Ordinary resolution basic understanding

    Posted By : damini / Published on : 29-Feb-2020 12:58 PM / View : 180 / Comment : 0
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    It is necessary to first understand the meaning of Ordinary resolution.

    As per Section 114 (1) of the Companies Act, 2013 - A resolution shall be an ordinary resolution if the notice required under this Act has been duly given and it is required to be passed by the votes cast, whether on a show of hands, or electronically or on a poll, as the case may be, in favour of the resolution, including the casting vote, if any, of the Chairman, by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy or by postal ballot, exceed the votes, if any, cast against the resolution by members, so entitled and voting.

    In simple terms, it means votes in favour shall be more than 50% votes cast against any resolution.

    Special resolution is defined under Section 114 (2) of the Companies Act, 2013 ad: (2) A resolution shall be a special resolution when—

    (a) the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting or other intimation given to the members of the resolution;

    (b) the notice required under this Act has been duly given; and

    (c) the votes cast in favour of the resolution, whether on a show of hands, or electronically or on a poll, as the case may be, by members who, being entitled so to do, vote in person or by proxy or by postal ballot, are required to be not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting.

    In simple terms, it means votes in favour shall be more than 75% votes cast against any resolution.

    However, it is necessary to note that this distinction of ordinary and special resolution is applicable only in General Meetings, ie.; Annual General Meeting or Extra-ordinary General Meeting and not Board Meetings.

    In case of Board Meetings, the words used are simple majority, which means that the votes cast in favour shall exceed the votes cast against a resolution.

    In essence, it resembles and equates to ordinary resolution. Since the Act doesn’t use the term ordinary or special resolution for Board Resolutions, we cannot use the ordinary resolution passed at a Board Meeting. We therefore always say that the resolution at the Board Meeting were passed by requisite majority or unanimously (as the case maybe).

    The Board resolution can be passed by simple majority.

    Hope i am right ?
    Read more on : understanding basic resolution ordinary



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