WL 549137, at *4 (Del. Ch. Apr. 8, 2002); This article is
concerned with “vote-buying” arrangements between the corporation and its stockholders. The Court in
Hewlett-Packard recognized this distinction, stating: “Shareholders are free to do whatever they want
with their votes, including selling them to the highest bidder,” so long as corporate assets are not
exchanged for votes.
10 Schreiber v. Carney, 447 A.2d 17 (Del. Ch. 1982)
11 Hewlett v. Hewlett-Packard Co., 2002 WL 549137 (Del. Ch. Apr. 8, 2002).
12 Schreiber, 447 A.2d at 26
13 At issue in the case—at the motion-to-dismiss stage—were efforts by the Hewlett-Packard Company
(HP) to garner approval for a merger between HP and Compaq Computer Corporation. Before the
merger vote, the proxy committee of Deutsche Asset Manage-ment (Deutsche Bank) “determined to
vote its shares against the proposed merger” and submit-ted proxies to that effect. Around the same
time, “HP closed a new multi-billion dollar credit facility to which Deutsche Bank had been added as a
co-arranger.” Deutsche Bank became concerned that its no vote would cause HP to “end the ongoing,
and desired future, business dealings between HP and Deutsche Bank.” On the morning of the special
meeting, Deutsche Bank and HP management held a telephone conference, after which Deutsche Bank
switched its votes—nearly 17 million votes—to vote in favor of the merger
14 http://www.internationallawoffice.com/newsletters/Detail.aspx?g=624a02bd-573b-4b81-a51a-
5a95e7af9ab5
9. 9
PROXY FIGHT
A proxy fight or proxy battle is an event, where stockholders oppose some aspect of the
corporate governance like director position or any other management decisions. In which
shareholders were persuade to use their proxy votes to make new management for any of a
variety of reasons.15
In Hilton Hotels v. ITT Corp case, it involves power and duties of directors in hostile takeovers,
coupling with an unsolicited tender offer with a proxy contest to replace the incumbent board.
Delayed tactics were used to postpose annual general meeting. There arise a conflict of interest
where shareholders are not permitted to exercise free rights, so the major issues which are seen
is whether it will affect the interest of corporation or shareholder, generally proxy fight is
contested in mergers, takeovers etc.
In Paramount v. Time,16
a hostile acquiring corporation would propose a tender offer
contingent of the redemption of the poison pill by the Board of the target corporation. But in
addition, the hostile acquiring corporation would nominate a new slate of directors and seek
the proxies of other shareholders to elect this new Board of the target corporation at its next
annual meeting or a special meeting of the shareholders. The board of directors can redeem or
eliminate poison pill but can’t prevent proxy contest. However, they can prevent shareholders
from entering into certain agreements that can assist in a proxy fight, such as an agreement to
pay another shareholder's expenses.
REVOCATION OF PROXIES
There is a contract between appointer and the proxy holder, where proxy holder is acting in
fiduciary duty. Proxy holder must exercise the power in accordance with the instructions of the
giver of the proxy. Where the giver of the proxy holder did not instruct him how to vote, he is
free to vote how he please.
In Cousins v. International Brick Company ltd.17
Lord Handworth held that shareholder may
exercise the right to vote personally notwithstanding that he or she has given proxy and not
revoked it. Similarly in Ansett v. Butler Air Transport ltd18
, Proxies was given for meeting on
31 dec 1957, which was then adjourned on 21 jan 1958. Many shareholder who has given proxy
for dec attended meeting personally, issue raised was whether the proxies of the shareholder
present at the meeting had been revoked or valid for poll. Court held that it is clear that
notwithstanding their personal attendance, their wishes is their proxy should vote for the poll.
