A company being an artificial juridical person, takes decision in the meetings by way of resolutions. The Companies Act, 2013 specifies two types of resolutions in relation to general meetings namely ordinary resolution and special resolution.
Section 114 of the Companies Act, 2013, deals with ordinary and special resolutions. As per the sub-section (2) of section 114 of the Companies Act, 2013, 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 information 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.
A special resolution needs to be passed only in case of those matters which are specifically mentioned in the Companies Act or the articles of association of a company as to be decided by way of special resolution. The reasons behind passing of special resolution is that the most important matters to be decided by higher majority of shareholders. In case of a special resolution, the votes cast in favour of the resolution are required to be not less than three times the number of the votes cast against the resolution. Thus, in view of the sub-section (2) of section 114 of the Companies Act, 2013, a special resolution needs to be passed by at least three fourth majority of members present and voting.
Matters where special resolution is required
| Section | Matters | Relevant portion of the Section/Rule of the Companies Act, 2013 |
| 3 | To convert a private company other than a section 8 company into one person company. | Rule 7(1) of the Companies (Incorporation) Rules, 2014: – A private company other than a company registered under section 8 of the Act may convert itself into one person company by passing a special resolution in the general meeting. |
| 5(4) | To alter the articles of association of a public company to incorporate entrenchment provisions. | 5(4) The provisions for entrenchment referred to in sub-section (3) shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company. |
| 8 | To convert a Section 8 company into a company of any other kind. | Rule 21 of the Companies (Incorporation) Rules, 2014 21(1) A company registered under section 8 which intends to convert itself into a company of any other kind shall pass a special resolution at a general meeting for approving such conversion. |
| 12(5) | To Change the registered office of the company outside the local limits of any city, town or village where such office is situated. | 12(5) Except on the authority of a special resolution passed by a company, the registered office of the company shall not be change— (a) in the case of an existing company, outside the local limits of any city, town or village where such office is situated at the commencement of this Act or where it may be situated later by virtue of a special resolution passed by the company; and (b) in the case of any other company, outside the local limits of any city, town or village where such office is first situated or where it may be situated later by virtue of a special resolution passed by the company: |
| 13(1) | To alter memorandum of association subject to other conditions. | 13(1) Save as provided in section 61, a company may, by a special resolution and after complying with the procedure specified in this section, alter the provisions of its memorandum. |
| 13(8) | To alter the object clause, where a company has raised money from public through prospectous for such object and still has any unutilised amount out of the money so raised. | 13(8) A company, which has raised money from public through prospectous and still has any unutilised amount out of the money so raised, shall not change its objects for which it raised the money through prospectous unless a special resolution is passed by the company and – *** *** *** |
| 14(1) | To alter articles of association. | 14(1) Subject to the provisions of this Act and the conditions contained in its memorandum, if any, a company may, by a special resolution, alter its articles including alterations having the effect of conversion of– (a) a private company into a public company; or (b) a public company into a private company: |
| 18 | Conversion of an unlimited liability company with or without share capital into limited liability company by shares or guarantee.To convert a company limited by guarantee into a company limited by shares. | Rule 37(1) of the Companies (Incorporation) Rules, 2014: 37(1) Without prejudice to any other provision in the Companies Act, for effecting the conversion of an unlimited liability company with or without share capital into limited liability company by shares or guarantee, such a company shall pass a special resolution in a general meeting and thereafter, an application shall be filed in Form No- INC-27 in the manner provided in sub-rules (2) and (3). Rule 39(3) of the of the Companies (Incorporation) Rules, 2014:- 39(3) A special resolution is passed by its members authorising such a conversion omitting the guarantee clause in its Memorandum of Association and altering the Articles of Association to provide for the articles as are applicable for a company limited by shares. |
