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Friday, September 3, 2010

Company Law - Participation of Shareholders in the management of the company and Role of Proxies


In the present world corporate governance has become a sensible measure for the long term success of the company. There has been great interest in corporate governance because developing good corporate governance is essential to restore economic vitality and fostering sustainable economic growth and development.

For shareholders, effective Corporate Governance structures have become important criteria for selecting the companies in which they wish to invest when making positive investment decisions. As the investors are interested in long term benefits therefore they have now started to analyse the corporate governance structure of the companies. The investors have now started comparing the various companies that which company has implemented the various recommendations regarding corporate governance as mentioned in various important codes.

The important purpose of corporate governance is to safeguard the shareholders rights in the company and also to pay special attention that there should be equal treatment with the shareholder of same category. Corporate governance practices have emerged in free market economies as a set of structural arrangements with a aim of developing a relationship between the management of companies and the interests of its shareholders. Subsequently, corporate governance concerns extended to the interest of other stakeholders and eventually to society at large. Therefore a sound corporate governance system requires that shareholders can actively participate in, and exert influence on, corporate strategic decision-making. The two important principle of corporate governance can be elucidate as:
The first principle:
“The corporate governance practices should give the shareholders a real opportunity to exercise their rights connected with their participation in the company”.
The second principle:
“The corporate governance practices should ensure equal treatment of shareholders who own the same number of shares of the same type (category)”.

The shareholders are the owner of the company and by virtue of this they have various rights and obligation in a company. Some of the basic rights in the company are: ensuring adequate methods of ownership registration, conveying or transferring shares, participating in the company’s profits, obtaining information on a timely basis, participating and voting in general shareholder meetings. Along with these there are various other rights of the shareholder and one of the most important among all these is the right to take part in the management of the company. The most important channel for shareholders to influence how the company has to run is to attend and vote at the general assembly meetings.


Although shareholders have many rights, there are two that are more important than any others: the right to elect directors and the right to sell their shares. These rights should be considered “the fundamental rights of the shareholder” and, as such, should be afforded a great deal of respect and protection by law. Shareholder rights should not undermine the role of the director, but neither should director prerogative undermine the role of the shareholder. Whatever balance corporate governance may strike between them, it may not disregard the fundamental rights of the shareholder.[1]

Shareholder Rights in brief:
A shareholder in a Company enjoys certain rights, which are as follows:
Rights as an individual shareholder:
  1. to receive the share certificates, on allotment or transfer as the case may be, in due time.[2]
  2. to receive copies of the abridged Annual Report, the Balance Sheet and the Profit & Loss Account.
  3. to participate and vote in General Meetings either personally or through proxies.[3]
  4. to receive Dividends in due time once approved in General Meetings. [4]
  5. to receive corporate benefits like rights, bonus, etc. once approved.
  6. to apply to Company Law Board (CLB) to call or direct the Annual General Meeting.
  7. to inspect the minute books of the General Meetings and to receive copies thereof.
  8. to proceed against the Company by way of civil or criminal proceedings.
  9. to apply for the winding-up of the Company.[5]
  10. to apply for the winding-up of the Company.
Rights as a Group:
  1. other rights are as specified in the Memorandum and Articles of Association.
  2. to demand a poll on any resolution.
  3. to apply to CLB to investigate the affairs of the Company
  4. to apply to CLB for relief in cases of oppression and / or mismanagement.[6]

The shareholders are involved in taking major decisions about the company. These decisions are basically taken in the general meetings. These decisions are in form of “resolution”. Every year there is one meeting of the members has been organized and this meeting is called as the Annual General Meeting.[7] In addition to this if there is any emergency or need to transact urgent business than an Extra Ordinary General Meeting is called. The main purpose of the annual general meeting is that the ultimate control of the company is in hands of shareholders. AGM gives them an opportunity to know about the working of the working of the company and to make suggestion for the improvement and progress. They can even change the management if they are not satisfied.

Development of the Right to Vote[8]
When the modern corporation first developed in the19th century, the shareholders, as residual owner of the corporation, typically were relatives or members of the local community. Shareholders' meetings were important because they provided a forum for discussion about the conduct of the business and a sharing of the collective wisdom. In that era, a shareholder's vote was considered a property right by the courts, so precious and personal that it could not be delegated. The increase in non-related shareholders led to statutory laws that gave shareholders the right to make proposals and vote at corporate
meetings. As corporate ownership became widely dispersed, with greater numbers of shareholders spread across a growing geographic area, it became more and more inconvenient for shareholders to attend meetings, and the absent shareholder was effectively disenfranchised. Thus, the delegation of one's voting right, or proxy, was developed to enable the shareholder to exercise his or her voting right in the corporation.

