Option to adopt principle of proportional representation for appointment of directors
Section 163 of the Companies Act, 2013 deals with option to adopt principle of proportional representation for appointment of directors. Notwithstanding anything contained in this Act, the articles of a company may provide for the appointment of not less than two-thirds of the total number of the directors of a company in accordance with the principle of proportional representation, whether by the single transferable vote or by a sys The Act came into force on 01 Apr 2014.
Notwithstanding anything contained in this Act, the articles of a company may provide for the appointment of not less than two-thirds of the total number of the directors of a company in accordance with the principle of proportional representation, whether by the single transferable vote or by a system of cumulative voting or otherwise and such appointments may be made once in every three years and casual vacancies of such directors shall be filled as provided in sub-section (4) of section 161.
Section 163, The Companies Act, 2013 (Act 18 of 2013).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 1
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Tata Industries Limited vs Cyrus Investments Pvt. LTD
Court's Decision & Legal Precedent
The removal of a Director from office, even if carried out in a manner that may be questioned on procedural grounds, cannot be termed as oppressive or prejudicial conduct under Sections 241 and 242 of the Companies Act, 2013, unless it is part of a larger design to oppress or prejudice the interests of some members. The invocation of the 'just and equitable' clause for winding up requires either a functional deadlock or an irretrievable breakdown of trust and confidence in a quasi-partnership relationship. The affirmative voting rights of Directors nominated by institutional shareholders holding majority stakes are valid and do not constitute oppressive conduct. The Tribunal cannot grant reliefs not sought by the petitioners or not permitted under law, including reinstatement of a director after the expiry of his tenure. The conversion of a company from public to private status is valid if the company satisfies the statutory criteria for being classified as a private company, and the Tribunal cannot interfere with such conversion on the ground of lack of probity without establishing actual oppressive or prejudicial conduct.
On this section: Proportionate representation. The Court held that this is an enabling provision allowing companies to provide for proportionate representation through single transferable vote, but it is not mandatory.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Made under this section, and citing it
1 instrument names this provision in its title or its text without being made under it.
Questions about Section 163
What have the courts held on Section 163 of the Companies Act?
Tata Industries Limited vs Cyrus Investments Pvt. LTD (26 Mar 2021) is the leading judgment on this section among those set out below: Proportionate representation. The Court held that this is an enabling provision allowing companies to provide for proportionate representation through single transferable vote, but it is not mandatory.
How do I find court cases under Section 163 of the Companies Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 163, section 163 Companies Act, section 163 of the Companies Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Tata Industries Limited vs Cyrus Investments Pvt. LTD (26 Mar 2021).
What should I read with Section 163 of the Companies Act, and has it changed?
Its own text turns on section 161 (Appointment of additional director, alternate director and nominee director), so none of them can safely be read on its own. 1 other provision in this corpus refers back to it. One instrument names it without being made under it, most recently Exemptions to Government Companies under section 462 of CA 2013 (2015).
When did Section 163 of the Companies Act come into force?
Section 163 of the Companies Act, cited as Companies Act 163, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5089 words
- 143. Powers and duties of auditors and auditing standards1867 words
- 230. Power to compromise or make arrangements with creditors and members1432 words
- 232. Merger and amalgamation of companies1416 words
- 149. Company to have Board of Directors1403 words
- 217. Procedure, powers, etc., of inspectors1390 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.