Motions and Resolutions

A ‘motion’ is a definite proposal put before a meeting for its consideration and adoption. A  ‘resolution’ on the other hand is the formal expression of the decision of a meeting. When a motion has  been duly voted upon and passed by a majority, with or without amendment, it is called a ‘resolution’. A  resolution once adopted and recorded in the minutes becomes the official decision of the meeting and  cannot be rescinded or revoked except by the consent of two-thirds majority in a meeting specially called  for the purpose.

Kinds of Resolutions

1. Ordinary Resolution

A resolution which is passed by a simple majority of votes cast by members present in person or  by proxy is called ‘ordinary resolution’. Simple majority means that the votes cast in  favor  of the  resolution must be at least one more than 50 per cent of the votes cast.

An ordinary resolution must satisfy the following conditions:

  1. It must be moved at a general meeting of which due notice has been given
  2. The voting may be on show of hands or by poll
  3. Voting must be by members who are entitled to vote in person or by proxy, if allowed; and
  4. The votes cast in  favor  of the resolution, including the casting vote of the chairman, if any,  must exceed the votes, cast against the resolution.

Usually, ordinary resolutions are required to transact ‘ordinary business’. In addition, ordinary  resolutions are sufficient to transact following types of special business:

  • Adoption of statutory report
  • Removal of director from office before the expiry of his term
  • Alteration of share capital
  • Issue of shares at a discount
  • Appointment of sole selling agents.

2. Special Resolution

A special resolution is one which is required for transacting special business and is required to be  passed by a three-fourths majority of members present and vote in the meeting.

A special resolution in order to be valid under the law must satisfy the following conditions:

  1. The notice of the general meeting must have been duly given as required under the Act;
  2. The intention to propose the resolution as a special resolution must have been duly specified in the  notice calling the general meeting or other intimation of such intention must have been given to  members;
  3. The voting may be on show of hands or on poll;
  4. Votes are cast by members who are entitled so to do, either in person or by proxy; and
  5. Votes cast in  favor  of the resolution are not less than three times the number of votes, if any, cast  against the resolution.

Special resolution is required to transact the following types of business:

  • To change of name of the company
  • To change of the domicile of the company
  • To change the object clause
  • To alter Articles of Association
  • To create reserve capital
  • To Reduce share capital
  • To pay interest out of capital
  • To decide winding up of the company

3. Resolutions Requiring Special Notice

Section 190 of the Companies Act, 1956 provides as follows:

  1. Where by any provision contained in this Act or in the Articles, special notice is required of any  resolution, notice of the intention to move the resolution shall be given to the company not less than  14 days before the meeting at which it is to be moved, exclusive of the day on which the notice is  served or deemed to be served and the day of the meeting.
  2. The company shall, immediately after the notice of the intention to move any such resolution has  been received by it, give its members notice of the resolution in the same manner as it gives notice  of the meeting, or if that is not practicable, shall give them notice thereof, either by advertisement in  a newspaper having an appropriate circulation or in any other mode allowed by the Articles, not less  than seven days before the meeting.

The Companies Act has specified certain types of business where such a resolution is required. If a  member wants to move such a resolution, he must give special notice to the company of his intention to  move such a resolution at least 14 days before the date of the meeting. On receipt of such notice, the  company must give notice of the resolution to its members at least 7 days before the meeting, in the same  manner as it gives notice of the meeting. If it is not practicable, notice must be given through  advertisement in newspapers or any other mode allowed by the Articles. The resolution proposed to be  moved may be an ordinary resolution or special resolution.

According to Companies Act, a resolution requiring special notice is required to transact the  following types of business:

  1. Removal of a director before the expiry of his term or to appoint another director in place of a director  so removed.
  2. Appointment as auditor of a person other than the retiring auditors or deciding that retiring auditor  shall not be re-appointed.

Articles may provide for additional matters for which special notice is required.

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