Chapter IV - Share Capital and Debentures
Section 47
Section 47: voting rights
Equity shareholders vote on every resolution in proportion to paid-up equity capital, while preference shareholders vote only on specified resolutions unless their dividend is two or more years in arrears.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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.
Introduction
Section 47 sets the default voting position for members of a company limited by shares. Equity voting is subject to section 43 (differential rights), section 50(2) (no vote on amounts paid in advance of calls) and section 188(1) (related-party voting restrictions).
Preference shareholders have a limited vote, which expands to all resolutions when the dividend on their class has been unpaid for two years or more.
Key takeaways
Equity vote
Each equity shareholder can vote on every resolution, and a poll is in proportion to paid-up equity capital.
Preference vote
Preference shareholders vote on resolutions directly affecting their rights, winding up, and repayment or reduction of equity or preference capital.
Arrears trigger
If dividend on a class of preference shares is unpaid for two years or more, that class can vote on all resolutions.
Exemptions
Section 47 does not apply to a private company, or a Specified IFSC public company, whose memorandum or articles so provide; Nidhis have a five per cent. poll-vote cap.
Map equity voting
Subject to section 43, section 50(2) and section 188(1), every member holding equity share capital can vote on every resolution placed before the company. On a poll, the vote is in proportion to the member’s share of paid-up equity share capital.
Apply the exceptions
Section 43 allows equity with differential voting rights under the prescribed rules. Section 50(2) gives no vote on amounts paid in advance until called up. The second proviso to section 188(1) bars a related-party member from voting on the resolution approving the contract or arrangement concerned, subject to the further proviso in that section.
Map preference voting
A preference shareholder votes, for that capital, only on resolutions that directly affect the rights attached to the preference shares, and on any resolution for winding up the company or for repayment or reduction of its equity or preference share capital. On a poll, the vote is proportionate to the member’s share of paid-up preference capital.
The first proviso keeps the ratio of equity votes to preference votes equal to the ratio of paid-up equity capital to paid-up preference capital.
Check dividend arrears
Where the dividend on a class of preference shares has not been paid for two years or more, that class may vote on all resolutions placed before the company. Track dividend history class by class.
Exemptions and modifications
G.S.R. 464(E) dated 5 June 2015, issued under section 462, provides that sections 43 and 47 shall not apply to a private company where its memorandum or articles of association so provide. Paragraph 2A, inserted by G.S.R. 583(E) dated 13 June 2017, makes the exceptions in that notification applicable only to a private company that has not committed a default in filing its financial statements under section 137 or its annual return under section 92 with the Registrar.
G.S.R. 08(E) dated 4 January 2017 provides that sections 43 and 47 shall not apply to a Specified IFSC public company where its memorandum or articles of association provide for it.
For Nidhis, G.S.R. 465(E) dated 5 June 2015 applies clause (b) of section 47(1) subject to the modification that no member shall exercise voting rights on poll in excess of five per cent. of total voting rights of equity shareholders. Check the current text of these notifications, including any later amendments, before relying on an exemption.
Practical preparation
Check any section 462 exemption or modification that applies to the company; list classes and paid-up amounts; identify differential-rights shares and calls paid in advance; flag related-party resolutions; classify each resolution for preference voting; check preference dividend arrears before the meeting.
Commencement and amendment record
Section 47 came into force on 1 April 2014 under S.O. 902(E). Section 11 of the Companies (Amendment) Act, 2017 added the reference to section 188(1) in section 47(1). Under S.O. 630(E), that provision came into force on 9 February 2018.
Practical checklist
Do
- Compute poll votes on paid-up capital, not nominal capital.
- Check preference dividend arrears before each general meeting.
Avoid
- Do not count votes on amounts paid in advance of calls.
- Do not let related-party members vote where section 188(1) bars it.
Illustrative example
Hypothetical: dividend arrears
A company has not paid dividend on a class of preference shares for two years and calls a general meeting on an unrelated matter.
Check arrears
Confirm the unpaid period for that class is two years or more.
Extend vote
Under the second proviso, that class can vote on all resolutions.
Count
Compute poll votes on paid-up preference capital, keeping the ratio in the first proviso.
Outcome
- The preference class votes on the unrelated resolution because the arrears condition is met.
Glossary
- Poll
- A vote counted by shareholding, which section 47 ties to paid-up capital.
- Paid-up capital
- The amount actually paid up on shares, which is the basis of poll voting under section 47.
Frequently asked questions
Can preference shareholders vote on all resolutions?
Only when the dividend on their class has been unpaid for two years or more; otherwise they vote on the listed resolutions only.
Does money paid in advance of calls carry votes?
No. Section 47(1) is subject to section 50(2), which denies voting rights on such amounts until called up.
Can a private company set its own voting rules?
Under G.S.R. 464(E), section 47 does not apply to a private company whose memorandum or articles so provide, subject to the filing condition in paragraph 2A inserted by G.S.R. 583(E).
Why does section 47 refer to section 188?
The 2017 amendment made equity voting subject to section 188(1), which restricts related-party members from voting on the related-party resolution it covers.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026