Ordinary and Special Resolution

Ordinary and Special Resolution

Ordinary and Special Resolution

Under Companies Act, 2013, the decisions that are taken by companies fall under the resolutions. A company is an artificial being, so its decision comes in the form of a resolution only. Any such resolution is made accordingly, either it is an agreement or a decision made by the directors or members of a company. A resolution can be based on anything, any vote or board meeting as the board members basically run the company. When a resolution is in the process of making, it is called a proposed resolution and changes can be included in it while being in the process. Whereas when the resolution is passed, the company and its members are bound to follow and work as per the decision. 

There are three types of resolutions, original, special, and unanimous resolution. 

Ordinary Resolution

The Ordinary Resolution Under Section 114 of the Companies Act, 2013 is defined as a resolution if the notice required as per the Act has been provided and is passed by the votes cast, be it on a show of hands / electronically / on a poll. In the case of the favour of the resolution, it is based on the votes, including the vote of the Chairman, by the members who are required to provide the vote in person, where proxies are granted by postal ballot/proxy which is cast against the resolution provided by the members who are in power of voting. 

  1. Anyone, not voting is not considered and the resolution is to be passed to carry out the ordinary business at AGM (Annual General Meeting). The following are the businesses present in the ordinary business:
  2. Retirement and appointment of Directors.
  3. Adoption of final accounts.
  4. Retirement and appointment of Auditors and fixing their remuneration.
  5. Declaration of the dividend.
Special Resolution

As per Section 114 of the Companies Act, 2013, the Special Resolution is notified timely in the notice calling the general meeting/intimation given to the members of the resolution. The Speical Resolution is passed by the votes cast, be it on a show of hands/electronically/on a poll. The favour of the resolution is based on the votes, by the members who are required to provide the vote in person/by proxy/postal ballot which is cast and is to be not less than three times the number of the votes, if any against the resolution provided by the members who are in power of voting.

As per the third resolution is considered, it is to be voted by all the members without a single vote being cast against it, only then does it fall as the unanimous resolution. In the case of a private company, the Companies Act 2013 added a new resolution which includes the unanimous approval/vote of all the members.  

Difference between Ordinary and Special Resolution

The things or points which differentiate and parts the 2 resolution from each other are:

  1. The consent of the members in the favour of one resolution or agreed upon percentage for the original resolution to pass is at least 51%, whereas, in the special resolution, the consent of at least 75% members in the favour is required. 
  2. The ordinary resolution is passed to carry out the Ordinary business, when a special business can be carried out through the special resolution or ordinary resolution, according to the requirements of the Companies Act. 
  3. A majority seen clearly is all that is required to move the resolution at a general meeting for an ordinary resolution. And, in special resolution, there is a great number/percentage or a supermajority is required to pass the resolution at the general meeting. 
  4. The copy of an ordinary resolution signed by the officer of the company only in some cases requires to be filed with the registrar of the company. However, in special resolution, a printed or hand-written copy of the resolution inclusive of the sign of the officer is supposed to be filed with the Registrar of Companies (ROC) within a period of 30 days, i.e. a month. 

Voting or asking the consent of the members of the company responsible for the changes made in the company is what makes things a bit formal, clean, and a must. A simple way of providing a decision on certain issues or things is what makes it reliable, and that of the majority is what wins.