| 27(1) | Variation in terms of contract or objects in prospectus. | 27(1) A company shall not, at any time, vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, except subject to the approval of, or except subject to an authority given by the company in general meeting by way of special resolution: |
| 41 | To issue of Global Depository Receipt. | A company may, after passing a special resolution in its general meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed. |
| 42 | Issue of shares on private placement basis. | Rule 14(1) of the Companies (Prospectous and Allotment of Securities) Rules, 2014: – 14(1) For the purposes of sub-section (2) and sub-section (3) of section 42, a company shall not make an offer or invitation to subscribe to securities through private placement unless the proposal has been previously approved by the shareholders of the company, by a special resolution for each of the offers or invitations: |
| 48(1) | Variation of rights of holders of different classes of shares. | 48(1) Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class,— (a) if provision with respect to such variation is contained in the memorandum or articles of the company; or (b) in the absence of any such provision in the memorandum or articles, if such variation is not prohibited by the terms of issue of the shares of that class: |
| 54(1)(a) | To issue sweat equity shares. | 54(1) Notwithstanding anything contained in section 53, a company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely: (a) the issue is authorised by a special resolution passed by the company; |
| 55 | To issue preference shares. | Rule 9(1)(a) of the Companies (Share Capital and Debentures) Rules, 2014:- 9(1)(a) A company having a share capital may, if so authorised by its articles, issue preference shares subject to the following conditions, namely: – (a) the issue of such shares has been authorised by passing a special resolution in the general meeting of the company. |
| 62(1)(b) & (c) | To increase the subscribed capital of a company by issuing further shares to employees under a scheme of employees’ stock option.To vary the terms of Employees Stock Option Scheme not yet excised by the employees.To issue shares on preferential basis.To issue convertible debentures. | 62(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— (a)********* (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; or (c) to any persons, if it is authorised by a special resolution, whether or not those persons include the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer, subject to the compliance with the applicable provisions of Chapter III and any other conditions as may be prescribed. (3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company: Provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a special resolution passed by the company in general meeting. Rule 12(5)(a) of the Companies (Share Capital and Debentures) Rules, 2014:- 12. *** *** *** (5)(a) The company may by special resolution, vary the terms of Employees Stock Option Scheme not yet excised by the employees provided such variation is not prejudicial to the interests of the option holders. Rule 13(1) of the Companies (Share Capital and Debentures) Rules, 2014: – 13(1) For the purposes of clause (c) of sub-section (1) of section 62, if authorised by a special resolution passed in a general meeting, shares may be issued by any company in any manner whatsoever including by way of a preferential offer, to any persons whether or not those persons include the persons referred to in clause (a) or clause (b) of sub-section (1) of section 62 and such issue on preferential basis should also comply with conditions laid down in section 42 of the Act: *** *** *** |
| 66(1) | Reduction of share capital subject to confirmation by the Tribunal. | 66(1) Subject to confirmation by the Tribunal on an application by the company, a company limited by shares or limited by guarantee and having a share capital may, by a special resolution, reduce the share capital in any manner and in, particular, may— (a) extinguish or reduce the liability on any of its shares in respect of the share capital not paid-up; or (b) either with or without extinguishing or reducing liability on any of its shares,— (i) cancel any paid-up share capital which is lost or is unrepresented by available assets; or (ii) pay off any paid-up share capital which is in excess of the wants of the company, alter its memorandum by reducing the amount of its share capital and of its shares accordingly: *** *** *** |
