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Ordinary Resolution

What is ordinary resolution?

As per section 114(1) of Companies Act 2013,  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 favor 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 simple words, the votes cast in favour of the resolution must exceed the votes cast against it. The consent of at least 51% of the members must be obtained to pass a valid ordinary resolution.

Matters requiring ordinary resolution under Companies Act 2013

(i) Where Registrar direct to change the name of the company within 3 months (Section 4)

(ii) Where Central Government direct to change the name of the company within 3 or 6 months (Section 16)

(iii) Alteration of Memorandum of Association ( Increase /Consolidate/ sub-divide/ convert/ cancellation of Share Capital) (Section 61)

(iv) Capitalization of Company profit or Reserves to issue fully paid bonus shares (Section 63)

(v) Unlimited company to provide for reserve share capital on conversion into a limited company (Section 65)

(vi) Accepting deposits from the public (Section 73 & 76)

(vii) Ordinary Business transacted at Annual General Meeting only (Section 102)

(viii) Fixing of Remuneration of Cost Accountant (Section 148)

(ix) Appointment of Alternate Director (Section 161)

(x) Removal of Director before the expiry of the term except Director appointed by Company Law Tribunal/ Board (Section 169)

(xi) Contribution to Charitable Trust in excess of 5 % of its Average Net Profit for 3 immediately preceding financial years (Section 181)

(xii) Restricted Non-cash transactions involving Directors requires approval of shareholders (Section 192)

(xiii) Appointment of Managing Director, Whole Time Director, Manager, subject to provision of Section 197  (Section 196)

(xiv) Remuneration to be paid to the Directors (Section 197)

(xv) In case of Voluntary wound up of Company (Section 304)

(xvi) Appointment of Official Liquidator and fixing his Remuneration (Section 310)

(xvii) To fill Casual Vacancy in office of Official Liquidator caused by way of Death, Resign or Removal (Section 311)

(xviii) Official Liquidator call General Meeting to get sanction of the company approval of report of Official Liquidator by Shareholders for approval (Section 314)

(xix) Approval of report of Official Liquidator by Shareholders for approval (Section 318)

Specimen of ordinary resolution

Sample 1: Issue of shares at discount (Sec. 79)

RESOLVED that the Directors of the Company be and are hereby authorised, subject to the sanction of the court, to issue 20,000 shares of Rs. 10 each in the capital of the Company at a discount of not exceeding Rupee one per share.”

Sample 2: Increase in the number of directors (Sec. 258)

RESOLVED that (subject to the approval of Central Government) the number of existing directors be increased from……………………….. to…………………… and Mr………….. and Mr…………. be and they are hereby appointed as additional directors.”

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TaxGyata Team

TaxGyata Team