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Kinds of Resolutions

The Companies Act generally recognizes three kinds of resolutions. These are discussed below:

Ordinary resolution: The resolution passed by the majority of members present at a general meeting is called ordinary resolution. Such a resolution is passed in an ordinary way and deals with ordinary business such as: passing of accounts, appointing directors, appointment of auditors, fixing remuneration for auditors and so on. Unless required by the articles, no notice of such resolution needs to be given. But ordinary resolutions that are passed in the statutory meeting require notice.

Special resolution: The resolution that requires vote of three-fourths majority of the members present in the meeting and a prior notice specifying the intention to propose the resolution, it is called special resolution. The notice must be circulated at least twenty-one days before the date of the meeting. Special resolutions are necessary for the following purposes:

  • To change the name of the company with consent of the Government.
  • To alter the memorandum with leave of the court.
  • To alter the mucks of the company.
  • To ranee the share capital of the company.
  • To crease reserve capital.
  • To authorize payment of interest out of capital.
  • To appoint inspectors to investigate the company’s own affairs.
  • To authorize payment of remuneration to directors who are not whole time employment.
  • To wind up a company voluntarily or by the court.

Extra-ordinary rewinds: Extra-ordinary resolution is also passed by three-fourths majority of the members present in the meeting. A 14 days’ notice is to be served to the concerned members. The notice must specify the intention to propose the resolution as an extra-ordinary resolution. Such resolution is necessary when a company is sought to be wound up voluntarily on the ground that it cannot continue its business because of its liabilities and also for a number of other reasons.