Corporate governance thrives on informed, democratic decision-making. Section 114 of the Companies Act, 2013, is a cornerstone of this framework, laying down how company members exercise their rights through resolutions. It governs two key instruments of such decisions:
- Ordinary Resolution – For routine business matters.
- Special Resolution – For strategic or structural changes.
🔍“Resolutions are the legal voice of the shareholders — the custodians of the company.”
Ordinary Resolution
A resolution is an ordinary resolution if:
“The votes cast in favour of the resolution exceed the votes cast against the resolution.”
✅ It requires a simple majority (>50%) of members present and voting.
Examples where Ordinary Resolution is required:
- Appointment of directors (other than via special process).
- Approval of financial statements and auditors’ reports.
- Declaration of dividends.
- Appointment or reappointment of statutory auditors.
- Increase in authorized capital (if not specifically required to be special resolution).
Special Resolution
A resolution is a special resolution if:
“The intention to propose the resolution as a special resolution has been duly specified in the notice, and the votes cast in favour are at least three times the votes cast against it.”
✅ It demands a minimum of 75% approval (i.e., 3:1 majority).
Examples where Special Resolution is required:
- Alteration of Memorandum or Articles of Association.
- Change of name of the company.
- Shifting of registered office from one state to another.
- Issue of sweat equity shares.
- Buy-back of shares.
- Reduction of share capital.
Difference Matters: Thoughtful Application
| Ordinary Resolutions | Special Resolutions |
| Represent majority will on operational matters. | Represent supermajority will on structural or sensitive matters. |
| Deal with day-to-day affairs. | Deal with long-term impact or investor interest. |
| Less formal, no need for explanatory statement. | Needs prior declaration + explanatory note (Sec 102). |
| Not usually filed with ROC. | Must be filed with ROC (Form MGT-14). |
Step-by-Step Procedure for Passing a Resolution
🔶 Step 1: Draft the Resolution
- Prepare the text of the proposed resolution.
- Clearly mention whether it is an Ordinary Resolution or a Special Resolution.
🔶 Step 2: Issue Notice of General Meeting
As per Section 101:
- Give minimum 21 clear days’ notice (excluding the day of sending and meeting).
- Mode of service: By hand delivery, post, or electronic means.
- Contents of notice must include:
- Date, time, and venue of the meeting.
- Agenda of the meeting.
- Exact text of resolution.
- Whether it’s Ordinary or Special Resolution.
For Special Resolution: The explanatory statement under Section 102 must be annexed.
🔶 Step 3: Convene the Meeting
- Hold the General Meeting as per the notice.
- Quorum as per Section 103 must be present.
- Resolution is put to vote (by show of hands, poll, or e-voting, as applicable).
🔶 Step 4: Voting
For Ordinary Resolution:
Simple majority of votes in Favor is enough.
For Special Resolution:
Minimum 75% votes must be in Favor (3 times the votes against).
Voting modes: Show of hands, e-voting, or poll depending on company type and provisions in Articles.
🔶 Step 5: Declaration of Result
- Chairman of the meeting declares the result of voting.
- Minutes of the meeting are prepared as per Section 118.
🔶 Step 6: Filing with ROC (for Special Resolutions)
- As per Section 117, special resolutions must be filed with ROC in Form MGT-7/MGT-14 within 30 days.
Copy of resolution + explanatory statement must be attached.