Chapter VII - Management and Administration
Section 106
Section 106: when a member’s voting rights can be restricted
Section 106 limits the grounds on which a company can stop a member from voting. The articles may bar voting only on shares with unpaid calls or other sums presently payable, or on which the company has exercised a lien.
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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) 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.
Introduction
The section also allows a member with more than one vote to use only some of the votes, or to cast them differently, on a poll.
Section 106 commenced on 12 September 2013 under S.O. 2754(E). The India Code consolidated text shows no amendment, and the text is identical to the Act as published in 2013. For a private company, G.S.R. 464(E) dated 5 June 2015 provides that sections 101 to 107 and section 109 apply unless otherwise specified in the respective sections or the articles of the company provide otherwise. Paragraph 2A, inserted by G.S.R. 583(E) dated 13 June 2017, makes the relaxations available only to a private company that has not defaulted in filing its financial statements under section 137 or its annual return under section 92 with the Registrar.
Key takeaways
Two permitted grounds
The articles may provide that no member votes on shares on which calls or other sums presently payable are unpaid, or on which the company has exercised a lien.
No other ground
Except on those grounds, a company must not prohibit a member from exercising voting rights.
Split voting on a poll
A member with more than one vote, or the member’s proxy or other person entitled to vote, need not use all the votes or cast them all the same way.
Private company exemption
Private companies can depart from section 106 through their articles, subject to the conditions of G.S.R. 464(E) as amended.
Grounds for restricting votes
Section 106(1) applies notwithstanding anything else in the Act. The articles may provide that no member shall exercise any voting right on shares registered in that member’s name on which any calls or other sums presently payable by the member have not been paid, or on which the company has exercised a right of lien.
Section 106(2) then closes the list: except on the grounds in sub-section (1), a company shall not prohibit any member from exercising voting rights on any other ground.
- India Code — consolidated Companies Act, 2013, section 106
- eGazette — MCA notification S.O. 2754(E), 12 September 2013 (commencement)
- eGazette — MCA notification G.S.R. 464(E), 5 June 2015 (exceptions and modifications for private companies)
- eGazette — MCA notification G.S.R. 583(E), 13 June 2017 (amending G.S.R. 464(E))
Using votes on a poll
Under section 106(3), on a poll taken at a meeting, a member entitled to more than one vote, or the member’s proxy where allowed, or another person entitled to vote for the member, need not use all the votes if voting, or cast all the votes used in the same way. This allows, for example, a custodian to vote different blocks of shares differently.
Private companies
For a private company, G.S.R. 464(E) dated 5 June 2015 provides that sections 101 to 107 and section 109 apply unless otherwise specified in the respective sections or the articles of the company provide otherwise. Paragraph 2A, inserted by G.S.R. 583(E) dated 13 June 2017, makes the relaxations available only to a private company that has not defaulted in filing its financial statements under section 137 or its annual return under section 92 with the Registrar. A private company that wants different voting restrictions should therefore set them out in its articles and keep its section 137 and section 92 filings up to date.
Practical preparation
Check the articles for any voting restriction; confirm calls are unpaid or a lien has actually been exercised before excluding votes; record the basis for any exclusion in the scrutiniser’s report or minutes; allow split voting on a poll; for private companies, confirm the G.S.R. 464(E) conditions are met before relying on the articles.
Practical checklist
Do
- Exclude votes only on the grounds allowed by section 106(1) and the articles.
- Tell affected members in advance why their votes on particular shares will not count.
Avoid
- Do not bar a member from voting because of a dispute unrelated to unpaid calls or a lien.
- Do not insist that a member casts all votes the same way on a poll.
Illustrative example
Hypothetical: unpaid call money
A member of a public company has not paid a call on partly paid shares. The articles allow voting rights on such shares to be suspended.
Check
The company confirms the call is presently payable and unpaid.
Restrict
Under the articles and section 106(1), the member cannot vote those shares.
Other shares
The member can still vote fully paid shares; section 106(2) prevents any wider restriction.
Outcome
- The restriction is lawful because it rests on a ground allowed by section 106(1).
Glossary
- Call
- A demand by the company for payment of the unpaid amount on partly paid shares.
- Lien
- The company’s right, under its articles, over a member’s shares for money owed to it.
- Poll
- A vote counted by the number of votes attached to shares, rather than by show of hands.
Frequently asked questions
Can a public company bar a member from voting for breaching a shareholders’ agreement?
Not under section 106. Except on the grounds of unpaid calls or other sums presently payable, or exercise of a lien, a company may not prohibit a member from voting.
Can a member vote some shares for and some against?
Yes, on a poll. Section 106(3) allows a member with more than one vote to cast votes differently or not use all of them.
Does section 106 bind private companies?
Under G.S.R. 464(E), it applies to private companies unless the articles provide otherwise, but only for private companies not in default of their section 137 and section 92 filings (paragraph 2A, inserted by G.S.R. 583(E)).
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026