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Special or ordinary resolution

jeets (CS ) (461 Points)

21 July 2010

Hello All,

How to determine whether a particular motion needs to be passed by special or ordinary resolution.

For eg:- While increasing the authorised share-capital of a company , the MOA needs to be altered by Special resolution, Can anyone guide me how to determine it.

Thanks

Best Regards

Jeet

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11 Replies

vivek (CS) (751 Points)
Replied 21 July 2010

If Section specifically provides any kind then it will be pased by that manner either Unanimous/SR/OR. If section does not provide then check for AOA. If Section provid for OR even though the AOA may provide for R thn it will be required to be passed as SR.

As per Act following list may be used (Check once for the Accuracy) :-

MATTERS WHICH HAVE TO BE PASSED BY COMPANY IN GENERAL MEETING BY ORDINARY RESOLUTION

1	22	Ractification of name of company which resembles the
2	61	name of another existing company
3	79	Variation of contracts stated in the prospectus
4	94(2)	Issue if Share at discount
5	149(2B)	Alteration of Share Capital
6	165	Commencement of new business where special resolution could not be passed
7	173,205	Approval of Statutory report
8	210	Declaration of Dividend
9	214	Adoption of Annual Account and Director's report
10	224(5)	Authorising representative of Holding company to inspect the books of subsidiary Company
11	224(1)	Appointment of First Auditors of the Company in default of action by the Board
12	224(2)	Appointment of retiring Auditors
13	224(6)	Appointment of Auditors other than retiring Auditors or a resolution that retiring Auditor shall not be reappointed
14	228(3)(a)	Filling of Casual vacancy caused by resignation
15	255	Audit of accounts of branch office other than by Company's Auditors
16	256	Appointment of First Director in default of provisions in the Articles
17	257	Appointment of retiring Directors.
18	260	Appointment of director who is not retiring director proposed by notice from member
19	269	Appointment of Director at the AGM who was appointed as additional Director by the Board
20	284(1)	Appointment of Managing/whole time Director
21	284(2)	Removal of Director by Special notice
22	293(1)(a) to(e)	Appointment of Director in place of one removed.
23	294(2)	Various purposes has been discussed earlier
24	309(1)	Appointment of Sole Selling Agent made by the Board
25	313(1)	Remuneration to Director for technical services
26	484(1)(a)	Appointment of Alternate Director in case there is no provisions in the Articles
27	490(1)	Winding up voluntarily
28	492	Appointment of liquidators on voluntary winding up
29	496	Filling up vacancy in the office of liquidator
30	497	Duty of liquidator to call the general meeting at the end of each year
31	500/502	Final meeting and dissolution in voluntary winding up
32	500/503	Nomination of liquidator
33	508	Appointment of committee of inspection
34	509	Liquidator to call general meeting every year in thecreditors winding up
35		General meeting for desolution---------------

MATTERS WHICH HAVE TO BE PASSED BY COMPANY IN GENERAL MEETING BY SPECIAL RESOLUTION

Sl.No	Section No	Purpose of Resolution
1	17	Alteration of object clause of MOA for dong new business.
2	17	Change of registered office from one state to another
3	21	Change of name of the company other than deletion or addition of the word "private" with the approval of Central Govt
4	25(3)	Change in the name by deletion of "Limited" or "Private Limited" with the approval of Central Government
5	31	Alteration of Articles of the company
6	77A	Authorising company to buy-back its securities
7	79A	Issue of Sweat equity shares
8	81(1-A)	Issue of Shares to persons other than existing members
9	81(3)	Issue of debentures and raising of loans containing a terms for conversion into equity shares
10	99	Making any portion of share capital to be not called up except in winding up.
11	100	Reduction of Share capital
12	149(2A)	Commencement of new business.
13	163	Keeping register of members/debenture holders copies of annual return at the place other than registered office
14	208	Payment of interest on paid-up capital raised for expenses for construction of any work which will not be profitable for a lengthy period
15	224A	Appointment of auditor in a company in which not less tan 25% of shares are held by specified institution
16	237	Request to Central Government to appoint inspectors to inspect the company
17	259	Increase of number of Directors from that fixed in the Articles.
18	294AA	Appointment of Sole selling agent as well as Sole purchasing Agent by a company having a paid up capital of Rs.50lac and more
19	309	Payment of commission to Director
20	310	Payment of Increased fees to Directors
21	314	Appointment of Directors and there relatives to the place of profit in certain circumstances
22	323	Making liability of any Director or Manager unlimited.
23	372A(1)	Giving loans to any other body corporate, making investment or providing guarantee in excess if limit specified
24	391(2)	Approval of compromise or arrangement or amalgamation by the Direction of the court.
25	433(a)	Winding up of a company by court.
26	484(1)(b)	Voluntary winding up
27	494	Power liquidator to accept share etc as consideration
28	512	Powers of liquidator in members voluntary winding up by special resolution in general meeting.
29	546	In winding up special resolution to give powers to liquidators.

