Key Provisions Related To Proxy Under Companies Act 2013

     

Key Provisions Related To Proxy Under Companies Act 2013

A proxy is an authorized agent of the member for the purpose of voting who, as between himself and the principal, was not entitled to act contrary to his instructions in the matter.

The term proxy is also applied to the instrument by which the appointment to act on his behalf is made by the member.

Section 105 provides that, any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his behalf, Provided that a proxy shall not have the right to speak at such meeting and shall not be entitled to vote except on a poll.

Who can appoint a proxy for the general meeting?

A proxy can be appointed by the following persons to attend and vote at the general meetings instead of themselves:—

1.      Members of a company having a share capital.

2.   Members of a company not having a share capital, if Articles of a company provides so.

3.   Representatives of body corporate appointed under section 113 of the Companies Act, 2013.

4.  Representatives of the President and the Governors of the State appointed under section 112.

5.   Power of Attorney holder of a member may vote by proxy, if authorized by such power of attorney.

Section 113 is not applicable where a company is composed of shareholders who are individuals, who will exercise their power to elect/appoint directors, who will manage and represent the company.¹

Instrument of proxy

An instrument appointing a proxy shall be in Form MGT-11 as per Rule 19(3) of Companies (Management and Administration) Rules, 2014. As per section 105(6) of the Act, proxy who is required for enabling a person to cast his vote is to be in the Form MGT-11. Although, general form of proxy is prescribed, section 105(7) of the Companies Act, 2013 provides that an instrument appointing a proxy shall not be questioned on the ground that it fails to comply with any special requirements specified for such instrument by the articles of a company.

Validity of a proxy

In order to be a valid proxy, the proxy should have been executed in a proper manner and the following points should be observed carefully:—

(i)  Mistake in proxy affecting voting right: Any mistake in a proxy, which affects the exercise of voting right in any way, will affect the validity of the proxy.

(ii) Proxy must be in writing and be signed by the appointer or his attorney duly authorized in writing or, if the appointer is a body corporate, be under its seal or be signed by an officer or an attorney duly authorized by it.

(iii) Dating of Proxy: Proxy executed should contain the date of its execution. However, an undated proxy lodged within the prescribed time is valid.

(iv) Proxy, which bears the latest date where it is filled up by the appointee shall be considered as valid.

(v)  Proxies at the adjourned meeting: Proxy sent at the time of the original meeting can be used in the adjourned meetings also. However, in case a fresh notice is issued for an adjourned meeting then lodging of fresh proxies shall be permissible.

(vi) Stamping of proxy: Proxy should be duly executed and it should be properly stamped. Insufficiently stamped proxies are invalid. Under Section 35 of the Indian Stamp Act, in the case of instruments insufficiently stamped, the instrument may be admitted in evidence on payment of a penalty and the deficit stamp duty.¹

Stamping on proxy

A proxy must be stamped with a fifteen paise revenue stamp, which must be canceled before the chairman acts upon them. The stamp has been reduced to 15 paise vide Notification No. SO 130(E), dated 28-1-2004 issued by the Department of Revenue. An unstamped proxy or where the stamp is not canceled shall be invalid and cannot be taken into account. Where the stamp appears over the signature then it cannot be said to be duly stamped.

Checkpoints in relation to proxy at a general meeting

The following points must be checked in relation to proxy:—

 1.     Proxy does not speak at the meeting.

 2.     Proxy votes only on poll unless Articles provide otherwise.

 3.   Instrument of proxy is in the form set out in Form MGT-11 and is in writing. It is duly signed by the appointer and under the seal, if the appointer is a body corporate.

 4.  Proxies are deposited 48 hours before the meeting if the Articles do not provide for such deposition more than 48 hours before any general meeting.

 5.  Where any member has given 3 days notice to inspect the proxies then, it should be ensured that proxies were open for inspection 24 hours before the time of the meeting during the business hours of the meeting.

Related Post :

Quorum For General Meeting Under Companies Act 2013

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