Introduction:

A company, being an artificial person, requires decisions to be made on its behalf by its Board of Directors (BOD) or its members.

These decisions, whether routine or significant, are formalized through resolutions passed in Board Meetings (Board Meetings) or General Meetings (General Meetings).

Types of Resolutions:

1. Ordinary Resolutions:

Ordinary resolutions, governed by Section 114(1) of the Companies Act, 2013, are passed by a simple majority. They cover a range of matters, including

• Alteration of Memorandum or Articles of Association
• Declaration of dividends
• Appointment of directors
• Capitalization of company profits

2. Special Resolutions:

Special resolutions, as per Section 114(2) of the Act, require a higher threshold of approval. They necessitate notice specifying their intent and must be passed with at least three times the number of votes against the resolution. Matters requiring special resolutions include:

• Alteration of Memorandum or Articles of Association
• Change in registered office location
• Issue of debentures convertible into shares

3. Process of Passing Resolutions:

• A motion is proposed in writing, signed by a member, and seconded by another member.
• The motion can be amended during debate, with the chairman’s approval.
• After discussion, the motion is put to vote, and if approved, it becomes a resolution.

4. General Meeting:

• Annual General Meetings (AGMs) are mandatory and must be convened by the Board to discuss financial statements, auditor appointments, and other matters.
• Notice of the meeting, along with relevant documents, must be provided to all members at least 21 days before the meeting.
• Items of Special Business require resolutions to be stated in the notice with an explanatory statement.

5. Passing of Resolution by Postal Ballot:

• Certain items, as specified by the Central Government, must be transacted via postal ballot.
• Results of the postal ballot must be displayed for at least three days at the company’s registered office and on its website.

6. Board Meeting:

• The Board must hold its first meeting within 30 days of incorporation and a minimum of four meetings annually.
• Resolutions at Board Meetings are passed by a simple majority unless specified otherwise.
• Certain business matters require approval by special resolution.

7. Passing of Resolution by Circulation:

• Urgent decisions can be approved by means of resolutions passed by circulation.
• Resolutions passed by circulation are deemed to be passed at a duly convened meeting of the Board.

8. Voting in a General Meeting:

• Voting methods include a show of hands or polls, with preference shareholders entitled to vote on resolutions concerning their rights.
• A poll may be demanded by members holding a certain percentage of shares.

Conclusion:

Understanding company resolutions and meetings is crucial for corporate governance and decision-making.

Whether it’s passing resolutions at meetings or voting on critical matters, adherence to legal requirements ensures transparency and accountability within the organization.