Restriction on Voting Rights & Joint Shareholder Voting (Section 106)
# Restriction on Voting Rights and Joint Shareholders [Section 106]
## (1) Restriction on Voting Rights
### What can AOA restrict?
The AOA may provide that a member cannot exercise voting rights on any share in respect of which:
1. Calls or other sums payable to the company have not been paid; OR
2. The company has exercised its right of lien (usually when the shareholder owes money).
### What cannot be restricted?
The company cannot prohibit voting rights on any other ground.
Voting rights are otherwise statutory — they cannot be curtailed by AOA except as above.
### Consequential restriction
Such a member also cannot sign a requisition for an EGM under Section 100.
## (2) Voting by Joint Shareholders
Where shares are held by joint shareholders:
Joint shareholders must concur in voting (unless AOA provides otherwise).
Voting is done in order of seniority — the vote of the senior holder is accepted, in person or by proxy.
Seniority is determined by the order in which their names appear in the Register of Members.
### Practical implication
If joint holders A, B and C disagree, A's vote (first-named) prevails. B's and C's separate votes are disregarded unless A is absent.
Worked example
### Example 1
Example: Mr. X holds 1,000 shares of S Ltd. on which ₹2 per share is unpaid. S Ltd.'s AOA states no member can vote on partly-paid shares with calls in arrears. Can X vote?
Solution: Since AOA so provides and calls are unpaid, X cannot exercise voting rights on those 1,000 shares. He also cannot sign an EGM requisition in respect of those shares.
### Example 2
Example: Joint holders A, B, C of P Ltd. (in that order in the register). A votes 'For', B votes 'Against', C abstains.
Solution: Only A's vote ('For') counts as the first-named (senior) holder. B's and C's votes are disregarded.
⚠️ Common exam mistakes
Assuming AOA can restrict voting rights on any ground — only unpaid calls or shares under lien.
Treating all joint holders' votes equally — only the senior holder's vote prevails.
Forgetting that a member with restricted voting rights also loses the right to sign an EGM requisition.
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.