Difference between Ordinary and Special Resolution

100 votes

Ordinary and special resolutions are classifications of the resolution which the members of a company can pass at a general meeting as per the company law in India. As the name suggests, an ordinary resolution is one which often pertains to proposals regarding the day to day running of a company and can be passed with just a simple bare majority. A special resolution on the other hand pertains to more serious matters and requires a three-fourth majority to be successfully passed. These resolutions commence with a formal proposal called a motion, which if approved becomes a resolution which is to be voted upon in the company’s general meeting. Ordinary and special resolutions are very distinct from one another and thus it is important to understand this distinction to gain a better understanding of the law on this aspect.
 

Ordinary resolution

An ordinary resolution signifies one which requires a bare majority in its favour to pass. The simple majority of 51% required to pass such a resolution relates to the approval of all members present and voting at a company’s general meeting. This voting can be carried out through either a simple show of hands, polling or voting through any electronic means. An ordinary resolution pertains to matters which affect the day-to-day business of the company and only persons present in person or through proxy can cast a vote. Members not present or absent are not accounted for or considered. Ordinary resolutions pertain to matters such as the following:

• Change in the name of a company following a direction of the registrar of companies

• Issue of equity shares with differential rights of companies

• An issue of shares to employees under employee stock option scheme

• An issue of bonus shares

• Transaction of ordinary business at the annual general meeting
   

Special resolution

A special resolution is one which requires a majority of at least 75% of the members present and voting to be passed. Such kind of majority is known as a supermajority and essentially entails that the votes in favour of such a resolution must be thrice as many as the votes against it. Voting for a special resolution can be either through show of hands, polling or through electronic means. However, it is essential that a notice of a general meeting must be given to all members where a special resolution is to be proposed. The following matters require a special resolution to be passed in their favour:

• Issue of sweat equity shares

• Change in the registered office of the company

• Buyback of shares

• Appointment of more than 15 directors

• Loans and investments by the company
   

Difference between ordinary resolution and special resolution

The following are the significant points of difference between ordinary and special resolutions:

1. An ordinary resolution pertains to a resolution which only requires a simple majority to be passed at a company general meeting. A special resolution on the other hand requires what is called a supermajority to pass at a general meeting of a company.

2. An ordinary resolution can be passed with the approval of at least 51% of the members. On the other hand, a special resolution requires the approval of a minimum of 75% of the members to be passed.

3. The prevailing mandate under company law does not require a copy of an ordinary resolution to be signed by an officer of the company and filed with the registrar of companies in all situations. There are only some cases where such a mandate exists in respect to an ordinary resolution. The law with respect to a special resolution on the other hand is more stringent and it requires a copy of every special resolution to be signed by an officer of the company and be filed with the registrar within a period of 30 days.

4. The aspects of day-to-day business activity can be carried out via an ordinary resolution, whereas special business matters often either require an ordinary or special resolution as per the mandate of the companies act. 

LawRato LawRato

854 votes

Ordinary Resolution is one in which the general meeting requires a simple majority to move the resolution. Special resolution means a resolution that needs a clear majority to approve the resolution at the general meeting. ... On the other hand, the special resolution needs at least 75% support for the resolution.

Advocate Anupam Kumar Mishra LawRato

134 votes

Ordinary resolutions require a simple majority (50% + 1), while special resolutions require a larger majority (typically 75%+). Ordinary resolutions are used to address routine or regular issues while Special Resolutions are used to address important or significant issues.

Advocate Chikirsha Mohanty LawRato