Companies Act Section 2(63) Ordinary Or Special Resolution

Ordinary Resolution Section 2 (63)

An Ordinary Resolution is a resolution passed by a simple majority of the shareholders or members present and voting at a general meeting of the company. It is used for routine business matters that do not require a higher threshold of approval.

Key Points:

1. Threshold: 

An Ordinary Resolution requires the affirmative vote of more than 50% of the shareholders or members present and voting either in person or through proxies.

It is typically used for routine matters such as the appointment of directors, ratification of auditor’s appointment, declaration of dividends, etc.

2. Examples: 

Approval of annual financial statements and reports.

Appointment or removal of directors (except directors appointed by proportional representation).

Declaration of dividends.

Routine administrative matters as specified under the Companies Act.

Special Resolution

A Special Resolution is a resolution that requires approval by a higher majority of shareholders or members, typically three-fourths (75%) or more of those present and voting at a general meeting. 

It is used for significant decisions that may affect the company’s constitution or require a major course of action.

Key Points:

1. Threshold: 

A Special Resolution requires the affirmative vote of at least 75% (three-fourths) of the shareholders or members present and voting at the general meeting.

It is used for critical decisions such as alteration of the company’s memorandum and articles of association, change of company name, conversion of shares, etc.

2. Examples: 

Alteration of the company’s memorandum or articles of association.

Change of company name.

Conversion of shares from one class to another.

Voluntary winding-up of the company.

Reduction of share capital.

Approval of certain related party transactions.

Legal Framework and Application:

Companies Act, 2013: 

The Act specifies the procedures for passing Ordinary and Special Resolutions, including notice requirements, voting rights, quorum, and filing obligations with regulatory authorities.  

Shareholder Rights: 

Shareholders have the right to propose resolutions, attend general meetings, vote on resolutions, and exercise their voting rights either in person or through proxies as per provisions laid down in the Act.