In Oliver v. Dalgleish19
issue is regarding disobey by proxy holder as instruction given to him,
court held: first that vote is invalid because outside the authority of proxy, second vote is valid
15 Klein, Ramseyer, and Bainbridge. Business Associations: Cases and Materials on Agency,
Partnerships, and Corporations. (7th Ed.) Foundation Press
16 571 A.2d 1140, 565 A.2d 280 (Del. 1989)
17 [1931] ch 90
18 [1958] 75 WN (NSW) 306
19 [1963] 3 All ER 330
10. 10
and proxy disobedience is a matter purely between the proxy holder and appointer and hence
it does not affect the voting result.
Revocation of proxy is to be communicated to the company and it shall be received by the
company at its registered office before the commencement of the meeting. Proxy shall itself be
revoked in case of death or insanity of the shareholder appointing the proxy. Where more than
one proxy issued to cast vote for the same matter, then the last proxy so issued will be valid.
CONCLUSION
Voting being an essential process can’t be undermine to maintain democratic system as a means
of corporate governance, simultaneously securing the voting rights of shareholders. However
voting by shareholder in public company is a tedious task, which involves large gathering and
due to which sometimes shareholder passes their right to vote by the means of proxy voting.
Voting by proxy involves fiduciary duty, where proxy is under duty to oblige and to do things
as guided by appointer. Such mechanism is to be controlled by the way of rules either in articles
of association or by statutes because decision of shareholders can affect the fate of company,
major decisions like director appointment, restructuring of company, mergers, amalgamation
etc. such a controversial decisions needs to be taken with care and precaution, where an
individual shareholder can be persuaded to vote in a different manner, fraud, misuse and proxy
contest are the major issues.
11. 11
BIBLIOGRAPHY
1. Statues:
Company act, 1956
2. Books
i. Klein, Ramseyer, and Bainbridge. Business Associations: CASES AND
MATERIALS ON AGENCY, PARTNERSHIPS, AND CORPORATIONS. (7th
Ed.) Foundation Press
ii. DDRJ Prentice Holland , CONTEMPORARY ISSUES IN CORPORATE
GOVERNANCE,
iii. Weston Situ Johnson, TAKEOVERS, RESTRUCTURING & CORPORATE
GOVERNANCE,
iv. Richard Smerdon, A PRACTICAL GUIDE TO CORPORATE GOVERNANCE,
v. Bob Tricker, CORPORATE GOVERNANCE: PRINCIPLES, POLICIES AND
PRACTICES,
3. Articles
i. Rockefeller Philanthropy Advisors “Unlocking the power of proxy”
ii. Available at www.asyousow.org/publications/powerproxy.pdf
iii. Investment company institute “Trends in Proxy Voting by Registered
Investment Companies” Available at www.ici.org/pdf/per16-01.pdf
iv. “Access to Corporate Machinery” available at
http://www.jstor.org/stable/1339801 Accessed: 31/08/2013 03:23
v. Roundtable on Proxy Voting Mechanics: “Topic One: Share Ownership and Voting”
Available at www.sec.gov/spotlight/proxyprocess/proxyvotingbrief.htm
4. Case laws:
i. Cousins v. International Brick Co Ltd [1931] 2 Ch 90,100.
ii. Whitlam v. Australian Securities and Investments Commission [2003] NSWCA 183
iii. Strang v. Edson (C. C. A. 8th, 1912) 198 F. 813.
iv. Atkinson v. Foster 27 Ill. App. 63 (1887), affd. 134 11. 472, 25 N. E. 528 (189o).
v. White v. Ferris 42 Conn. 560 (1875)
vi. Schreiber v. Carney, 447 A.2d 17 (Del. Ch. 1982)
vii. Hewlett v. Hewlett-Packard Co., 2002 WL 549137 (Del. Ch. Apr. 8, 2002)
viii. Hilton Hotels v. ITT Corp case
ix. Paramount v. Time 571 A.2d 1140, 565 A.2d 280 (Del. 1989)
x. Ansett v. Butler Air Transport ltd [1958] 75 WN (NSW) 306
xi. Oliver v. Dalgleish [1963] 3 All ER 330