A company takes decision in a general meeting by passing ordinary or special resolution according to the requirement of the Companies Act, 2013 and articles of association of the company. All businesses in a general meeting can be transacted by passing ordinary resolution unless otherwise provided in the Act or articles of association of the company.
Section 114 of the Companies Act, 2013 deals with ordinary and special resolutions. Sub-section (1) of section 114 of the Companies Act, 2013 speaks about the ordinary resolution and reads as below: –
“(1) 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.”
In case of ordinary resolution, the votes cast in favour of the resolution are more than votes cast against the resolution. Accordingly, an ordinary resolution can be passed by a simple majority.
Matters where Ordinary Resolution is required under the Companies Act, 2013
| Section | Matters | Relevant portion of the Section/Rule under the Companies Act, 2013 |
| 4(5)(ii) (b)(i) | To change the name of a company on direction of Registrar, if it is found that name was applied by furnishing wrong or incorrect information. | *** *** *** (b) if the company has been incorporated, the Registrar may, after giving the company an opportunity of being heard— (i) either direct the company to change its name within a period of three months, after passing an ordinary resolution; *** *** *** |
| 16(1)(a) & (b) | Rectification of name of a Company- On direction of the Central Government, if in the opinion of the Central Government, the name of the company is similar to an existing company on an application by a registered proprietor of a trade mark and in the opinion of the Central Government, the name of the company is similar to an existing trademark | (1) If, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which, — (a)in the opinion of the Central Government, is identical with or too nearly resembles the name by which a company in existence had been previously registered, whether under this Act or any previous company law, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of three months from the issue of such direction, after adopting an ordinary resolution for the purpose; (b) on an application by a registered proprietor of a trade mark that the name is identical with or too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999, made to the Central Government within three years of incorporation or registration or change of name of the company, whether under this Act or any previous company law, in the opinion of the Central Government, is identical with or too nearly resembles to an existing trade mark, it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of three months from the issue of such direction, after adopting an ordinary resolution for the purpose. |
| 43 (a)(ii) | To issue Equity Shares with differential rights | *** *** *** (ii) with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed; *** *** *** Rule 4(1)(b) of the Companies (Share Capital and Debentures) Rules, 2014- (b) the issue of shares is authorized by an ordinary resolution passed at a general meeting of the shareholders: *** *** *** |
| 61(1)(a) (Read with Article 35 and 36 of Table F of Schedule I) | For alteration of Share Capital | (1) A limited company having a share capital may, if so authorised by its articles, alter its memorandum in its general meeting to— (a) increase its authorised share capital by such amount as it thinks expedient; (b) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares: *** *** *** (c) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination; (d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; (e) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled. Article 35– The Company may, from time to time, by ordinary resolution increase the share capital by such sum, to be divided into shares of such amount, as may be specified in the resolution. Article 36– Subject to the provisions of section 61, the company may, by ordinary resolution – a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; *** *** *** |
| 62(1)(b) | To issue further shares to the employees of a company under a scheme of employees’ stock option. | (1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered- *** *** *** (b) to employees under a scheme of employees’ stock option, subject to special resolution passed by company and subject to such conditions as may be prescribed; *** *** *** [In case of private company – for the words “special resolution”, the words “ordinary resolution” shall be substituted. – Notification G.S.R. 464(E) dated 5th June, 2015. In case of Specified IFSC Public Company – for the words “special resolution” read as “ordinary resolution”. – Notification G.S.R. 08(E) dated 4th January, 2017] |
| 63(2) | To issue bonus shares | (2) No company shall capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares under sub-section (1), unless— (a) it is authorised by its articles; (b) it has, on the recommendation of the Board, been authorised in the general meeting of the company; *** *** *** |
| 73(2) | To accept deposits from its members by a company other than eligible company | *** *** *** |
| 76 | To accept deposits from public by an eligible company within the limits specified under clause (c) of sub-section (1) of section 180 | An eligible company, which is accepting deposits within the limits specified under clause (c) of sub-section (1) of section 180, may accept deposits by means of an ordinary resolution. |
| 102 | To transact ordinary business in the Annual General Meeting | i) the consideration of financial statements and the reports of the Board of the Directors and auditors ii) the declaration of any dividend iii) the appointment of Directors in place of those retiring iv) the appointment of, and the fixing of the remuneration of, the auditors; |
| 139(6) | To appoint first auditor of the company in case Board fails to appoint the first auditor within 30 days of the registration of the company | (6) Notwithstanding anything contained in sub-section (1), the first auditor of a company, other than a Government company, shall be appointed by the Board of Directors within thirty days from the date of registration of the company and in the case of failure of the Board to appoint such auditor, it shall inform the members of the company, who shall within ninety days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting. *** *** *** |
| 139(8)(i) | To approve the appointment of statutory auditor made by the Board to fill the casual vacancy in the office of an auditor, where such casual vacancy is caused due to resignation of the auditor. | (8) Any casual vacancy in the office of an auditor shall— (i) in the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled by the Board of Directors within thirty days, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within three months of the recommendation of the Board and he shall hold the office till the conclusion of the next annual general meeting; *** *** *** |
