The company is a legal entity that is different from it members that constitute it, however, this doesn't mean that they do not have any duty or right over it. The dispersal of control and ownership makes it important for shareholders to know their rights, privileges and liabilities of the shareholders.
Equity shareholders in a company are the main shareholder of the company but when the distribution of share is done the preference shareholder will be the first one to be distributed the dividend. Since the position of equity shareholder is not as secure as preference shareholder they have more voting rights.
The shareholder has the right to vote upon the questions of legal competency as they have a personal interest in the subject matter as opposed to any particular interest of the company.
Generally, the voting rights in a company are enjoyed by the equity shareholders only, what preference shareholder enjoy as voting right are limited. The reason behind such a divide is that preference shareholder is in a comparatively secure position to an equity shareholder.
Under certain condition, the preference shareholders also enjoy voting rights.
The right of the preference shareholder is dependent on the amount of preference share the person holds in a company.
Every member that is limited by share and hold any equity share capital have a right to vote in a company with respect to every resolution that is passed in the company.
Shareholders have three classes of right in any company in which they hold share contract. These are:
Votes that are casted by the shareholder in any meeting play a decisive role in the proposed business. Voting in a general meeting can be convened in two different ways:
By attending the General Meeting
The voting in the annual general meeting can be conducted through Show of Hands or by Poll if the voting has not been demanded to be conducted through an electronic medium. If the company faces no objection they can vote through a simple method of show of hands or by Poll that can be demanded by the shareholders that have shares worth Rs. five lakh or have 10% voting power.
By Voting Electronically
Every listed company or companies that have more than 1000 shareholders need to include e-voting options for their shareholders as per the purview of companies act 2013.
The article of Association of any company can be used to place a certain restriction upon the voting rights of the shareholders. For instance, the article of association of many companies includes the restriction clause on the voting rights for which one-time sum which was liable to be paid was not paid by the shareholder.