Regards,

1 Like

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jeets (CS ) (461 Points)
Replied 21 July 2010

Hi Vivek,

Thankyou so much for such a detailed explanation,

If you don't mind I have one small clarification that needs to be made here.

Is there any difference between Unanimous/SR/OR

Best Regards

Jeets

Kanika Gupta (C.S Trainee) (100 Points)
Replied 21 July 2010

For difference between OR and SR refer Section 189 of the companies act,1956

jeets (CS ) (461 Points)
Replied 21 July 2010

Thanks Kanika,

Is there any difference between a resolution unanimously passed and one that is is not: and also is there any legal implications attached to it.

Also

In situations where the AOA prescribes ordinary resolution and Law states special resolution, which one would prevail:- Law or AOA:- I guess it should be Law.

Can anyone advice me

Thanks

Kanika Gupta (C.S Trainee) (100 Points)
Replied 21 July 2010

unanimously means resolution passed by all the members present in the meeting and voting.

Special resolution means 75% of the members present in the meeting and voting.

Ordinary resolution means simple majority in favour of the resolution.

When act requires SR and AOA prescribes OR then act prevails

When act requires OR and AOA prescribes SR then SR needs to be passed as in this case AOA is not overriding law.

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Kalpesh Chauhan, (Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com)) (8311 Points)
Replied 21 July 2010

Thanks Vivek

vivek (CS) (751 Points)
Replied 21 July 2010

Agree with Kanika,

1. There are few section where it specifically provide for Unanimous resolution and it is in case of Board Meeting, means all the directors present in meeting must vote in favour of the resolution {like refer Section 372A(2)}.

2. There is a doctrine of "Ultra vires" if Act provides SR then your Article can't provide OR. Their Act will prevail but if Act provide OR then Your Article may provid for SR and Article will prevail.

In simple words Article may be stringent then act but article shall not be liberal one then Act.

Regards,

Yogesh Bhatt (Company Secretary) (475 Points)
Replied 21 July 2010

Thanks to vivek

jeets (CS ) (461 Points)
Replied 21 July 2010

Thanks Vivek for such a detailed explanation:- It was really helpful

Also Thankyou Ms Kanika for your inputs and assistance

I really appreciate it

Best Regards

Jeet

(Guest)

