When is a resolution ordinary, and when is it special?
An ordinary resolution passes when the votes cast for it exceed the votes cast against it. A special resolution passes when the votes cast for it are at least three times the votes cast against it. In both cases the count is of members who vote. A member who stays away, or who abstains, is not treated as a vote against.
When is a resolution ordinary?
Section 114(1) counts votes on a show of hands, on a poll, or by electronic means, including a proxy where proxies are allowed, and a casting vote if the chair has one. More than half of the votes cast is enough. It is not 51% of every member.
The ordinary business of an annual general meeting is the financial statements and the reports, the declaration of a dividend, the appointment of directors in place of those retiring, and the appointment and remuneration of the auditors. Other matters can also be decided by an ordinary resolution where the Act says so. Removal of a director under section 169 is an ordinary resolution, and it is not ordinary business of the annual meeting. That vote is on the removal page.
When is a resolution special?
The notice of the meeting has to state the intention to propose the resolution as a special resolution. Votes in favour must be not less than three times the votes against. That is at least three quarters of the votes cast. It is not three quarters of every shareholder on the register.
| Matter | Resolution |
|---|---|
| Alteration of the memorandum or the articles | Special |
| Change of name | Special |
| Registered office shifted outside the local limits of the city, town, or village | Special |
| Reduction of share capital | Special, and the Tribunal’s confirmation |
| Removal of a director under section 169 | Ordinary, after a special notice |
A shift of the registered office inside the same city, town, or village is a board decision, not a special resolution. The filing for a shift is on the registered office page. A special resolution is filed in Form MGT-14. Which ordinary resolutions are also filed is on the MGT-14 page.
What is a board resolution?
A board resolution is a decision of the directors. It is not an ordinary or a special resolution of the members. Where the Act requires the matter to be decided at a board meeting, the directors cannot pass it by a circular. There is no third members’ resolution called a unanimous resolution. Some acts need the consent of every member, and that consent is stated in the section that requires it.
Frequently asked questions
Four questions cover the two counts, a change of name, and Form MGT-14.
Is an ordinary resolution 51% of all members?
No. The votes cast in favour must exceed the votes cast against. A member who does not vote is not in either figure.
Is a special resolution 75% of every shareholder?
No. Votes in favour must be at least three times the votes against. That is three quarters of the votes cast, not of every person on the register of members.
Is a change of name an ordinary resolution?
No. A change of the company’s name is a special resolution under section 13.
Is every special resolution filed?
A special resolution is filed with the Registrar in Form MGT-14. An ordinary resolution is filed only where section 117 lists it. The list is on the MGT-14 page.
Sources
Ordinary and special resolutions are section 114 of the Companies Act, 2013. Filing with the Registrar is section 117. A shift of the registered office outside the local limits is section 12(5).