| 142(1) | To fix remuneration of auditors | (1) the remuneration of the auditor of a company shall be fixed in its general meeting or in such manner as may be determined therein. *** *** *** |
| 143(8) | For appointment of branch auditor | *** *** *** |
| 148(3) | To ratify the remuneration of the Cost Auditor fixed by board or audit committee, as the case may be. | (3) The audit under sub-section (2) shall be conducted by a Cost Accountant who shall be appointed by the Board on such remuneration as may be determined by the members in such manner as may be prescribed: *** *** *** Rule 14 of the Companies (Audit and Auditors) Rules, 2014- For the purpose of sub-section (3) of section 148- a) in the case of companies which are required to constitute an audit committee – i) the Board shall appoint an individual, who is a cost accountant or a firm of cost accountants in practice, as cost auditor on the recommendations of the Audit committee, which shall also recommend remuneration for such cost auditor; ii) the remuneration recommended by the Audit Committee under (i) shall be considered and approved by the Board of Directors and ratified subsequently by the shareholders; b) in the case of other companies which are not required to constitute an audit committee, the Board shall appoint an individual who is a cost accountant or a firm of cost accountants in practice as cost auditor and the remuneration of such cost auditor shall be ratified by shareholders subsequently. |
| 149(9) | To approve profit related commission to Independent Directors | (9) Notwithstanding anything contained in any other provision of this Act, but subject to the provisions of sections 197 and 198, an independent director shall not be entitled to any stock option and may receive remuneration by way of fee provided under sub-section (5) of section 197, reimbursement of expenses for participation in the Board and other meetings and profit related commission as may be approved by the members. |
| 151 | To elect small shareholders’ director | Rule 7(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014- (1) A listed company, may upon notice of not less than one thousand small shareholders or one-tenth of the total number of such shareholders, whichever, is lower, have a small shareholders’ director elected by the small shareholders: *** *** *** |
| 152(2) | For appointment of directors | (2) Save as otherwise expressly provided in this Act, every director shall be appointed by the company in general meeting. |
| 161(2) | To authorise Board of Directors to appoint an alternate director, if articles of association does not contain any specific provision | (2) The Board of Directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a person holding any alternate Directorship for any other director in the company, or holding Directorship in the same company, to act as an alternate director for a director during his absence for a period of not less than three months from India: *** *** *** |
| 169(1) | To remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of the period of his office | (1) A company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard: *** *** *** |
| 181 | To make contribution to bona-fide Charitable & other funds by a company, in excess of the prescribed limit | The Board of Directors of a company may contribute to bona fide charitable and other funds: Provided that prior permission of the company in general meeting shall be required for such contribution in case any amount the aggregate of which, in any financial year, exceed five per cent. of its average net profits for the three immediately preceding financial year. |
| 188(1) | To enter into certain related party transaction | (1) Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to— (a) Sale, purchase or supply of any goods or materials; (b) selling or otherwise disposing of, or buying, property of any kind; (c) leasing of property of any kind; (d) availing or rendering of any services; (e) appointment of any agent for purchase or sale of goods, materials, services or property; (f) such related party’s appointment to any office or place of profit in the company, its subsidiary company or associate company; and (g) underwriting the subscription of any securities or derivatives thereof, of the company: Provided that no contract or arrangement, in the case of a company having a paid-up share capital of not less than such amount, or transactions exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a resolution: Provided also that the requirement of passing the resolution under first proviso shall not be applicable for transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval. |
| 191(1) (b)(iv) | For making payment to director for loss of office, etc, in connection with transfer of undertaking, property or shares | *** *** *** (b) the transfer to any person of all or any of the shares in a company being a transfer resulting from— *** *** *** (iv) any other offer which is conditional on acceptance to a given extent, receive any payment by way of compensation for loss of office or as consideration for retirement from office, or in connection with such loss or retirement from such company or from the transferee of such undertaking or property, or from the transferees of shares or from any other person, not being such company, unless particulars as may be prescribed with respect to the payment proposed to be made by such transferee or person, including the amount thereof, have been disclosed to the members of the company and the proposal has been approved by the company in general meeting. |
| 192(1)(b) | To approve certain non-cash transactions involving directors | (b) the company acquires or is to acquire assets for consideration other than cash, from such director or person so connected, unless prior approval for such arrangement is accorded by a resolution of the company in general meeting and if the director or connected person is a director of its holding company, approval under this sub-section shall also be required to be obtained by passing a resolution in general meeting of the holding company. |
| 196(4) | To appoint managing director, whole-time director or manager | (4) Subject to the provisions of section 197 and Schedule V, a managing director, whole-time director or manager shall be appointed and the terms and conditions of such appointment and remuneration payable be approved by the Board of Directors at a meeting which shall be subject to approval by a resolution at the next general meeting of the company and by the Central Government in case such appointment is at variance to the conditions specified in Part I of that Schedule: *** *** *** |
| 197(1) | To authorise the payment of remuneration exceeding 11% of the net profits of the company, subject to the provisions of Schedule V. | (1) *** *** *** Provided that the company in general meeting may, authorise the payment of remuneration exceeding eleven per cent. of the net profits of the company, subject to the provisions of Schedule V: *** *** *** |