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1904 Supreme(SC) 31
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD MACNAGHTEN, LORD LINDLEY, SIR ANDREW SCOBLE, AND SIR ARTHUR WILSON.
BOMBAY-BURMAH TRADING CORPORATION, LIMITED - Appellant
Versus
DORABJI CURSETJI SHROFF - Respondents
On appeal from the High Court at Bombay.
Decided On : Nov. 17, 18; Dec. 19. 1904.
Solicitors for appellants:Budd, Johnson & Jecks. Solicitors for respondent: Payne & Lattey.
A proxy holder need not be specifically named if they are sufficiently described to be identified. Furthermore, a requirement that a proxy be a shareholder applies at the time the proxy acts, not necessarily at the time of the appointment.
Headnote:(A) Indian Companies Act, s. 77 (re-enactment of s. 51 of Imperial Companies Act, 1862) - Special resolution - Validity of proxies - Requirement of three-fourths majority - If proxies are held to be invalid, the required majority for a special resolution to alter a company's objects may not be secured.
(B) Articles of Association - Form of proxy - Where articles provide a prescribed form for the appointment of a proxy, such a form is generally permissive and not directory. If the person appointed can be sufficiently described or ascertained for business purposes, the proxy is valid even if the person is not named in the strict literal sense.
(C) Qualification of Proxy - Where articles provide that no person shall be appointed or have authority to act as a proxy who is not a shareholder, such a requirement does not necessitate that the person be a shareholder at the time the proxy is signed. The nomination does not become an effective appointment until the person is qualified; therefore, the person must be a shareholder at the time they act as a proxy, not necessarily at the time of appointment.
Facts of the case:
A company sought court confirmation for alterations to its objects passed by a special resolution. The resolution was challenged on the ground that certain proxies used by the chairman were invalid. The proxies were granted via a power of attorney to partners of a managing firm. The chairman was a partner of the firm and a shareholder at the time of the meeting, but he was not specifically named in the power of attorney, nor was he a partner or shareholder when the document was executed several years prior.
Findings of Court:
The court found that the prescribed form in the articles was permissive and that the chairman was sufficiently described to be identified. It further held that the requirement to be a shareholder is a condition for acting as a proxy, and as the chairman was a shareholder at the time of the meeting, the requirement was satisfied.
Issues: Whether a proxy is invalid if the proxy holder is not specifically named in the instrument but is sufficiently described, and whether a proxy holder must be a shareholder at the time of appointment or only at the time of acting.
Ratio Decidendi: A proxy form provided in the articles is permissive; sufficiency of description for identification is adequate for validity. The qualification of being a shareholder for a proxy is a condition precedent to acting, not a condition for the validity of the initial nomination.
Result: Appeal allowed.
Legal Category Hierarchy
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company law
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corporate governance
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shareholders' meetings
- proxy voting
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shareholders' meetings
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memorandum and articles of association
- alteration of objects
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corporate governance
Judgement
Appeal from an order of the High Court (Oct. 17, 1902) dismissing a petition presented under the Indian Companies (Memorandum of Association) Act, 1895, by the appellants for the confirmation by the Court of certain alterations of the companys objects.
Those alterations were proposed to be effected by a special resolution purporting to have been passed and confirmed at meetings of the appellant company held on May 29 and June 19, 1902.
The High Court found that by reason of the invalidity of certain proxies given under the circumstances stated in their Lordships judgment the special resolution was never validly passed. The respondent had objected to their validity. In the High Court argument was confined to two lots of 124 and 192 votes given to Macaulay, the chairman of the meeting, as proxy for absent shareholders. The Indian Companies Act, s. 77, which is for all material purposes a re-enactment of s.
Law. Rep. 32 Ind. App. 39 ( 1904- 1905) Bombay-Burmah Trading v. Dorabji Cursetji Shroff
138
51 of the Imperial Companies Act, 1862 , requires a special resolution to be passed by a three-fourths majority of members present in person or by proxy; which in this instance was not secured if the votes in question were invalid.
Haldane, K.C, Levett, K.C, and Armitstead, for the appellants, contended that the votes were valid. They referred to various articles of association, including art. 65, which provides that no person can act as a proxy who is not a shareholder; art. 64, which gives a prescribed form of proxy ; art. 66, which assumes that he is named therein. They contended that the proxy in dispute was valid, because Macaulay was duly nominated as proxy by the power of attorney in 1881 and was qualified as a shareholder at the time he acted under it by voting. Art. 64 was only permissive and not directory as to the form of the instrument. There is no article which prohibits the appointment of a person to be ascertained at a future time, provided that when he acts he is qualified. Macaulay was sufficiently designated as a partner for the time being of a specified firm; in fact, the chairman of the company is by art. 71 directed to be a partner for the time being of the same firm. It was the settled practice of the company to treat powers of attorney so drawn as valid instruments of proxies.
Cohen, K.C, Jardine, K.C, and Clauson, for the respondent, contended that the proxy was invalid. Macaulay at the date of his appointment—that is, at the date of granting the power of attorney—was not qualified as a shareholder. He was not named in the power, as at least contemplated if not provided by arts. 64 and 66.
Haldane, K.C, replied.
The judgment of their Lordships was delivered by
LORD LINDLEY. The question raised by this appeal is whether an objection taken to a proxy used at a meeting of the shareholders of the above-named company can be sustained.
The company was incorporated in 1863 under the Indian Companies Act (XIX, of 1857), and in 1895 it was duly registered under the Indian Companies Act, 1882. It was formed to carry on trade in timber and petroleum in Burmah, Siam, and other places in the East, and by the companys memorandum of association and by its articles it was in substance provided that the business of the company should be carried on by the firm of Wallace & Co., merchants, of Bombay, " of whatever member or members that firm may for the time being consist," or, if they declined to act, by other managers to be appointed by the company.
As a matter of fact the company was formed to take ovar ft branch of the business of Wallace & Co., and this firm were the secretaries, treasurers, and managers of the company. There never were any others.
By the companys articles of association voting by proxy was allowed. The articles relating to such voting and to the chairman of the company were as follows —
“LXIL Votes may be given either personally or by proxy,
"LXIII. The instrument appointing a proxy shall be in wr
