Ordinary Resolution and Special Resolution

Both ordinary resolution and special resolution are important for company meeting so, a detail discussion about ordinary and special resolution is given below:

Ordinary Resolution

 

Section 81(1) of the Companies Act, 1994 provides that a resolution shall be an ordinary resolution when at a general meeting, of which the notice required under this Act has been duly given, the votes cast in favor of the resolution by members exceed the votes cast against the resolution.

The ordinary resolution is commonly used for ordinary business transacted in the general meeting such as the declaration of dividends, the appointment of an auditor, adoption of annual accounts, the election of directors, issue of shares at a discount, the appointment of secretary, etc.

Certain items of ‘special business’ also require ordinary resolutions under the Companies Act 1994

  1. Issue of shares at a discount
  2. Alteration of the share capital.
  3. Appointment of Branch Auditor.
  4. Increasing or reducing the number of directors within the limits fixed, by the Articles.
  5. Approval to the Board of Directors for exercising any of the powers.
  6. Appointment of the sole selling Agent.
  7. Remuneration is payable to the directors.
  8. Investment in any other body corporate.
  9. Voluntary winding up in specified circumstances.

Special Resolution

Section 87(2) of the Companies Act 1994 provides that a resolution shall be a special resolution when

  • The intention to propose the resolution as a special resolution has been duly specified in the notice calling the General Meeting or other intimation has been given to the members of the resolution;
  • The notice required under this Act has been duly given for the General Meeting, and
  • The votes cast in favor of the resolution by the members in person or by proxy are not less than three times the number of votes, if any, cast against the resolution. The Articles of Association may also provide that certain types of business shall be approved by a special resolution.

Generally in the following cases, a special resolution is required

  1. Change of the registered office from one state to another and change of object Clause of the Memorandum of Association.
  2. Change of the name clause of the Memorandum of Association.
  3. Alteration in the Articles of Association.
  4. Creation of Reserve Capital.
  5. Reduction of Capital.
  6. Removal of registered office from one place to another place in the same state.
  7. Payment of interest out of the capital to the shareholders.
  8. Appointment of inspectors to investigate the company’s affairs.
  9. Fixation of Directors’ remuneration, if the articles provide so and sanctioning of remuneration to a director on the basis of percentage of profit.
  10. Permission to the director to hold any office of profit under the company.
  11. For making the liability of directors unlimited.
  12. Making loans to other companies under the same management.
  13. Voluntary liquidation of a Company.

I think all information about ordinary resolution and special resolution can be found in these articles and both ordinary resolution and special resolution are important for a company meeting.

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