Voting at the general meetings of companies is the most valuable and fundamental mechanism by which the shareholders accept or reject the proposals of the board of directors as regards the structure, the strategy, the ownership and the management of the corporation. Therefore shareholder voting is an integral part of the governance structure of publicly held corporations.

Requiring shareholder consent for any fundamental change in corporate policy is a safeguard for the residual risk-bearers of a corporation against ex post expropriation by the management. The right to vote assures the shareholders that without their approval the basic terms of their investment cannot be altered. Also, vesting voting rights in shareholders is the only feasible method to implement major improvements of corporate policy that affect the terms of their investment.

In other words we can say that the voting is the only mechanism available with the shareholders for exercising an external check on the board and the management. It is important to ensure that those votes are cast in a manner that is most consistent with the long-term best economic interests of the company’s shareholders. Right to vote is one of the most effective tools for promoting good corporate governance. To maintain this effective tool all shareholders should receive equitable treatment, including minority and foreign shareholders and all shareholders should be able to obtain effective redress for violation of their rights. More specifically:
  • Shares of the same class should have the same vote,
  • Information on the voting right should be provided before the purchase of the share,
  • Any changes in voting rights should be subject to shareholder vote,
  • Custodians or nominees should cast votes as agreed upon with the beneficial owner of the shares,
  • Company procedures should not make it unduly difficult or expensive to cast votes,
  • Insider trading and abusive self dealing should be prohibited, and
  • Members of the board and management should be required to disclose any material interest in transactions or matters affecting the corporation

Under the Indian Companies Act, all holders of equity shares as on the date of the Annual General Meeting are entitled to vote. A member’s voting right are in proportion to his share of the paid up capital in the company.[9] In case of share issued with disproportionate voting right as permissible under Section 86, the voting right will be as per the terms of the issue of the share.

There is also a concept of postal ballot under the companies Act. The concept has been stated in the section 192A which has been brought in to force on 15th June 2001. The main idea behind postal ballot is to confirm the “corporate democracy”.[10] This is like there are lakhs of shareholder spread all over the country and it is not possible for all of them to be present in the meeting. Therefore to remedy this situation this concept has been brought in this the shareholder can vote by post without attending the general meeting.

If a shareholder of the company is unable to attend the meeting than he can appoint a proxy to attend the meeting.[11] Such another person may or may not be the member of the company. A proxy is basically one acting for another. Proxy who has been appointed is entitled to attend the meeting and can vote on behalf of the principal member.

Along with this there is a new concept emerging and that is of Electronic sending of vote and some countries have already adopted this concept. For example: Belgian law leaves it to the companies and their by-laws to decide whether shareholders can vote by mail or in person. In France Voting by mail is permitted by the law. Shareholders may also vote by fax, as long as they also mail the official ballot to the company.

Basically all these emerging concept of voting is to give effect to the voting right of the shareholder. Because the only mechanism available with the shareholders for exercising an external check on the board and the management is voting. Therefore it is important to ensure that all the votes have been casted properly.

The shareholders, who are the ultimate owner of the company are authorized only to take decision in respect of major policy matter only to the extend specified in the Companies Act. As we know that there is a divorce between the management and the ownership and therefore the shareholder cannot interfere in the day to day management of the company.
For the same reason they appoint director to look over the company. Overall supervision and control of affairs of the company is entrusted to director as appointed by the member. It is the duty of the directors to pool their knowledge and experiences for the betterment of the company. Shareholder has right to appoint the directors and to remove them as well


The development of the OECD Principles of Corporate Governance was sparked by the Asian financial crisis of 1997-1998.[12] At the height of the 1997-98 financial crises, the OECD was asked by the G7 to develop international standards on corporate governance that could be useful to OECD Members and non-Member countries alike. In May 1999, the OECD Principles were formally endorsed by OECD Member countries. While the OECD Principles were developed with publicly listed companies in mind, many of these Principles are also applicable to privately-held enterprises. The OECD Principles cover five main areas:
1) The rights of shareholders;
2) The equitable treatment of shareholders;
3) The role of stakeholders;
4) Disclosure and transparency; and
5) The responsibilities of the board.

