Think of voting rights as the voice each shareholder gets in running the company. Section 47 answers a very practical question: who gets to vote on what? The answer depends entirely on the type of share you hold.
Equity shareholders are the real owners — they take the risk, so they get the full say. Under Section 47(1), every equity shareholder can vote on every resolution placed before the company. Their voting power on a poll is proportional to their share in the paid-up equity share capital. So if Mr. Sharma holds 30% of the paid-up equity capital, he carries 30% of the vote on any poll.
Preference shareholders are a different story. They get a fixed dividend and have priority on repayment, but in exchange, their voting rights are restricted. Under Section 47(2), preference shareholders can only vote on resolutions that: (a) directly affect the rights attached to their preference shares, (b) relate to winding up of the company, or (c) relate to repayment or reduction of equity or preference share capital. Their voting weight on a poll is proportional to their paid-up preference share capital, and the ratio of equity to preference voting rights mirrors the ratio of respective paid-up capitals.
Here is the critical exception that examiners love: if a preference dividend has remained unpaid for 2 or more years on any class of preference shares, that entire class of preference shareholders gets the right to vote on all resolutions — just like equity shareholders. This is the law's way of compensating preference shareholders when the company fails to honour its commitment to pay them. Think of it as: no dividend for 2 years = full voting rights restored. This exception is asked frequently as a 4-mark question, so do not ignore it.
Example 1 — Proportionate voting on a poll
Rajesh & Co. Pvt. Ltd. has the following paid-up capital:
- Equity share capital: ₹40,00,000 (held by 4 shareholders)
- Preference share capital: ₹10,00,000
Mr. Arjun holds equity shares worth ₹8,00,000 (paid-up).
Question: What is Mr. Arjun's voting weight on a poll for an ordinary resolution?
Working:
Mr. Arjun's share in paid-up equity capital = ₹8,00,000 ÷ ₹40,00,000 = 20%
Answer: Mr. Arjun carries 20% of the total equity votes on the poll.
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Example 2 — Preference shareholders getting full voting rights
Ms. Iyer holds 1,000 preference shares of ₹100 each (paid-up ₹1,00,000) in Sunrise Textiles Ltd. The company has not paid preference dividend for 3 consecutive years.
Question: Can Ms. Iyer vote on a resolution to appoint a new Managing Director?
Working:
Normally, preference shareholders cannot vote on a routine appointment resolution — it does not directly affect their rights.
However, preference dividend has been unpaid for 3 years ≥ 2 years → the proviso to Section 47(2) is triggered.
Answer: Yes, Ms. Iyer can vote on ALL resolutions, including the MD appointment resolution, because preference dividend has been unpaid for 2 or more years.
📖 Bare Act text — Section 47, Companies Act 2013
(click to expand)
(1) Subject to the provisions of section 43, sub-section (2) of section 50 and sub-section (1) of section 188,— (a) every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company; and (b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital of the company. (2) Every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares and, any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital and his voting right on a poll shall be in proportion to his share in the paid-up preference share capital of the company: Provided that the proportion of the voting rights of equity shareholders to the voting rights of the preference shareholders shall be in the same proportion as the paid-up capital in respect of the equity shares bears to the paid-up capital in respect of the preference shares: Provided further that where the dividend in respect of a class of preference shares has not been paid for a period of two years or more, such class of preference shareholders shall have a right to vote on all the resolutions placed before the company.