Business Resolution

Business Resolution

What is a Resolution?

The matter of business that are transacted at a general meeting are presented in the form of motions. These motions are taken up for discussion and decision. If the motion is approved by the required majority of members present, it becomes a resolution.

Types of Resolutions

There are two types of resolution. There are:

1.       Ordinary Resolution

2.       Special Resolution

Ordinary Resolution

The resolutions which are passed at a general meeting by a simple majority are called ordinary resolutions. The votes can be cast by members or by proxy. The resolution can be passed either by show of hand or by poll.

Matters decided

The following matters can be decided by an ordinary resolution:

1.       Adoption of statutory report.

2.       Appointment of first directors who are liable to retire by rotation.

3.       Appointment of auditors and fixation of their remuneration.

4.       Appointment of a managing director.

5.       Removal of a director and appointment of a director in his place.

6.       Approval of final accounts.

7.       Alteration of share capital.

8.       Creation of reserve fund etc.

Special Resolution

A special resolution is one which requires at least 3/4th majority of the members voting on it at the General Meeting. The voting can be by a show of hands or by poll. A notice has to be given at least 21 days before the meeting in which a special resolution is passed. The notice must clearly state the resolution to be moved is a special resolution.

Purpose of Special resolutions

Special resolution is required to be passed for the following purposes:

1.       Alteration of a company’s name.

2.       Alteration of the objects clause in the Memorandum of Association.

3.       Alteration of the articles of the company.

4.       Reduction of share capital.

5.       Variation of shareholders rights.

6.       Change of registered office from one state to another state.

7.       Making the liability of directors unlimited.

8.       Voluntary winding up.

Distinction between ordinary and special resolution

Basis of distinction	Ordinary Resolution	Special Resolution
Majority	It can be passed with simple majority	It requires at least 3/4th majority for it to be passed.
Notice	Prior notice is not required for passing an ordinary resolution.	21 days notice must be given before the meeting in which such a resolution is to be passed.
Registration	It does not require to be filed with the Registrar.	A copy of the special resolution must be filed with the Registrar within 30 days from the date of its passing.
Objective	It is required to transact ordinary business.	It is required to transact special business.

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