In the OCED principles of corporate governance there is a clear mention that the key shareholder rights are the participation in any decision concerning fundamental corporate changes and the right to be informed of options to address these changes. These fundamental changes can be amendments in the corporate chapter; authorization of additional shares; and extraordinary transactions that result in a fundamental change of the asset structure. This principle is totally in favor of the shareholder right to take part in the management of the company.

The second chapter of the Principles emphasizes that all shareholders, including minority and foreign shareholders, should be treated equitably by controlling shareholders, boards and management.  Insider trading and abusive self-dealing should be prohibited.  The Principles call for transparency with respect to distribution of voting rights and the ways voting rights are exercised.  They also call for disclosure of any material interests that managers and directors have in transactions or matters affecting the corporation.[13] At the international level, the OECD Principles of Corporate Governance have emerged as the international benchmarks on good corporate governance.

The ICGN[14] principles also recognizes the object stated in the OECD principles. The ICGN principle states that there should not be any major strategic changes in the core business should not be without the prior consent of the shareholders. The UK Combined Code (January 1998) states that the process and procedure for conducting annual general meeting should allow the shareholder to have fair and equal participation. The German Code (January 2000) states that the confidence of the shareholder and other investors should be promoted in the international market.

The European Union and its member states are totally in favor of the shareholder participation in the management. It sates that the shareholder to be treated equitably and there should be no barrier with regard to the shareholder attending the general meeting, whether in person or by proxy.

Therefore it is clear that mostly all the countries around the world are now recognizing the right of the shareholder. Every country all over is now taking steps to make fair and equitable participation of the shareholders.


The highest measure of democracy is neither the 'extent of freedom' nor the 'extent of equality', but rather the highest measure of participation”---------------A. d. Benoist

In order to make any institution democratic it has to follow certain sacrosanct Principles and the reason being that the new democracies are inherently fragile. Once a new system of government has been designed, agreed to and implemented, the priority is to consolidate it. Some of the vital principles of ‘Democracy’ are:
  • Transparency: Transparency refers to openness of the government system. The process of governing needs to be both visible and understandable to the population. As such, it will reassure them that it is trustworthy, and encourage their support and co-operation, rather than risking their alienation[15].
  • Accountability: Accountability refers to the answerability of government to the law and to the people - an essential ingredient of a new democracy. As long as the government remains, in real terms, answerable to the population, a self-sustaining regulatory process is set in motion[16].
  • Participation: When people feel a part of the system, they take a share of responsibility for it and play a role in making it work. At a basic level, the electoral process symbolizes such participation. Voting is a fundamental part of being involved in governance by having a real say in the choice of government. But participation must exist between elections too. The attraction of many of the power-sharing formulae, electoral system choices, national conferences and other mechanisms outlined in the previous chapter, for example, is precisely the way that they build confidence by ensuring inclusion of all significant stakeholders in the transition process[17].

An analogy can be drawn from a comparison between political governance set up and the corporate setup, the power relationship between the shareholders and the corporation vis a vie citizens and state. The flow of power and responsibility in both the systems could be compared to understand the concept after all both the setups have a natural entity (shareholders and citizens) and legal entity (company and state). If we take the democratic setup then we see a body of people who are elected by masses and are called peoples representatives. They make laws and policies for governance of the state. They are accountable to the people at least when they go to seek fresh mandate. Similarly in the corporate setup we see shareholders who could be compared to citizens of the state, and the directors as their elected representatives. These directors are entrusted with a responsibility of conducting the business of the organization and the overall governance of it. They are responsible to the shareholders and in the annual general meeting they have to face the people who had elected them.
 A company is also a form of government which is governed by the management and the shareholders the voters who take part in the election process and elects the board of directors who can be equated with prime minister or president of any country. It is a internal mechanism of a company to govern itself but this also follows the principles of democracy for its efficient running, allowing a say of every member and to create a check and balance system.
Like in any other Institutional Framework or system of governance in Corporations also a system of democracy exits which follows the same Principles but with a less vigor. The directors in a corporations are accountable to the shareholders whereas the shareholders are required to participate in the decision making process in order to create a ‘check and balance’ approach and their should be transparency in all the actions of the corporation whether they are taken by company or by the shareholders. Shareholders Democracy which is part of corporate democracy means that a company under the management and control of its shareholders. In this every shareholders has equal opportunity to elect and constitute a board of directors to manage and conduct the affairs of the company. They act under as agents and trustees for the company in a fiduciary capacity. AS such, their meaningful participation at company meetings is an imperative[18].

