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Types of Resolution in a Company (Explained in Detail)

types of resolution

The resolution is a plan sent to the meeting for discussion and approval. It is known as a resolution if the motion is unanimously approved by the members present at the meeting. There are different types of resolutions, and some of them are also mentioned in this list. Ordinary resolution and special resolutions are two types of resolution.

Additionally, you need to know that there is no concept of special resolution in board meetings, and minimum unanimous resolutions are required. The ordinary resolution would apply to the one adopted by a simple majority of all the company members. On the other hand, a special resolution is an agreement approved by three-fourths of the company members.

Different Types of Resolution

Below we will discuss about various types of resolution used to send for discussion and approval.

Ordinary Resolution

An ordinary resolution is a resolution where the votes for and more votes than those against it. Is the resolution formed by at least half of the motion present or delegate at the General Assembly? It is also confirmed by the people who attended it.

The vote casting is basically in favor of the resolution and should be passed by hand display electronically or polling. It shall inform the members properly of the gathering of the conference. The participants who are not present would not be considered, and an ordinary decision must be taken for an annual general meeting only to run the regular business.

Actions That Requires Ordinary Resolution

  • Accepting deposits from the public.
  • Appointment of the alternate director
  • To fill the vacancy of the official liquidator
  • Removal of the director before the term expiry, except for the director appointed by NCLT.
  • It transacted the ordinary business at the annual general meeting.

Special Resolution

A special resolution is a resolution that needs around three times as many votes cast in support of the proposal as the votes cast against it. About 75% of the members must strongly favor the given motion.

The organization can achieve many things if the special resolution is approved at the general meeting. The members must be notified duly of the general meeting, and the communication must contain clear intentions to resolve.

Actions That Requires Special Resolution

  • It is for changing the registered company address as per section 12 of the Companies Act 2013.
  • For changing the memorandum of association.
  • It is for changing the article of association, like alteration having the effect of conversion of a private company into a public company or vice versa.
  • For a variation of shareholders’ rights as per section 48.
  • To minimize the share of capital.

Difference Between Ordinary and Special Resolution

As you are now aware that there are mainly two types of resolution, ordinary and special. There is a lot of difference between ordinary and special resolution, and some differences are mentioned here.

Meaning

An ordinary resolution is only implemented if a majority vote is required to propose any proposal in the general meeting. Conversely, a special resolution is required in the general meeting when a supermajority vote is needed.

At least 51% of the members must strongly favor the given motion for an ordinary resolution. At the same time, for special resolution, at least 75% of the members should demonstrate a strong favor for the given motion.

Registration with ROC

Filing a copy or OCR with RC is important only in certain cases for an ordinary resolution. But at the same time, filing a copy with Sr. with ROC is important for a special resolution.

Wrap Up!

Above we have discussed about all different types of resolution and their significance in a company.

You would conduct meetings in the organization to make decisions by voting on the specific proposals sent to the meeting. At the same time, the ordinary resolution would be important to deal with the business.

An ordinary resolution is important to deal with the business, and other than regular business is the adjustment for the company’s name to ROC where the previously reported name is wrong or even inaccurate as ordered by the central government.

A special resolution is subject to issuing shares in the sweat shares or changing the provisions already mentioned in the association memorandum and buying back shares, shifting the company’s registered office, etc. You need to understand the key differences between various types of resolution.¬†

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