Resolution :
The purpose of a meeting is to arrive at decisions and the sense of a meeting is ascertained by voting upon proposals put to the meeting. A formal proposal put to the meeting is resolution. A company expresses its will by the mean of resolutions.
There are only two kinds of resolutions under the Act, ordinary and special, and they are defined in Section 114 of the Companies Act, 2013. Some writers classify resolutions into three types namely, ordinary, special and resolutions requiring special notice.
Ordinary Resolution: This is a motion passed by a simple majority of those present in person or by proxy where proxies are allowed and voting upon the resolution at a general meeting. Members not participating in voting are not taken into account. As distinguished from a simple majority, an absolute majority is a majority of all those entitled to vote whether they attend or not.
Section 114(1) defines an ordinary resolution as follows:
A resolution shall be an ordinary resolution if the notice required under this Act has been duly given and it is required to be passed by the votes cast, whether on a show of hands, or electronically or on a 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 so to do, vote in person, or where proxies are allowed, by proxy or by postal ballot, exceed the votes, if any, cast against the resolution by members, so entitled and voting.
Special Resolution: Apart from ordinary resolutions, various sections of the Act provide that certain things can be done by a company with the authority of a special resolution passed at a duly constituted general meeting. A special resolution is an artificial conception of the Act, requiring a larger majority than an ordinary resolution. It has been defined by Section 114(2) as follows:
A resolution shall be a special resolution when—
(a) the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting or other intimation given to the members of the resolution;
(b) the notice required under this Act has been duly given; and
(c) the votes cast in favour of the resolution, whether on a show of hands, or electronically or on a poll, as the case may be, by members who, being entitled so to do, vote in person or by proxy or by postal ballot, are required to be not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting.
It is doubtful whether a resolution can take effect as a special resolution when the formalities required by Section 114(2) have not been complied with even if it is agreed to by all the members of the company. There are no cases directly in point, and Section 114(2) should therefore be complied with;
The notice convening the meeting at which a special resolution is to be considered must set out the actual wording of the resolution, and also annex an explanatory statement as required under Section 102, in which the shareholders are informed of the material facts concerning the resolution and the nature of interest therein of the directors;
A printed or typewritten copy of the special resolution (together with a copy of the explanatory statement annexed under Section 102) duly certified under the signature of an officer of the company must be filed with Registrar of Companies within thirty days of its being passed (Section 117).
Acts for which special resolutions are required: Some matters may be so important and outside the ordinary course of the company’s business, such as any important constitutional changes, that safeguards should be imposed to ensure that a larger majority than a simple majority of the members approve of them before they are given effect to.
In addition to the requirements of the Act, a company’s own articles may prescribe for special resolution where under the Act only an ordinary resolution is necessary. However, where the Act specifies for a special resolution, the articles cannot provide for the different kind of resolution.
Resolution requiring special notice: According to section 115 of the Companies Act, 2013, where, by any provision contained in this Act or in the articles of a company, special notice is required of any resolution, notice of the intention to move such resolution shall be given to the company by such number of members holding not less than one per cent. of total voting power or holding shares on which such aggregate sum not exceeding five lakh rupees, as may be prescribed, has been paid-up and the company shall give its members notice of the resolution in such manner as may be prescribed.
For example the matters in respect of which special notice is required are: (1) for appointment a person as auditor at the annual general meeting other than the retiring auditor for providing expressly that the retiring auditor shall not be re-appointed [Section 140(4)]; (2) for removing a director before the expiry of the period of his office and appointing some one in the place of the director so removed [Section 169(2)].
According to the Companies (Management and Administration) Rules, 2014-
1. Signing of special notice: A special notice required to be given to the company shall be signed, either individually or collectively by such number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not more than five lakh rupees has been paid up on the date of the notice.
(Vide Notification G.S.R. 537(E), dated24th July 2014, by the Companies(Management and Administration)Second Amendment Rules, 2014, in rule 23 subrule(1), for the words “ not less than five lakh rupees”, the words “ not more than five lakh rupees” shall be omitted)
(2) Sending of notice to the company: The notice referred to in sub-rule (1) shall be sent by members to the company not earlier than three months but at least fourteen days before the date of the meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting.