When shareholders invest in a corporation, the interest represented by their shares typically includes some right (albeit a contingent right) to receive a return on their investment, and a right to vote[19].

Several benefits may be gained from increased shareholder participation. First, increased access to the corporate board and to more information would increases the value of the company and reduces the risk of poor or corrupt management.

In the contest for control, a Director faced with a real threat of being replaced by the electorate will tend to direct in a more beneficial manner. Inferior management will presumably be replaced by superior managers, thus increasing value. Also, group dynamics will be improved because more truly outside directors will be elected to the Board providing a check on insider interests.

Furthermore, in the context of issue contests, increased access will likely result in better decision-making in corporate policy. Similar to the electoral contest, directors faced with the threat of increased participation by the shareholders would rationally choose to be more responsive to shareholder issues and avoid self-interested actions such as excessive compensation increases. Thus, with either better performance before the contest, or beneficial change as a result of the contest, an overall increase in value insures not only to the shareholder but also to the public at large.[20]

The primary argument of those opposed to increasing shareholder participation is the “Wall Street Rule,” which provides that the stock market is the best check on management because dissatisfied shareholders will “vote with their feet” and sell their shares, thus driving the stock prices down[21]. The “Wall Street Rule,” however, has the unfortunate result of pressuring management to make ill-advised decisions to increase short-term gain at the expense of longer term concern.

The large topic of shareholder participation in corporate governance exists in an often overlooked procedural context that of disclosure and information flow. Informed participation is as important as participation per se. Furthermore, the distinction between passive participation in a simple ratification mode and active participation in the agenda-setting sense is an essential aspect of the overall topic of shareholder participation in corporate governance[22]. In the present days Corporations the Shareholders are not allowed to participate in the decision making process of the company.  Therefore it is the most important aspect, at least from a corporate democracy standpoint; there are other substantial obstacles to shareholder participation in corporate governance through the proxy process[23]. While it can certainly be argued that greater shareholder participation in corporate governance is necessary to provide an appropriate check on directorial abuses, this is only one of several possible arguments in favor of permitting large shareholders a greater role in the corporate decision making process[24]. Increased shareholder participation in corporate governance could also produce a second potential benefit, better decision making. One way by which the participation of the shareholders in the affairs of the company increased was by way of proxies.

A member may vote either in person or by proxy[25]. Articles may allow voting by proxy even by show of hands[26].  A proxy is entitled to vote at a meeting or in a resolution. The instrument of proxy encourages the participation of a member indirectly but then also it strengthens the democratic pattern of the modern corporations. The Companies (Amendment) Act, 2000 has, among others, laid down the law relating to passing of general meeting resolutions by postal ballot[27]. This is a unique provision in as much as that never before in the history of Indian corporate laws share holders have been given a right to vote in respect of the business of a corporate without actually attending its general meeting. The need for such right arises as corporate in numerous cases hold their general meetings in far flung areas of the Country where they have their registered offices, with the result that a vast majority of shareholders residing all over India do not find it convenient to travel to such remote places and attend such meetings. One really can not fault the corporate as they hold their general meetings as per law {section 166 of the Companies Act 1956} which provides that the annual general meetings {AGMs} shall have to be held at the registered office or at some other place within the city/town/village in which the registered office is situated. However there is no restriction in holding extra ordinary general meeting in any other place but corporate usually prefer to hold such meetings where they have been holding their AGMs. Be as it may, the net result is that a miniscule number of shareholders are really able to attend the general meetings and exercise their voting rights. Thus, where a resolution has been passed by the shareholders of a company at a general meeting which has been attended by say, hardly 1% of the total number of shareholders holding say 3% of the voting power, it cannot be said that the shareholders’ democracy has been implemented in true spirit although there is no violation of law[28]. To over come the aforesaid situation that has been in existence for decades in India, the introduction of the concept of postal ballot in the statute books, is really welcome. It provides for true shareholders’ democracy. Pertinently, by way of good corporate governance, the listing agreement has also provided for companies passing resolutions through postal ballot, albeit the same is discretionary on the part of the companies. This is understandable, as the provisions of the Companies Act, in this regard, had not yet come into force at that time. Further there have continues efforts to promote corporate democracy in the Indian scenario. The Companies Amendment Bill, 2003 has been introduced in the Rajya Sabha on May 7, 2003. It includes, inter alia  holding of meetings on Sundays, this can be called as step further in enhancing the  participation of shareholders in the functioning of the government. But however this canot be called as sufficient steps to make a secured and dependable form of democracy. It would have been better if clauses providing for more attendance and authorizing the proxy holders to speak and vote on show of hands at such meetings, are also made part of such meeting[29]. In India the Justice Sachar Committee in 1978 recommended that:
(a)              The proxy holders should be allowed to speak at general meetings
(b)              Every proxy holder should entitled to vote on show of hands.
(c)              Two way proxy from affording members an opportunity of voting for or against a resolution should be sent along with notice of general meetings to every shareholders entitled to attend and vote at the meeting.