| 67 | To approve making provision of money for the purchase of or subscription for, shares in the company or its holding company, if the purchase of, or the subscription for, the shares by trustees is for the shares to be held by or for the benefit of the employees of the company. | Rule 16(1)(a) of the Companies (Share Capital and Debentures) Rules, 2014 16(1) A company shall not make a provision of money for the purchase of, or subscription for, shares in the company or its holding company, if the purchase of, or the subscription for, the shares by trustees is for the shares to be held by or for the benefit of the employees of the company, unless it complies with the following conditions, namely: – (a) the scheme of provision of money for purchase of or subscription for the shares as aforesaid is approved by the members by passing special resolution in a general meeting; Exception: Section 67 shall not apply to a private company and a Specified IFSC public company- (a) in whose share capital no other body corporate has invested any money (b) if the borrowings of such company from banks or financial institutions or any body corporate is less than twice its paid up share capital or fifty crore rupees, whichever is lower; and (c) such a company is not in default in repayment of such borrowings subsisting at the time of making transactions under this section. Vide Notification No- G.S.R. 464(E) dated 5th June 2015- Private company Vide Notification No- G.S.R. 08(E) dated 4th June 2015- IFSC Company |
| 68(2)(b) | For buy back of shares. | 68(2) No company shall purchase its own shares or other specified securities under sub-section (1), unless— (a) the buy-back is authorised by its articles; (b) a special resolution has been passed at a general meeting of the company authorising the buy-back: |
| 71(1) | Issue of convertible debentures. | 71(1) A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption: Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting. |
| 76 | Acceptance of deposit from public by certain companies. | Rule 2(1)(e) of the Companies (Acceptance of Deposits) Rules, 2014 2(1)(e) “eligible company” means a public company as referred to in sub-section (1) of section 76, having a net worth of not less than one hundred crore rupees or a turnover of not less than five hundred crore rupees and which has obtained the prior consent of the company in general meeting by means of a special resolution and also filed the said resolution with the Registrar of Companies before making any invitation to the Public for acceptance of deposits: Provided that 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; |
| 94(1) | For keeping registers, return etc. at any other place in India in which more than one-tenth of the total number of members entered in the register of members reside. | 94(1) The registers required to be kept and maintained by a company under section 88 and copies of the annual return filed under section 92 shall be kept at the registered office of the company: Provided that such registers or copies of return may also be kept at any other place in India in which more than one-tenth of the total number of members entered in the register of members reside, if approved by a special resolution passed at a general meeting of the company. |
| 139(9) | To appoint some other auditor or providing expressly that retiring auditor shall not be re-appointed. | 139(9) Subject to the provisions of sub-section (1) and the rules made thereunder, a retiring auditor may be re-appointed at an annual general meeting, if- (a)*** (b)*** (c) a special resolution has not been passed at that meeting appointing some other auditor or providing expressly that he shall not be re-appointed. |
| 140(1) | Removal of the auditor appointed u/s 139 from his office before the expiry of his term subject to the approval of the Central Government. | 140(1) The auditor appointed under section 139 may be removed from his office before the expiry of his term only by a special resolution of the company, after obtaining the previous approval of the #Central Government in that behalf in the prescribed manner: *** *** *** # Power delegated to RD. |
| 149(1) | To appoint more than 15 directors in the company. | 149(1) Every company shall have a Board of Directors consisting of individuals as Directors and shall have— (a) a minimum number of three Directors in the case of a public company, two Directors in the case of a private company, and one director in the case of a One Person Company; and (b) a maximum of fifteen Directors: Provided that a company may appoint more than fifteen Directors after passing a special resolution: Not applicable to Section 8 Company vide Notification No- G.S.R. 584(E) dated 13th June 2017. Not applicable to a specified IFSC Public Company vide Notification No- G.S.R. 463(E) dated 5th June 2015. |
| 149(10) | To re-appoint an independent director beyond 5 years. | 149(10) Subject to the provisions of section 152, an independent director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment on passing of a special resolution by the company and disclosure of such appointment in the Board’s report. Not applicable to Section 8 Company vide Notification No- G.S.R. 466(E) dated 5th June 2015. Not applicable to a specified IFSC Public Company vide Notification No- G.S.R. 08(E) dated 4th January 2017. |
| 165(2) | To decide lesser number of companies in which a director of the company may act as director. | 165(2) Subject to the provisions of sub-section (1), the members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as Directors. |
