Introduction:
Articles of Association and Memorandum of Association clauses of companies describe the regulatory and regulatory rules. However, directors of companies or shareholders may accept decisions to make those regulations or to amend the constitution itself. It may be presented at general meetings (general and special decisions) or Board meetings. This article will describe all about the ordinary as well as the special resolution.
Relevant Provision
Section 114: This provision is in accordance with Section 189 of the Companies Act 1956, which provides that, if the proposed vote of a decision exceeds the vote cast in the member’s motion against the decision, the decision shall be a general decision. If enough is said in the letter, the resolution called the General Assembly will be different.
What is an Ordinary Resolution?
Many of the decisions used for general change, which require the majority of shareholders or directors to agree or disagree with a decision, are known as ‘general decisions’. This type of resolution may be passed by a show of hands at a meeting.
Passing of Ordinary Resolution
The general decision is a popular vote. As provided for in subsection (1) of paragraph 114, a decision shall be a valid decision if the notice duly given of that decision reaches, where necessary, the votes cast to be in accordance with that decision.
The chairperson who casts the vote will be regarded as a general decision as applied, to determine the problem. Electronic voting, voting, or other forms of voting approved by hand or by postal ballot may be a form of voting.
Only eligible and voting members will be included in the number of votes. Therefore, members who do not allow or are not allowed to vote (even if it is subject to the provisions of this Act) will not be counted. Where the rules or provisions of the Act provide for the adoption, general meeting or approval of a company, a decision of a company, and an official without specifying the purpose of the decision to be made, an order is required.
However, either the party or the member proposing the decision may provide the necessary notice.
What is a Special Resolution?
Special decisions – also known as ‘unconventional decisions’ – are required for very important decisions or those that affect a company’s constitution. This requires at least 75% of shareholders or directors to agree – sometimes up to 95%. Unlike standard decisions, votes are determined by the number of shares given to each shareholder (as opposed to the number of shareholders). Special decision types include:
- Changing company name;
- Making changes to the Articles of Association; or
- Transforming an independent company into a public company.
Passing of Special Resolution
The key conditions for appealing a special decision are;
- The notice appropriately stated the purpose of the decision as a special decision.
- Notice was given as required by the Act.
- The votes cast in support of this decision do not exceed three times the number of members who oppose the decision. In other words, the resolution was adopted with 75% of the votes cast.
Voting can be by show of hand, electronic voting, voting, or any other approved form or voting by post. The number of votes for ‘eligible and voting’ representatives will only be calculated. Therefore, citizens who do not agree or are not allowed to vote (even under the provisions of this Act) will not be counted. Therefore, the organization or member proposing the decision may provide the necessary notice.
Other types of resolutions
The provisions of the Act include the adoption of resolutions, which vary. For example, paragraph (6) of section 230 of the Act on the compromise agreement regime’s approval. This resolution requires the overwhelming support of three-fourths of the shared interest.
Process of passing the resolutions
The decision as ‘movement’ is suggested. Motion becomes a decision only after the majority of members have accepted it. The nominee’s proposal must be signed in writing and submitted to a Presidential vote at the conference. In the case of business meetings, only certain decisions are included in the agenda. However, such proposals are the result of negotiations and may not be allowed if the Act does not require a special decision.
Secretarial Standard-2 Section 7.1 stipulates that each decision is presented by one member and supported by another. The proposed proposal could be changed during the debate. Amendments are any change in a member’s significant nomination until a vote has been taken and approved. A Member who has not commented on a major proposal or who has never removed an amendment may propose an amendment, but a formal proposal cannot be amended.
The chairperson may consider or reject the amendment for various reasons such as inconsistency, duplication, inconsistency, etc. When an amendment is made, an important proclamation is accepted and supported and a discussion of the amendment begins. Anyone who has ever talked about a major proposal can talk about an amendment, but no one is allowed to talk about the same amendment twice. After a detailed consideration of the proposal, we will be voted on. When this amendment is approved, it will be included in the intermediate motion form.
The revised resolution, known as the “strong proposal,” is then presented to the board. When an amendment is rejected, the main proposal may be contested again, but the original proposal cannot be repeated if the outstanding proposal is voted on and defeated. There can be a variety of changes in the main movement. One amendment can be changed to change another provision, but can only be changed once.
If a sufficient number of amendments are included in the main motion, the initial action of the amendment may be removed amicably and a new proposal may be adopted incorporating all amendments. The President has the power to determine the order of the various amendments to be considered.
Interpretation of the interim period of decisions passed Under the Companies Act, 1956
The Department of Corporate Affairs has issued General Circular No. 32/2014 dated 23 July 2014 in respect of the determination of the period of change in the decisions passed under the Companies Act, 1956. In its Circular, the Department states:
The Government is informed that many companies have passed decisions for the 2013-14 financial year under the relevant provisions of the Companies Act, 1956 (Old Act) which is in various stages of implementation after implementing the relevant provisions of the new Companies Act, 2013 (New Act). The Department has recommended that while section 6 of the General Clauses Act, 1897 protects the implementation of these decisions, it would be better if the communication that is provided is also taken out of the matter by the Department with extreme caution.
The issue has been investigated because of similar issues identified earlier. It is clarified that decisions approved or passed by companies under the relevant provisions of the Old Act from 1 September 2013 to March 31, 2014, may be made, in accordance with the provisions of the Old Act, notwithstanding the repeal of the law. -1 April, 2014 and (b) that this provisional provision will be available for one year from the adoption of a resolution or six months from the commencement of the corresponding provision in the New Act or any later.
The main difference between a General Resolution and a Special Resolution
The main differences between the general and the special resolution are defined as follows:
A common solution is one where the general assembly needs a simpler majority to submit a resolution. A special resolution means a decision that requires a clear majority to accept a decision at a general meeting.
In certain cases only, it is compulsory to submit a copy of the standard decision with the Registrar signed by the organization’s offices. A printed or handwritten copy of the special decision, including the company’s official signature, must be sent to the Registrar of Companies (ROC) within 30 days.
A general decision requires the approval of at least 51 members to accept the decision. On the other hand, a special decision requires at least 75% support for the decision.
Conclusion
Meetings are held at the company to discuss and vote on specific proposals set out in the discussion. Decisions are nothing more than a reflection of the will of the company. Ordinary decisions will be required to do business outside of ordinary business. If the registered name is incorrect or false or if the company name is changed as directed by the Central Government etc. A general decision will have to be made.
In the company, meetings are held to reach decisions, by voting on official proposals presented at the meeting. Decisions are nothing without the company’s will. General Amendments is sufficient to do business, other than ordinary business there is a Change of Company name, as directed by the ROC, where the pre-registered name is incorrect or incorrect or the Company name amendment as directed by Central Government, accountant wage costs.
Issues requiring special resolution are the issue of stock equity shares, modification of the provision of the organization’s memorandum, modification of organizational articles, return of shares or securities, differences in prospectus assets, the transfer of a registered company office, and so on.
References:
- Jaya Ahuja, Understanding Ordinary Resolution & Special Resolution, Legalwiz, (July 23, 2020), https://www.legalwiz.in/blog/understanding-ordinary-resolutions-special-resolutions – :~:text=Ordinary%20Resolution%20is%20one%20in,resolution%20at%20the%20general%20meeting.&text=On%20the%20other%20hand%2C%20the,75%25%20support%
- Surbhi S., Difference Between Ordinary Resolution and Special Resolution, Key Differences, (January 5, 2018), https://keydifferences.com/difference-between-ordinary-and-special-resolution.html
0 Comments