What are Ordinary Resolutions and Special Resolutions?

Introduction 

Articles of Association and Memorandums of Association of companies hold clauses that lay out the rules for governing and administering them. Though Company directors or shareholders may pass the resolutions or amend the constitution itself to make such a decision. It can be delivered at General Meetings As well as Board meetings. This article defines Ordinary Resolution, and Special Resolution, And also defines the Difference between Ordinary Resolution and Special Resolution that is specified.

Ordinary Resolution

According to Section 114 (1) of the Companies Act, 2013-

Under the Companies Act, A resolution shall be an ordinary resolution if the notice is needed. It has been duly given and it needed to be passed by the votes cast, whether on a show of hands, electronically, or on a poll, as the case may be, in favor of the resolution which includes the casting vote, if any Chairman or by members who being granted so to do vote in person, or where proxies are allowed or by postal ballot, exceed the votes cast against the resolution by the members, so granted and voting.

Matters decided

There are various matters that can be decided by an ordinary resolution which are mentioned below:

• Acquiring the statutory report.

• Appointment of first directors who are accountable to retire by rotation.

• Appointment of auditors and fixing their salaries.

• Appointment of a managing director.

• Removal of any director and appointment of a director in his place.

• To provide authority over final accounts.

• Adoption of the report of directors.

• Election of directors.

• Issue of shares at a discount subject to sanction under the Company Law Board.

• Any amendment in share capital.

• Creation of reserve fund and many more.

Special Resolution

Special Resolution means a resolution in which the casting of votes in favor of the resolution must be three times higher than the casting of votes against it. If a special resolution is certified at the duly constituted general meeting then there are several things that can be done by the company only. The notice of the general meeting should be duly provided to the members, and the notice should accommodate the intention to object to the special resolution to be given particularly.
The resolution is needed to be passed by any procedure like voting on a show of hands electronically by the members present in person or via postal ballot.

Purpose of Special resolutions

The purpose of a Special resolution is needed to be passed which are given following:

• Amendment of the company name.

• In the Memorandum of Association, amend the objects clause.

• Amendments in the articles of the company.

• Transformation of any segment of the underserved capital into reserve capital.

• Deduction of share capital.

• Variation of the rights of shareholders.

• Any changes in the place of registered office from one state to another.

• Payment of interest out of capital.

• Making the responsibility of the directors unlimited.

• Voluntary winding up.

Procedure for Passing a Resolution

Until it wins approval to be passed for a proposed resolution that is referred to as a movement. It becomes a resolution after the appropriate permission is obtained under the Companies Act, 2013. When it comes to topics that need a special resolution and they must be included in the agenda of the meeting, which is given at the notice of the meeting time is sent out. Motions arising from negotiations may be authorized for subjects that do not need a special resolution under the Companies Act, 2013.

According to Secretarial Standard-2 paragraph 7.1., normally, each resolution is introduced by one member and then the second resolution is introduced by another member. During the debate, the under-consideration motion may be changed. The primary motion can be altered in any number of ways. On the other hand, an amendment can only be changed once. When a motion contains a large number of amendments then a new motion may be voted; on containing all of the amendments, and the old motion may be withdrawn after receiving the common consent of the members.

Where the resolution is special then Form MGT – 14 is required to be lodged with the Registrar of Companies within 30 days of the resolution being passed. There are some attachments which are given following:

• A copy of the attached resolution was passed.

• Section 102 of the Companies Act of 2013 needs an explanatory statement.

• When any changes are made then provide a copy of the Article of Association of Company Incorporation.

• When any changes are made then provide a copy of the Memorandum of Association.

Difference between Ordinary Resolution and Special Resolution

There are several differences between Ordinary Resolution and Special Resolution which are as follows:

Conclusion 

It concluded that Under the Companies Act, A resolution shall be an ordinary resolution if the notice is needed. It has been duly given and it needed to be passed by the votes cast, whether on a show of hands, electronically, or on a poll, as the case may be, in favor of the resolution which includes the casting vote, if any Chairman or by members who being granted so to do vote in person, or where proxies are allowed or by postal ballot, exceed the votes cast against the resolution by the members, so granted and voting. If a special resolution is certified at the duly constituted general meeting then there are several things that can be done by the company only. The notice of the general meeting should be duly provided to the members, and the notice should accommodate the intention to object to the special resolution to be given particularly.

Author:

Radhika Punani
Ambala
I am Radhika from Ambala city. I qualified LLM from Kurukshetra University and B.A.LLB from Maharishi Markandeshwar University