| 169(1) | For removal of an independent director re-appointed for second term under sub-section (10) of section 149. | 169(1) *** *** *** Provided that an independent director re-appointed for second term under sub-section (10) of section 149 shall be removed by the company only by passing a special resolution and after giving him a reasonable opportunity of being heard: |
| 180(1) | To grant consent to the Board to exercise powers under sections 180(1)(a) to 180(1)(d). | 180(1) The Board of Directors of a company shall exercise the following powers only with the consent of the company by a special resolution, namely:— (a) to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings. (b) to invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation; (c) to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves and securities premium, apart from temporary loans obtained from the company’s bankers in the ordinary course of business: *** (d) to remit, or give time for the repayment of, any debt due from a director. Exception: A private company can exercise the powers prescribed u/s 180 without passing a special resolution- Notification No- G.S.R. 464(E), dated 5th June, 2015. A specified public company can exercise the powers prescribed u/s 180 without passing a special resolution unless the articles of the company provide otherwise- Notification No- G.S.R. 08 (E), dated 4th January, 2017. |
| 185 | To advance any loan including any loan represented by a book debt, or give any guarantee or provide any security in connection with any loan taken by any person in whom any of the director of the company is interested. | 185(2) A company may advance any loan including any loan represented by a book debt, or give any guarantee or provide any security in connection with any loan taken by any person in whom any of the director of the company is interested, subject to the condition that- (a) a special resolution is passed by the company in general meeting: *** *** *** Exception: Section 185 shall not apply to Government Company in case such company obtains approval of the Ministry or Department of the Central Government which is administratively in charge of the company, or, as the case may be, the State Government before making any loan or giving any guarantee or providing any security under the section; vide Notification G.S.R. 463(E) dated 5th June 2015. Section 185 shall not apply to a private company- (a) in whose share capital no other body corporate has invested any money (b) if the borrowings of such a company from banks or financial institutions or any body corporate is less than twice of its paid up share capital or fifty crore rupees, whichever is lower; and (c) such a company has no default in repayment of such borrowings subsisting at the time of making transactions under this section. (Vide Notification G.S.R. 464(E) dated 5th June 2015) Section 185 shall not apply to Nidhi company, provided the loan is given to a director or his relative in their capacity as members and such transaction is disclosed in the annual accounts by a note; vide Notification G.S.R. 465(E) dated 5th June 2015. |
| 186(3) | Loan & investment by a company exceeding specified limit. | 186(3) Where the aggregate of the loans and investment so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate along with the investment, loan, guarantee or security proposed to be made or given by the Board, exceed the limits specified under sub-section (2), no investment or loan shall be made or guarantee shall be given or security shall be provided unless previously authorised by a special resolution passed in a general meeting: |
| 196(3)(a) | Appointment of managing director, whole-time director or manager who has attained the age of 70 years. | 196 (3) No company shall appoint or continue the employment of any person as managing director, whole-time director or manager who — (a) is below the age of twenty-one years or has attained the age of seventy years: Provided that appointment of a person who has attained the age of seventy years may be made by passing a special resolution in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such person; Provided further that where no such special resolution is passed but votes cast in favour of the motion exceed the votes, if any, cast against the motion and the Central Government is satisfied, on an application made by the Board, that such appointment is most beneficial to the company, the appointment of the person who has attained the age of seventy years may be made. |
