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Section 89 – The Companies Act,1956

The Companies Act, 1956

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:

1[(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 3[ten thousand rupees].

(4) The Central Government may, in respect of any shares issued by a company before the Ist 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.


1. Subs. by Act 53 of 2000, sec. 40, for clause (a) (w.e.f. 13-12-2000).

2. Clause (c) omitted by Act 53 of 2000, sec. 40 (w.e.f. 13-12-2000).

3. Subs. by Act 53 of 2000, sec. 40, for “one thousand rupees” (w.e.f. 13-12-2000).

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The Companies Act, 1956

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