But till date the amendments on these are awaited. The simple reason behind proxies can be that, it is not convenient for members to attend every time when the meeting is called but we may very interested in the happening of the events in the meeting and wanted to play an active role then he may empower and appoint any other person to attend and vote on his behalf. This method enables the participation of the members indirectly. Recently SEC chairman William Donaldson proclaimed  “time has come for a thorough review of the proxy rules and regulations to ensure that they are serving the best interests of today’s investors and fostering sound corporate governance and transparent business practices.” To that end, the Securities & Exchange Commission announced that it has asked its Division of Corporate Finance to examine current proxy regulations with a view to improving corporate democracy[30].

 The Proxy system no doubt have many favorable arguments but like any other system this is also not free from critiques. It has been argued that this form of Corporate democracy may have existed at common law, for in many cases both ownership and control of the early corporation resided in a few individuals[31] but this postulated presence of this form of corporate governance, however, was disproved because ownership in large companies was so widespread, no one shareholder could amass even a significant minority interest. Thus, the vote of each individual shareholder counted for little or nothing. Furthermore, it is observed that “where ownership was sufficiently sub-divided, the management could become a self-perpetuating body even though its share in the company's ownership is negligible.” Management therefore, and not the 'shareholder-owner,' controls the modern corporation.
Managerial control necessarily diminishes opportunities for meaningful participation by shareholders in corporate governance and in the corporate electoral process.[32]
  • First, shareholders receive limited information on those corporate policies and practices that are not submitted to them for their vote.
  • Second, they have only limited access to corporate proxy machinery.
  • Finally, the only potential recourse for most investors is a state law right to nominate directors from the floor at shareholder meetings. This right remains more theoretical than real, however, for the shareholder proxies are received and the votes are cast even before the meetings have begun.

Then can it be said that there is no real participation of shareholders and it is only the major shareholders who are the players in the field and rest of the small investors are just watching all the happenings like a the spectators. If we have to imbibe the principles of democracy in our corporate culture then it is necessary that every eligible member should make active efforts to participate in the decision making process of the company whereas the state should take responsibility to make laws which facilitates this process. It is well accepted that in large companies it is not possible to involve every shareholder in the decision making process but through the instrument of proxy this can also be achieved. By strengthening the instrument of proxy it is possible to come over the hurdles, defeat the lacunas of proxies and reverting back the title of ownership to the shareholders. This system would also improve check and balance system in the organization which would result in greater efficiency of the management and will reduce the incidence of frauds and misrepresentation.


According to OECD and the report of 2nd Meeting of the Latin American Corporate Governance Roundtable Buenos Aires, Argentina, 28-30 March 2001 it was suggested that the Proxy voting rules should be modified. Following recommendations were made:
  1. Practices should be simplified and standardized:
Proxy voting in many markets remains hindered by archaic voting practices such as share blocking, unreasonable voting deadlines, high fees, disclosure of little or no information concerning how votes are carried out, voting by a show of hands as opposed to ballot and three to four levels of intermediaries between shareholders and the company. Institutional investors must take a leadership role in encouraging parties involved in cross-border voting-- companies, market regulators, as well as global and sub-custodians--to adopt simplified voting procedures.
  1. The Power of Proxy Voting Services:
The use of specialized proxy voting services can also provide an effective means for receiving notice of upcoming shareholder assemblies and proxy initiatives, analyzing the merits of the issues in question, and exercising the right to vote.  
e.g One such service, Institutional Shareholder Services (ISS), provides global proxy coverage for the Franklin Templeton Group, including the Bradesco Templeton offshore funds. ISS currently serves more than 700 institutional and corporate clients, and each year recommends votes on ballot issues for more than 17,000 shareholder meetings around the world.
  1. Shareholders should be provided with adequate notice of shareholder meetings and sufficient information regarding the issues to be voted upon.
Inadequate notice of shareholder meetings is a serious problem, even when using a specialized proxy voting service.