| 197(1) | To pay managerial remuneration to directors in excess of the limits provided in second proviso to Section 197(1). | 197(1) *** *** *** Provided further that, except with the approval of the company in general meeting, by a special resolution, – (i) the remuneration payable to any one managing director; or whole-time director or manager shall not exceed five per cent. of the net profits of the company and if there is more than one such director remuneration shall not exceed ten percent of the net profits to all such directors and manager taken together; ii) the remuneration payable to directors who are neither managing directors nor whole-time directors shall not exceed, – (A) one per cent. of the net profits of the company, if there is a managing or whole-time director or manager; (B) three per cent. of the net profits in any other case. Exception: Shall not apply to Nidhi company with the modification that the remuneration of a director who is neither managing director nor whole-time director or manager for performing special services to the Nidhis specified in the articles of association may be paid by way of monthly payment subject to the approval of the company in general meeting and also to the provisions of section 197: Provided that no approval of the company in general meeting shall be required where,- (a) a Nidhi does not have a managing director or a whole-time director or a manager; (b) the remuneration payable during a financial year to all the directors of the Nidhi does not exceed ten per cent, of the net profits of such Nidhi or fifteen lakh rupees, whichever is less; and (c) a remuneration payable under clause (b) is approved by a special resolution passed in this behalf by the Nidhi. (Vide Notification G.S.R. 465(E) dated 5th June 2015) |
| 197(4) | To determine the remuneration of any director including managing director or whole-time director or manager, articles of association so require. | 197(4) The remuneration payable to the Directors of a company, including any managing or whole-time director or manager, shall be determined, in accordance with and subject to the provisions of this section, either by the articles of the company, or by a resolution or, if the articles so require, by a special resolution, passed by the company in general meeting and the remuneration payable to a director determined aforesaid shall be inclusive of the remuneration payable to him for the services rendered by him in any other capacity: |
| 197(10) | To waive the recovery of remuneration drawn in excess of the limit prescribed by section 197 or where such remuneration is drawn without approval as stipulated u/s 197, within 2 years from the date the sum becomes refundable. | 197(10) The company shall not waive the recovery of any sum refundable to it under sub-section (9) unless approved by the company by special resolution within two years from the date the sum becomes refundable. |
| 210(1)(b) | To intimate the Central Government to investigate into the affaires of a company. | 210(1) Where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company,— (a) on the receipt of a report of the Registrar or inspector under section 208; (b) on intimation of a special resolution passed by a company that the affairs of the company ought to be investigated; |
| 212(1)(b) | To intimate the Central Government for investigation into affairs of company by Serious Fraud Investigation Office. | 212(1) Without prejudice to the provisions of section 210, where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company by the Serious Fraud Investigation Office— (a) on receipt of a report of the Registrar or inspector under section 208; (b) on intimation of a special resolution passed by a company that its affairs are required to be investigated; |
| 248(2) | To file an application to the Registrar of Companies for removing the name of the company from the register of companies. | 248(2) Without prejudice to the provisions of sub-section (1), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent. members in terms of paid-up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub-section (1) and the Registrar shall, on receipt of such application, cause a public notice to be issued in the prescribed manner: *** *** *** |
| 271 | For winding up a company by the Tribunal. | A company may, on a petition under section 272, be wound up by the Tribunal, – (a) if the company has, by special resolution, resolved that the company be wound up by the Tribunal; *** *** *** |
| 371(3)(a) | To adopt Table F in Schedule I after registering in pursuance of Chapter XXI of the Act. | 371(3) All the provisions of this Act shall apply to the company and the members, contributories and creditors thereof, in the same manner in all respects as if it had been formed under this Act, subject as follows:— (a) Table F in Schedule I shall not apply unless and except in so far as it is adopted by special resolution; |
| 406 | Where a Nidhi company intends to acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management. | Rule 6 of the Nidhi Rules, 2014 6.(d) acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi; |
| 455 | To make an application to the Registrar of Companies for obtaining the status of a Dormant Company. | Rule 3 of The Companies (Miscellaneous) Rules, 2014 3. For the purposes of sub-section (1) of section 455, a company may make an application in Form MSC-1 along with such fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 to the Registrar for obtaining the status of a Dormant Company in accordance with the provisions of section 455 after passing a special resolution to this effect in the general meeting of the company or after issuing a notice to all the shareholders of the company for this purpose and obtaining consent of at least 3/4th shareholders (in value): *** *** *** |