May 18th, 2026

[A.] Cover Story

Lockstep Voting Agreements: Are They Valid?

A lockstep voting agreement is a contract between the parties to vote as a unified bloc. The parties may be the directors on a board or the shareholders. The parties to the lockstep voting agreement agree to meet before a formal company meeting to decide how the entire bloc will vote. Once a decision is reached, all the members are legally bound to vote in that direction irrespective of their personal viewpoint. Similar behaviour is also seen in Parliament when members of a particular party meet before the parliament session and decide their direction of voting.

In a company meeting, compliance with a lockstep agreement can be ensured through a proxy grant where a designated person is given the authority to cast the votes of the entire group. The key objectives of entering into a lockstep voting agreement are to retain control amongst a bloc, to guarantee selection of a particular individual on board, or to have strategic stability in a company.

The lockstep voting agreements are different from voting trusts. In voting agreements, the shareholders retain the legal ownership of the shares but merely agree to vote like a bloc, whereas in a voting trust, the shareholders transfer their shares to a trust, and the trustee, as an owner, votes according to the terms of the trust.

The lockstep voting agreements are legally valid. However, the legal boundaries of such agreements are often debated. The duration of such agreements (to avoid perpetual control that may be disadvantageous for future shareholders), the coverage of such agreements in public companies within the concept of persons acting in concert, and fiduciary duty of the shareholders to vote in their own interest are some of the points on which these lockstep voting agreements have been challenged in different courts around the world.

In a recent case, the Court of Chancery of the state of Delaware had an opportunity to analyse a voting agreement between three directors where two out of three directors agreed to vote in the same manner as the third director. The third director, feeling dissatisfied with the performance of the first two directors, moved a resolution to remove them and claimed that the resolution stands approved by a majority vote, as the other two directors were under a contractual obligation to vote in the same manner. The court held that while the voting agreement between the parties was valid, the attempt to remove it was ineffective, as the voting agreement did not grant proxy to vote on behalf of others. This case clarifies that the proxy grant is different from a voting agreement, and the proxy grant is a measure adopted to enforce compliance.

[B.] Case Laws

[B.1] Ancillary Objects Cannot Replace Main Objects of the Memorandum in a Company

In the recent case of Jetking Infotrain Ltd v. BSE Ltd, the Securities Appellate Tribunal (SAT) upheld the BSE’s decision to return a listing application, reinforcing a critical distinction in main objects and ancillary objects of the memorandum.

The company had raised funds via a preferential issue to invest in Virtual Digital Assets (VDAs). While they had amended their memorandum to allow such investments under ancillary objects (Clause III(B)), they had not yet received RoC approval to include VDAs in their main objects (Clause III(A)) at the time of investment.

The SAT ruled that actions taken under ancillary clauses cannot operate independently as a primary business activity. Consequently, the investments made before the formal certification of the main object amendment were deemed ultra vires.

For businesses and investors, this is a stark reminder that technical compliance is not a formality. Moving into new asset classes or business lines requires a main objective mandate.

[B.2] Estoppel Against Participating Shareholders: You Can’t Challenge the Deals You Profited From

In the case of Peerless General Finance Investment Co. Ltd. v. Bhagwati Developers Pvt. Ltd., the National Company Law Appellate Tribunal (NCLAT) overturned a NCLT’s decision that had cancelled a decades-old share allotment.

The dispute centred on a 1987 private placement in which the original petitioners (now respondents) had voted for as active shareholders and directors at that time. Later on, they also financially benefited themselves by selling their holdings at a significant premium. Decades later, they challenged the allotment as ‘oppression and mismanagement’.

The NCLAT ruled that because the shareholders participated in the meetings without recorded dissent and accepted the sale consideration without protest, they were estopped from invoking equitable jurisdiction to undo their own commercial decisions.

For companies and investors, this ruling underscores the principle of acquiescence, signalling that the judiciary will not support buyer’s remorse disguised as legal grievances. This decision provides a critical shield for corporate stability, ensuring that shareholders who instrumentalise and profit from a board’s decision cannot later challenge its legality to the detriment of the company’s settled interests.

[B.3] The Arbitrator, Not the Court, Decides: Narrowing Judicial Intervention in Section 11 Petitions

The Supreme Court, in Mohan Ramanujam v. Bloom Energy Corporation, has reaffirmed a hands-off approach regarding the appointment of arbitrators.

In this case, an employee sought arbitration over denied benefits and termination, but the parent company (Respondent No. 1) resisted, raising complex objections regarding its lack of involvement, the statute of limitations, and whether the claims were even arbitrable.

The Court ruled that under Section 11 of the Arbitration and Conciliation Act, a judge’s role is strictly limited to verifying the existence of an arbitration agreement. Any deeper disputes, such as whether a claim is time-barred or if a parent company is truly a party to the contract, are mixed questions of fact and law that must be left to the arbitrator.

For businesses and legal practitioners, this decision reinforces the principle of competence-competence, ensuring that parties cannot use preliminary court hearings to stall proceedings with technical objections. It provides a faster track to the arbitral stage. The courts will no longer act as a secondary gatekeeper for substantive defences at the appointment stage.

B.1 - Jetking Infotrain Ltd v. BSE Ltd, SAT-Mumbai, May 8th, 2026.

B.2 - Peerless General Finance Investment Co. Ltd v. Bhagwati Developers Pvt. Ltd, NCLAT-New Delhi, April 16th, 2026.

B.3 - Mohan Ramanujam v. Bloom Energy Corporation, Supreme Court, March 24th, 2026.