(3) On receipt of notice by the company: The company shall immediately after receipt of the notice, give its members notice of the resolution at least seven days before the meeting , exclusive of the day of dispatch of notice and day of the meeting , in the same manner as it gives notice of any general meetings.
(3) Publication of notice : Where it is not practicable to give the notice in the same manner as it gives notice of any general meetings, the notice shall be published in English language in English newspaper and in vernacular language in a vernacular newspaper, both having wide circulation in the State where the registered office of the Company is situated and such notice shall also be posted on the website, if any, of the Company. The notice shall be published at least seven days before the meeting, exclusive of the day of publication of the notice and day of the meeting.
Resolutions passed at adjourned meeting: According to section 116 of the Companies Act, 2013, where a resolution is passed at an adjourned meeting of—
(a) a company; or
(b) the holders of any class of shares in a company; or
(c) the Board of Directors of a company,
then, the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact passed, and shall not be deemed to have been passed on any earlier date.
Resolutions and agreements to be filed: Section 117 of the Companies Act, 2013, provides that the resolutions and agreements in respect of the matters specified therein together with a explanatory statement shall be filed with the Registrar.
Following is the procedure with respect to the filing with the registrar-
(1) Filing of copy of resolution/any agreement: A copy of every resolution or any agreement, in respect of matters specified in sub-section (3) together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed within the period of 270 days (specified under section 403):
Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement.
(2) Failure to file the resolution or the agreement: If a company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified under section 403 with additional fee, the company shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default, including liquidator of the company, if any, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
(3) Applicability: The provisions of this section shall apply to—
(a) special resolutions;
(b) resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose unless they had been passed as special resolutions;
(c) any resolution of the Board of Directors of a company or agreement executed by a company, relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director;
(d) resolutions or agreements which have been agreed to by any class of members but which, if not so agreed to, would not have been effective for their purpose unless they had been passed by a specified majority or otherwise in some particular manner; and all resolutions or agreements which effectively bind such class of members though not agreed to by all those members;
(e) resolutions passed by a company according consent to the exercise by its Board of Directors of any of the powers under clause (a) and clause (c) of subsection (1) of section 180;
(f) resolutions requiring a company to be wound up voluntarily passed in pursuance of section 304;
(g) resolutions passed in pursuance of sub-section (3) of section 179(Powers of Board); and
(h) any other resolution or agreement as may be prescribed and placed in the public domain.
Circulation of members’ resolution and statements: Students should carefully note the circumstances in which the members can make use of the administrative machinery of a company for introducing resolutions for consideration at next annual general meeting or for circulation of statements in regard to any resolution to be proposed at an extraordinary general meeting or business to be dealt with at any general meeting. Such circumstances are stated below:
(1) Notice to members- As per section 111 of the Companies Act, 2013, a company shall, on requisition in writing of such number of members, as required in section 100(Calling of EGM), give notice to members of any resolution which may properly be moved and is intended to be moved at a meeting; and circulate to members any statement with respect to the matters referred to in proposed resolution or business to be dealt with at that meeting.
(2) Exemption from serving notice- A company shall not be bound under this section to give notice of any resolution or to circulate any statement, unless—
(a) a copy of the requisition signed by the requisitionists (or two or more copies which, between them, contain the signatures of all the requisitionists) is deposited at the registered office of the company,— (i) in the case of a requisition requiring notice of a resolution, not less than six weeks before the meeting; (ii) in the case of any other requisition, not less than two weeks before the meeting; and
(b) there is deposited or tendered with the requisition, a sum reasonably sufficient to meet the company’s expenses in giving effect thereto.
Where however, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the company, an annual general meeting is called on a date within six weeks after the copy has been deposited, the copy, although not deposited within the time required by this sub-section, shall be deemed to have been properly deposited for the purposes thereof.
(3) Exception from circulation of any statement- The company shall not be bound to circulate any statement, if on the application either on behalf of the company or of any other person who claims to be aggrieved, then the Central Government, by order, declares that the rights conferred are being abused to secure needless publicity for defamatory matter.
(4) Order to bear the cost- An order made may also direct that the cost incurred by the company shall be paid to the company by the requisitionists, notwithstanding that they are not parties to the application.
(5) DefauIt in contravention of the provision- If any default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees.