Understanding the Types of Resolution and their Briefs
Published On: Jul 1, 2020 • Last Updated: Dec 11, 2021 • 4.3 min read •
Any action made by a corporate as an artificial entity should be in the nature of a resolution. A resolution may, therefore, be defined as an agreement or a judgment made by the board or members of a company (or class of members).
Within a company, the business items to be discussed at a GM (General Meeting) are presented as proposals. 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 resolutions in Board meetings, and very few unanimous resolutions are also required. However, all three are covered in the case of general meetings.
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.
Let us, therefore, discuss the differences between ordinary and special resolutions.
Basis of Comparision
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.
Either the ordinary business or a special business – depends on the need of the Act.
Only a special business.
Definition of 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 favor 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 businesses. 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.
Definition: 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. 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 specifically mentioned.
The resolution must be adopted in any way, whether the vote by hand or vote or electronically by the members present in person, by proxy or by postal ballot.
Key Differences Between Ordinary Resolution and Special Resolution
The important differences between ordinary resolution and special resolution are discussed as follows:
An ordinary resolution is one where the General Meeting requires the simple majority to put forward the resolution. A special resolution is a resolution that requires a supermajority to accept the resolution at the General Assembly.
The ordinary resolution requires the consent of at least 51 percent of its members to adopt the resolution. On the other hand, in support of the amendment, the special resolution requires at least the approval of 75% of members.
A copy of an ordinary resolution signed by the company officer should be sent only in certain situations to the registrar. A handwritten or hand-written copy of a special resolution must, therefore, be lodged with the Registrar of Companies (ROC) in 30 days bearing the signature of the officer of the company.
The standard resolution has been passed for standard company transactions. Nevertheless, a particular business can be transacted in accordance with the requirement of the Companies Act, through special resolution or ordinary resolution.
Meetings are conducted in an organization to make decisions by voting on specific proposals sent to the meeting. Resolutions are nothing more than the manifestation of the will of the company. An ordinary resolution is necessary to deal with business, other than an ordinary business is the adjustment of the name of the company, to ROC, where the previously reported name is inaccurate or wrong, or correction of the name of the company as ordered by the central government, payment of the cost accountant.
Special resolution subjects include issuing of shares in sweat shares, changing the provisions of the Association Memorandum, altering association articles, buying-backs of shares or securities, altering the objects of the prospectus, shifting the registered office of the Company, etc.
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About the Author
Anandan Mudaliar pursuing Company Secretary is associated with LegalWiz.in as Operational Executive of the Company. He is handling various MCA related compliance along with good grip in Company, LLP and other various legal drafting.