89. Termination of
disproportionately excessive voting rights in existing companies.—(1)
If at the commencement of this Act any shares, by whatever
name called, of any existing company limited by shares carry
voting rights in excess of the voting rights attaching under
sub-section (1) of section 87 to equity shares in respect
of which the same amount of capital has been paid up, the
company shall, within a period of one year from the commencement
of this Act, reduce the voting rights in respect of the shares
first mentioned so as to bring them into conformity with the
voting rights attached to such equity shares under sub-section
(1) of section 87.
(2) Before the voting rights are brought into such conformity,,
the holders of the shares in question shall not exercise in
respect thereof voting rights in excess of what would have
been exercisable by them if the capital paid up on their shares
had been equity share capital, in respect of the following
resolutions placed before the company, namely:—
(a) any resolution relating to the appointment or re-appointment
of a director or to any variation in the terms of an agreement
between the company and a managing or whole-time director
thereof;
(b) any resolution relating to the appointment of buying or
selling agents;
(3) If, by reason of the failure of the requisite proportion
of any class of members to agree, it is not found possible
to comply with the provisions of sub-section (1), the company
shall, within one month of the expiry of the period of one
year mentioned in that sub-section, apply to the Court for
an order specifying the manner in which the provisions of
that sub-section shall be complied with; and any order made
by the Court in this behalf shall bind the company and all
its shareholders.
If default is made in complying with this sub-section, the
company, and every officer of the company who is in default,
shall be punishable with fine which may extend to ten thousand
rupees.
(4) The Central Government may, in respect of any shares
issued by a company before the 1st day of December, 1949,
exempt the company from the requirements of sub-sections (1),
(2) and (3) wholly or in part, if in the opinion of the Central
Government the exemption is required either in the public
interest or in the interest of the company or of any class
of shareholders therein or of the creditors or any class of
creditors thereof.
Every order of exemption made by the Central Government under
this sub-section shall be laid before both Houses of Parliament
as soon as may be after it is made.
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