Special Resolution – What is Resolution ?, What is Special Resolution ?
Special Resolution, My this new article talks about the details regarding the special resolution, in which the details regarding what are resolutions, why are they required to be passed, when are they required to be passed, what matters are covered under special resolution, what is meant by special resolution, what are the consequences if followed and all the other details. I have covered some of the details of the above in this article.
What is Resolution ??
As Company is a artificial person, it cannot take decisions on its own, it has to give authority or power to someone to take the decisions. The power is given to the Board of Directors of the company. Now if the company has issued shares for the public at the large, than it needs to take the consent of such shareholders also for taking the decisions. The method to take the decisions from the public is taken by resolution. When any resolution is passed by the company than the terms and conditions mentioned in it should be exactly satisfied and if not than penal provisions may apply to it.
There are many types of resolutions but majorly there are 3 types of resolutions :
- Ordinary Resolution
- Special Resolution
- Unanimous Resolution
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What is Special Resolution ??
Now we would talk about the Special Resolution, the meaning of special resolution which is covered u/s 114(2) which means :
- Intention of the same is to be mentioned in the notice which is sent to the members of the company.
- Company should have given notice to the members as per the regulations of the act.
- Votes in the favour of the resolutions must be not less than the 3 times the number of votes if any, against the resolution.
In simple words, special resolution is a resolution in which the intention of the resolution as special resolution has been specified in the notice and at least 3/4th votes required for passing the special resolution.
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Cases where special resolution is required:
- For altering Articles of Association
- For altering Memorandum of Association
- For changing registered office of the company
- For changing the objects for which the money was raised which was mentioned in the prospectus.
- For entrenchment under section 5(3)
- For variation in the shareholders rights.
- For issue of Sweat equity shares
- For issuing depository receipts in foreign country
- For varying or changing the terms which are mentioned in the prospectus of the company
- For reducing the share capital
- For buy back or purchasing back its own shares
- For increasing the subscribed capital
- For issuing debentures which can further be converted into shares
- For appointing directors for a number of more than 15 in a company
- For removing auditor under section 139
- For changing the place for keeping the registers
- For excersizing some powers by the BOD for which they are not authorised
- For reappointment of Independent Director
- For any related party transaction
- For giving any loan, guarantee or for providing any security
- For fixing remuneration of a Director
- For removal of name of Company from ROC
- For appoinment of MD
- For investigation by CG
- For winding up of a company
- For voluntary Winding up
- For approval of scheme of amalgamation
- For conferring certain powers on Liquidator
- For disposal of books of account
- For application in Table-F in Schedule-I
This is the list where special resolution is required to be passed, but this may be illustrative list only, there may be many more cases where such resolution is required to be given.
This notes has been Hand Written by the author. Any Information or any suggestion given in the notes are only from personal opinion and do not create any liability on the part of author. The author has exclusive rights over the documents. If any one found copying it will be liable for Legal Action.