  1. No open issues on the agenda:
Information regarding the issues on the agenda for a shareholder meeting often consists of a few lines in a newspaper announcement, if provided at all. It is not uncommon for the company to include an item called “other business”, or another similarly vague title, in the agenda. Such an open-ended item effectively eliminates the possibility for minority shareholders to properly analyze the issues eventually raised by the controlling shareholders under this agenda item. In our opinion, No issues should be voted upon at a shareholder meeting unless they have been fully described and listed on the agenda at the time is given for convocation of the meeting.

  1. Within reasonable limits, companies should include shareholder-initiated proposals on the agenda of shareholder meetings:
The corporation must include shareholder proposals in the corporate proxy materials, provided certain conditions are met. To avoid frivolous proposals, corporations are not required to include shareholder proposals involving the redress of a personal claim or grievance, operations accounting for less than 5% of the company’s assets or business, matters relating  to the ordinary conduct of business operations, etc.

  1. Shareholders should be able to communicate with each other, especially with regard to issues on the agenda of upcoming shareholder meetings:
Shareholders must be able to communicate with each other to effectively evaluate shareholder meeting agenda proposals, including those proposals opposed by management. The utility of the Internet for rapid, wide and low-cost distribution of information should become an important tool for communications between company and shareholders, as well as among shareholders. Most corporations now have  hompages on the Web, and can easily create a shareholder page to be used as a message board and communication channel. A record of discussions among shareholders can be maintained for the review of shareholders and management alike.
  1. Proxy voting rules should facilitate rather than hinder shareholder participation.

  1. New, convenient methods of proxy voting such as internet voting should be required. 
The shareholders are really the ultimate owner of the company. They bear all the risk of the business and stand to gain the profits arising out of it. They have heavy risk on their shoulders because if the business will have profit then they will also earn dividends but if the business will incur losses than their money which is involved is also gone.

Shareholder has various rights in the company. One of the important right among them is the right to participate in the management of the company. Every shareholder has a right to take part in the management of the company as by participating and voting in the annual general meeting either personally or through proxies. Taking all the information about the management of the is also an important right as possessed by the shareholder.

In the present scenario corporate governance is holding very important place in the corporate world. Every company in the world is trying to incorporate the basic principles of corporate governance. One of the most important principles of corporate governance which has been acknowledged all over the world is the shareholder right to participate in the management of the company and to receive equal treatment.

Therefore it is very clear that for the better performance of the company there should be proper transparency and shareholders should be well informed about the management of the company and there should be proper participation on the part of the shareholders.

A company can also be understood as a form of government which is governed by the management and the shareholders the voters who take part in the election process and elects the board of directors who can be equated with prime minister or president of any country. One of the ways to participate in this democratic process is by way of proxies where the member is unable to come and the meeting. But if we have to imbibe the principles of democracy in our corporate culture then it is necessary that every eligible member should make active efforts to participate in the decision making process of the company whereas the state should take responsibility to make laws which facilitates this process. By strengthening the instrument of proxy it is possible to come over the hurdles, defeat the lacunas of proxies and revert back the title of ownership to the shareholders. This system would also improve check and balance system in the organization which would result in greater efficiency of the management and will reduce the incidence of frauds and misrepresentation.

[1]Julian Velasco, The Fundamental Rights of the Shareholder, cf:  as visited on 25th September 2005.
[2] Section 84, Companies Act, 1956.
[3] Section 87 and 166(1), Companies Act, 1956.
[4] Section 93, Companies Act, 1956
[5] Section 243, Companies Act, 1956
[6] Section 397, Companies Act, 1956
[7] Section 166(1), Companies Act, 1956
[8] Stephen H Dover & Bradesco Templeton, Voting Rights and the Right to Vote, cf: as visited on 25th September 2005
[9] Section 87, Indian Companies Act.
[10] Datey V.S., “Student Guide to Corporate Law”, (Taxmann Allied Service, 5th  ed., 2002) p198.
[11] Section 176, Indian Companies Act, 1956
[12] Kaizuka Masaaki, Corporate Governance in Asia OECD Principals and Beyond, Fourth Round Table on Capital Market Reform in Asia09-10 April 2002, Tokyo, Cf .  as visited on 19/09/2005.