Originally posted by : vivek
	If Section specifically provides any kind then it will be pased by that manner either Unanimous/SR/OR. If section does not provide then check for AOA. If Section provid for OR even though the AOA may provide for R thn it will be required to be passed as SR. As per Act following list may be used (Check once for the Accuracy) :- MATTERS WHICH HAVE TO BE PASSED BY COMPANY IN GENERAL MEETING BY ORDINARY RESOLUTION 1 22 Ractification of name of company which resembles the 2 61 name of another existing company 3 79 Variation of contracts stated in the prospectus 4 94(2) Issue if Share at discount 5 149(2B) Alteration of Share Capital 6 165 Commencement of new business where special resolution could not be passed 7 173,205 Approval of Statutory report 8 210 Declaration of Dividend 9 214 Adoption of Annual Account and Director's report 10 224(5) Authorising representative of Holding company to inspect the books of subsidiary Company 11 224(1) Appointment of First Auditors of the Company in default of action by the Board 12 224(2) Appointment of retiring Auditors 13 224(6) Appointment of Auditors other than retiring Auditors or a resolution that retiring Auditor shall not be reappointed 14 228(3)(a) Filling of Casual vacancy caused by resignation 15 255 Audit of accounts of branch office other than by Company's Auditors 16 256 Appointment of First Director in default of provisions in the Articles 17 257 Appointment of retiring Directors. 18 260 Appointment of director who is not retiring director proposed by notice from member 19 269 Appointment of Director at the AGM who was appointed as additional Director by the Board 20 284(1) Appointment of Managing/whole time Director 21 284(2) Removal of Director by Special notice 22 293(1)(a) to(e) Appointment of Director in place of one removed. 23 294(2) Various purposes has been discussed earlier 24 309(1) Appointment of Sole Selling Agent made by the Board 25 313(1) Remuneration to Director for technical services 26 484(1)(a) Appointment of Alternate Director in case there is no provisions in the Articles 27 490(1) Winding up voluntarily 28 492 Appointment of liquidators on voluntary winding up 29 496 Filling up vacancy in the office of liquidator 30 497 Duty of liquidator to call the general meeting at the end of each year 31 500/502 Final meeting and dissolution in voluntary winding up 32 500/503 Nomination of liquidator 33 508 Appointment of committee of inspection 34 509 Liquidator to call general meeting every year in thecreditors winding up 35 General meeting for desolution--------------- MATTERS WHICH HAVE TO BE PASSED BY COMPANY IN GENERAL MEETING BY SPECIAL RESOLUTION Sl.No Section No Purpose of Resolution 1 17 Alteration of object clause of MOA for dong new business. 2 17 Change of registered office from one state to another 3 21 Change of name of the company other than deletion or addition of the word "private" with the approval of Central Govt 4 25(3) Change in the name by deletion of "Limited" or "Private Limited" with the approval of Central Government 5 31 Alteration of Articles of the company 6 77A Authorising company to buy-back its securities 7 79A Issue of Sweat equity shares 8 81(1-A) Issue of Shares to persons other than existing members 9 81(3) Issue of debentures and raising of loans containing a terms for conversion into equity shares 10 99 Making any portion of share capital to be not called up except in winding up. 11 100 Reduction of Share capital 12 149(2A) Commencement of new business. 13 163 Keeping register of members/debenture holders copies of annual return at the place other than registered office 14 208 Payment of interest on paid-up capital raised for expenses for construction of any work which will not be profitable for a lengthy period 15 224A Appointment of auditor in a company in which not less tan 25% of shares are held by specified institution 16 237 Request to Central Government to appoint inspectors to inspect the company 17 259 Increase of number of Directors from that fixed in the Articles. 18 294AA Appointment of Sole selling agent as well as Sole purchasing Agent by a company having a paid up capital of Rs.50lac and more 19 309 Payment of commission to Director 20 310 Payment of Increased fees to Directors 21 314 Appointment of Directors and there relatives to the place of profit in certain circumstances 22 323 Making liability of any Director or Manager unlimited. 23 372A(1) Giving loans to any other body corporate, making investment or providing guarantee in excess if limit specified 24 391(2) Approval of compromise or arrangement or amalgamation by the Direction of the court. 25 433(a) Winding up of a company by court. 26 484(1)(b) Voluntary winding up 27 494 Power liquidator to accept share etc as consideration 28 512 Powers of liquidator in members voluntary winding up by special resolution in general meeting. 29 546 In winding up special resolution to give powers to liquidators. Regards,

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Amit Gupta (Loosening Myself) (1508 Points)
Replied 22 July 2010

Originally posted by : Kanika Gupta

unanimously means resolution passed by all the members present in the meeting and voting.

Special resolution means 75% of the members present in the meeting and voting.

Ordinary resolution means simple majority in favour of the resolution.

When act requires SR and AOA prescribes OR then act prevails

When act requires OR and AOA prescribes SR then SR needs to be passed as in this case AOA is not overriding law.

AGREE..