## Section 106 — Restriction on Voting Rights of Members
### Core Rule
The Articles of a company may provide that a member shall not exercise voting rights in respect of any shares held by him on which:
Any calls are unpaid, OR
Any other sums presently payable by him to the company in respect of those shares have not been paid, OR
The company has, on those shares, exercised any right of lien.
This restriction operates only if the Articles say so. If the Articles are silent, the member CAN vote despite calls being unpaid.
### What restrictions are NOT allowed?
Sub-section (2) makes clear: except as provided in sub-section (1), no company shall prohibit any member from exercising his voting rights on any other ground. Any clause in the Articles imposing voting restrictions on grounds other than the ones listed above is invalid.
### Splitting of Votes by a Member (sub-sec. 3)
Where a member is entitled to more than one vote (e.g. a member voting through a proxy, or holding multiple shares), he:
Is not bound to use all his votes, AND
May split his votes — using them differently (i.e. some 'For' and some 'Against') if he chooses.
#### Illustration (split voting)
If a member holds 1,000 shares (= 1,000 votes), he may cast:
600 votes For the resolution, and
400 votes Against the resolution.
The company cannot insist he vote all 1,000 the same way.
### Joint Holders — order of priority for voting
Where shares are jointly held, only ONE joint holder can effectively vote on a resolution. The vote of the senior named joint holder prevails. Seniority is determined by the order in which the names appear in the Register of Members — the first-named holder is treated as senior.
If joint holders cannot concur on how to vote, the senior holder's vote is accepted to the exclusion of the others.
### Quick Recap Grid
Issue
Rule
Voting restriction allowed on
Unpaid calls / sums / lien — IF AOA so provides
Other grounds for restriction
NOT permitted
Member with multiple votes
Need not use all; may split
Joint holders
Senior name (first in register) prevails
Worked example
### Example 1
Example 1 — Articles silent on unpaid calls
Mr. P holds 500 partly paid-up shares of XYZ Ltd. on which calls of Rs. 5 per share are unpaid. The AOA of XYZ are silent on voting restrictions for unpaid calls.
Solution: Since the Articles do not impose a restriction, Mr. P CAN vote on his 500 shares, despite the calls being unpaid. Section 106(1) is enabling — it permits but does not impose the restriction; the AOA must positively provide for it.
### Example 2
Example 2 — Split voting in a poll
Ms. Q holds 1,000 equity shares of ABC Ltd. and is voting on a poll for a special resolution. She wishes to vote 700 shares 'For' and 300 shares 'Against'.
Solution: Under Section 106(3), Ms. Q is entitled to split her votes. She can cast 700 votes in favour and 300 against, and the company must accept this split.
### Example 3
Example 3 — Joint holders disagree
Shares of DEF Ltd. are jointly held by Mr. X (first named) and Mr. Y (second named). Both attend an AGM. Mr. X wants to vote 'For' a resolution; Mr. Y wants to vote 'Against'.
Solution: As per company law principles read with Section 106, where joint holders do not concur, the vote of the senior holder (Mr. X, whose name appears first in the Register) is accepted, to the exclusion of Mr. Y's vote.
### Example 4
Example 4 — Invalid AOA clause
The AOA of GHI Ltd. provides that any member who is also a director of a competing company shall not vote at any general meeting.
Solution: Section 106(2) prohibits voting restrictions on any ground other than those in sub-section (1). The AOA clause is invalid and unenforceable.
⚠️ Common exam mistakes
Assuming voting rights are automatically suspended if calls are unpaid — this happens only if the AOA so provide.
Forgetting that Section 106(2) prevents restrictions on grounds other than unpaid calls / sums / lien.
Believing a member MUST cast all votes the same way — split voting is expressly allowed under sub-section (3).
Mixing up the rule on joint holders — seniority is by order of names in the Register, NOT by age or shareholding.
Bare-Act text Section 106 · Companies Act, 2013 · click to expand
Section 106 — Restriction on voting rights.
(1) Notwithstanding anything contained in this Act, the articles of a company may provide that no member shall exercise any voting right in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid, or in regard to which the company has exercised any right of lien.
(2) A company shall not, except on the grounds specified in sub-section (1), prohibit any member from exercising his voting right on any other ground.
(3) On a poll taken at a meeting of a company, a member entitled to more than one vote, or his proxy, where allowed, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.