[This article was originally published in the leading law journal All India Reporter in the year 1996 with the citation AIR 1996 Journal 130.]
Democracy has become well-established in political institutions all over the world. With the increasing importance of economic institutions, which are coming more and more within the ambit of private sector with liberalisation of national economies, it is equally significant to introduce democracy in such institutions as well. It is in this context that democratisation of company administration becomes essential, in order to ensure that the affairs of a company are conducted in accordance with the wishes of the majority of its members. The Companies Act, 1956, specifically contains provisions to this effect. In fact, for certain matters relating to the administration of a company, which are of special or vital significance, there are provisions requiring passing of special resolutions, wherein a resolution is treated to have been passed only when the votes cast in favour of the resolution are not less than three times the number of votes cast against the resolution.
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