What is Resolution?
The “resolution” is a plan sent to the meeting for discussion and approval. If the motion is approved by the members present at the meeting unanimously, it is referred to as a resolution. Three forms of resolutions are available: ordinary resolution, special resolution and unanimous resolution. There is no concept of special resolution in board meetings and very few unanimous resolutions are also required. However, all three are covered in the case of general meetings.
How are Directors appointed at the time of Company incorporation?
An ordinary resolution applies to a resolution adopted by a simple majority of members of the organization.
A special resolution, but on the other hand, is the agreement, approved by a three-fourth majority of the business members.
ORDINARY RESOLUTION
An ordinary resolution is a resolution where the votes cast “for” exceed the votes cast “against” it. This is a resolution affirmed by more than half the motion, present or delegate at the general assembly, confirmed that they had attended. The vote casting, in favour of the resolution, should be passed by one of the following modes, i.e. hand display, polling or electronically.
The member shall be properly informed of the convocation of the conference. In fact, participants who are not present will not be taken into account. In general, an ordinary decision must be taken for AGM (Annual General Meeting) to run ordinary business. Popular enterprise consists of the following:
- Adoption of final accounts.
- Declaration of the dividend.
- Retirement and appointment of Directors.
- Retirement and appointment of Auditors and fixing their remuneration.
Following are some actions for which ordinary Resolution required:
- Accepting deposits from public
- Appointment of alternate director
- To fill casual vacancy of official liquidator
- Removal of Director before expiry of term except Director appointed by NCLT
- Ordinary business transacted at Annual General Meeting
SPECIAL RESOLUTION
Special Resolution (SR) is a Resolution that needs three times as many votes cast in support of the proposal as votes cast against it. A minimum of 75% of members should demonstrate a strong favour for the motion. Many stuff can only be achieved by the organization if a special resolution is approved at the well-established general meeting. The members should be duly notified to the general meeting and the communication should contain the intention of making a resolution as SR specially mentioned.
Following are some actions for which Special Resolution required:
- For changing registered office of company as per sec 12(5) of Companies Act,2013
- For altering Memorandum of association
- For altering Article of Association including alteration having effect of conversion of Private company into Public company and vice versa
- For variation of shareholders right as per section 48(1)
- For reducing share capital of company
DIFFERENCE BETWEEN ORDINARY AND SPECIAL RESOLUTION
| BASIS OF COMPARISON | ORDINARY RESOLUTION | SPECIAL RESOLUTION |
| Meaning | If a majority vote is required in the general meeting to put forward the proposal, it is considered an ordinary resolution. | Whether a super-majority vote is required at the general meeting, it is referred to as a special resolution. |
| Consent of members | A minimum of 51% of members should demonstrate a strong favor for the motion. | A minimum of 75% of members should demonstrate a strong favor for the motion. |
| Registration with ROC | Filing a copy for “OR” with ROC (only certain cases). | Filing a copy of “SR” with ROC. |
| Business transacted | Either the ordinary business or a special business- depends on the need of the Act. | Only a special business. |
CONCLUSION:
Meetings are conducted in an organization to make decisions by voting on specific proposals sent to the meeting. An ordinary resolution is necessary to deal with business, Ordinary Resolution is sufficient to transact the business, apart from the ordinary business are Change of company’s name, at the direction of ROC, when the name registered previously is incorrect or wrong or Rectification of company’s name as directed by Central Government, remuneration of cost accountant.
Matters which require Special Resolution are the issue of sweat equity shares, alteration in the provisions of the memorandum of association, alteration of articles of association, buy back of shares or securities, variation in the objects of the prospectus, shifting of registered office of the company and so on.
