Page 324 - DMGT407Corporate and Business Laws

Unit 13: Meeting of Directors and Shareholders

Once the motion has been put to the members and they have voted in favour of it, it becomes a Notes
resolution. In the case of a company, there are three kinds of resolutions: (i) ordinary resolution;
(ii) special resolution; (iii) resolution requiring special notice.

13.5.1 Ordinary Resolution (s.189(1))

When a motion is passed by simple majority of the members voting at a general meeting, it is
said to have been passed by an ordinary resolution. In other words, votes in favour of the
resolution are more than 50 per cent. Still in other words, a resolution shall be an ordinary
resolution where the votes cast in favour of the resolution are more than the votes cast against
the resolution. According to s.189(1), “A resolution shall be an ordinary resolution when at a
general meeting of which the notice required under the Act has been duly given, the votes cast
(whether on show of hands, or on 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 to do so, vote in
person or where proxies are allowed, by proxy, exceed the votes, if any, cast against the resolution
by members so entitled and voting.”
All matters which are not required either by the Act or the company’s articles to be done by a
special resolution can be done by means of an ordinary resolution. Some of the cases in which
only ordinary resolution is required are: alteration of authorised capital, declaration of dividend,
appointment of auditors, election of directors.

13.5.2 Special Resolution (s.189 (2))

A resolution is a special resolution in regard to which: (a) the intention to propose the resolution
as a special resolution has been specifically mentioned in the notice calling the general meeting;
(b) 21 days notice has been duly given for calling the meeting; (c) the number of votes cast in
favour of the resolution is three times the number cast against it.
Some of the cases in which a special resolution is necessary: alteration of objects clause; change
of registered office from one State to another; alteration of the Articles; changes in the name of
the company; reduction of share capital.

13.5.3 Resolution requiring Special Notice (s.190)

Some resolutions require special notice. The object of special notice is to give the members
sufficient time to consider the proposed resolution and also to give the Board of directors an
opportunity to indicate views, on the resolution if it is not proposed by them but by some other
shareholders. Under this, a notice of intention to move the resolution should be given to the
company not less than 14 days before the date of the meeting at which it is proposed to be
moved. The company in turn must immediately give notice by advertisement in a newspaper or
in any other mode allowed by the Articles, but not less than seven days before the meeting.
Some of the cases in which a special notice is necessary are: appointing an auditor, a person other
than a retiring auditor; moving a resolution that a retiring auditor will not be re-appointed;
removing a director before his term expires.
Section 192 requires that a printed or a type written copy of each special resolution should be
sent to the Registrar within 30 days thereof.

13.5.4 Passing of Resolutions by Postal Ballot (s. 192A)

Section 192A contains following provisions for passing of resolution by postal ballot:
1. A listed company may and in the case of resolution relating to such business as the Central
Government may, by notification, declare to be conducted only by postal ballot, shall, get

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