[13] Stilpon Nestor, OECD Principles of Corporate Governance on Shareholder Rights and Equitable Treatment: Their Relevance to the Russian Federation, Cf. as visited on  23/09/2005
[14] International Corporate Governance Network.
[15] Harris Peter and Ben Reilly, Democracy and Deep-Rooted Conflict: Options for Negotiators, Cf:: <Visited on 22nd  September 2005)
[16] Ibid
[17] Ibid
[18] Aggarwal G.D., Corporate Democracy needs further improvement through the companies (Amendment) Bill, 2003 Vol. XXXIII, Charteres Secretary p 833 (June 2003)
[19] H. Henn & J. Alexander, Laws of Corporations and Other Business Enterprises, 396-97 (3d ed. 1983). This description is a highly formalized and traditional one. Creative minds are capable of designing capital structures in which equity interests are granted a spectrum of relative income and voting entitlements. The simplest example is preferred stock, which typically has a preference over common stock in a right to current income as dividends or a right to growth income on dissolution, but has lesser voting rights than common. Modern statutes permit classification of shares to a degree that defies description in this Article. See id. at 285-94. But present or future investment return, and voting, are fundamental attributes of corporate shares. This description also does not take into account other important procedural shareholder rights: the limited rights to inspect corporate books and records and to obtain a shareholder list, see id. at 539-45; the right to bring a shareholder's derivative suit, see id. at 1053; and appraisal rights upon dissent to merger or dissolution, see id. at 1150. Last, and by no means least, is the right of a shareholder to sell its shares in the secondary market, sometimes referred to as the 'Wall Street Rule.' Cf: Ryan Partrick J, Rule 14a-8, Institutional Shareholder Proposals, And Corporate Democracy, 23 Ga. L. Rev. 97  <> (Vsited on 20th September 2005)
[20] Stephen H Dover & Bradesco Templeton, Voting Rights and the Right to Vote, cf: as visited on 25th September 2005
[21] Alan R. Palmiter, The Shareholder Proposal Rule: A Failed Experiment in Merit Regulation, 45 Ala. L. Rev. 901-902. (1994)
[22] Richard M Buxbaum., The Internal Division Of Powers In Corporate Governance, 73 CAL. L. REV. 1671, 1678-1713 (1985) <> (Vsited on 25th September 2005)
[23] Carol Goforth, Proxy Reform as a Means of Increasing Shareholder Participation in Corporate Governance: Too Little, But Not Too Late, Am U. l. REV. 380 (1994) <> (Vsited on 20th September 2005)
[24] Lipton Martin, Corporate Governance in the Age of Finance Corporatism, 136 U. PA. L. REV. 1, 66-69 (1987) <> (Vsited on 25th September 2005)
[26] Section 176(1)(c)
[27] Section 192A of the Companies Act, 1956.
[28]Amitav Ganguly, Analysis of New Law of Postal Ballot Cf:  (Visited on 23rd September 2005).
[29] G.D. Aggarwal, Corporate Democracy needs further improvement through the companies (Amendment) Bill, 2003 Vol. XXXIII, Charteres Secretary p 833 (June 2003)
[30] SEC To Revisit Shareholder Access To The Company Proxy, Corporate Counsel July 2003 Cf: (Visited on 23rd September 2005).
[31] Shareholder Participation in Corporate Management, 40 VA.L.REV. 901, 901 (1954). Cf: Sadat-Keeling Leila N., The 1983 Amendments To Shareholder Proposal Rule 14a-8: A Retreat From Corporate Democracy? 59 Tul. L. Rev. 161  <> (Vsited on 24th September 2005).
[32] Sadat-Keeling Leila N., The 1983 Amendments To Shareholder Proposal Rule 14a-8: A Retreat From Corporate Democracy? 59 Tul. L. Rev. 161  <> (Vsited on 23rd September 2005)
[33] Stephen H Dover & Bradesco Templeton, Voting Rights and the Right to Vote, cf: as visited on 25th September 2005

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