Resolutions - Company Meetings, Company Law | Company Law - B Com PDF Download

Resolutions

The decisions of a meeting take the form of resolutions carried by a majority of votes. A question on which a vote is proposed to be taken is called a 'motion'. Once a 'motion' has been put to the members and they have opted in favour of it, it becomes a resolution. A resolution may, thus, be defined as the formal decision of a meeting on a particular proposal before it.

Types of Resolutions

Resolutions are of the following types :

1. Ordinary Resolutions ;
2. Special Resolutions ; and
3. Resolutions requiring special notice

Ordinary Resolution 

At a general meeting of which notice has been given, if votes cast in favour of the resolution by members exceed the votes, if any, cast against the resolution by members, the resolution so passed is an ordinary resolution [Sec. 189(1)]

Unless the Companies Act or the memorandum or the articles expressly require a special resolution or resolution requiring special notice, an ordinary resolution is sufficient to carry out any matter.

Transactions where ordinary resolution is required

Important maters for which an ordinary resolution is enough are as follows :

1. Issue of shares at a discount (Sec. 79)
2. Alteration of the share capital (Sec. 94)
3. Approval of the statutory report (Sec.165)
4. The consideration of accounts, the Balance Sheet and the report of the Board of Directors and of the auditors (Sec. 210)
5. Appointment of auditors and fixation of their remuneration [Sec. 224(1)].
6. Appointment of the first directors who are to retire by rotation [Sec. 255(1)].
7. Increase or decrease in the number of directors within the limits prescribed by the Articles [Sec. 258].
8. Adoption of the appointment of sole selling agents [Sec. 294].
9. Removal of a director and appointment of another director in his place [Sec. 284(1)].
10. Declaration of dividend [Sec. 205].
11. Appointment of liquidator in case of voluntary winding up and fixing his remuneration [Sec. 490(1)].
12. To rectify the name of company [Sec. 22].
13. To cancel or redeem debentures [Sec. 21].
14. To cancel directors by rotation [Sec. 256].
15. To approve the remuneration of directors [Sec. 309].
16. To fill the vacancy in the office of Liquidator [Sec. 492].

Special Resolution 

The resolution is a special resolution, if

1. The intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting ;
2. The notice required has been duly given of the general meeting; and
3. The votes cast in favour of the resolution by members are three times the number of the votes, if any, cast against the resolution by the members [Sec. 189 (2)].

A copy of the special resolution must be filed with the Registrar within 30 days of its passing.

Special Resolution Matters

In addition to the matters given in the articles of the company, the Companies Act specifies certain matters for which a special resolution must be passed ; for example,

1. To alter the memorandum of the company [Sec. 17];
2. To alter the articles of the company [Sec. 31];
3. To issue further shares without pre-emptive rights [Sec. 81];
4. For creation of a reserve capital [Sec. 99];
5. To reduce the share capital [Sec. 100];
6. To pay interest out of the capital to members [Sec. 208],
7. For authorising a director to hold an office or place of profit [Sec. 314];
8. For voluntary winding-up of a company [Sec. 484].

Resolutions Requiring Special Notice 

A resolution requiring special notice is not an independent class of resolutions. It is a kind of ordinary resolution, with the only difference that here the mover of the proposed resolution is required to give a special notice of 14 days to the company before moving the resolution, and the company shall then immediately give its members notice of the resolution in the same manner as it gives notice of the meeting. If that is not practicable, the company shall give not less than seven days notice before the meeting either by advertisement in a newspaper or in any other mode allowed by the articles (Sec. 190).

In addition to the purposes enumerated in the articles requiring special notice, under the Act, special notice has to be given for the following matters :

(a) for a resolution at an annual general meeting appointing as auditor a person other than a retiring auditor and for a resolution providing expressly that a retiring auditor shall not be re-appointed (Sec. 225).

(b) for certain persons who shall not be eligible for appointment as directors whose period of office is liable to determination by retirement of directors by rotation (Sec. 261).

(c) for removing a director before the expiry of his period of office; and

(d) of any resolution to appoint a director in place of a director so removed (Sec. 284).