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In the business world, the board of directors make decisions and take action on behalf of the company. But how does this work? It isn’t as simple as the decisions we make in our everyday lives.
The decisions taken at this level have an effect on a considerable number of people, their livelihood, their employment and their wealth. The board of directors pass corporate resolutions to make any significant decisions binding. A document in writing that is normally created by the board of directors certifying a binding corporate action is called a resolution.
As per the provisions of Section 114 (1) of the 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 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.
Key points to be considered:
As per the provisions of Section 114 (2) of the Companies Act, 2013-
A resolution shall be a special resolution when-
Key points to be considered:
A proposed resolution is called a motion until it receives approval to be passed. Once the necessary approval is obtained as per the provisions of the Companies Act, 2013, it becomes a resolution. When it comes to matters requiring a special resolution, the same has to be included in the agenda of the meeting which is given at the time the notice of the meeting is sent out. For matters that do not require a special resolution as per the Act, motions that arise out of negotiation may be allowed as well.
As per the Secretarial Standard-2 Paragraph 7.1, each resolution is generally introduced by one member and thereafter seconded by another member. The motion that is under consideration may be amended during the debate. There can be any number of amendments to the main motion. However, an amendment can be amended only once. Where a motion carries a large number of amendments, after obtaining common consent, a new motion may be passed, incorporating all the amendments, and the old motion may be withdrawn.
Form MGT – 14 is required to be filed mandatorily with the Registrar of Companies within 30 days of the resolution being passed, where the resolution is a special resolution, especially. Attachments include:-
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