Companies Act 2013: Ordinary resolutions
The companies act has brought smiles on corporate India’s face giving a much needed lift. Simplifying the procedural aspect will surely wash away the bad memories during the older regime. This article explore the areas where ordinary resolutions are required.
What is an ordinary resolution?
A resolution is said to be ordinary resolution if votes cast in favour of the resolution exceed the votes cast against the resolution. Voting includes voting by members entitled to vote including chairman. The voting may be in person, through electronic mode, by show of hands, by postal ballot or by proxy or on a poll.
Areas where ordinary resolutions are required to be passed
1. Where the company has furnished wrong and incorrect information to ROC. ROC shall direct the company to change its name within 3 months [Sec 4(5)(ii)(b)(i)]
2. For the purpose of rectification of name under section 16(1), after being directed by central government
3. Under section 61 (1), a limited company having share capital can alter its memorandum of association by passing ordinary resolution and authorized by articles. The resolution is required in following matter:
a. Increase in share capital
b. Consolidation of share capital
c. Division of share capital
d. Subdivision of share capital
e. Conversion of fully paid shares into stock or vice versa
f. Cancellation of shares which have not been taken or agreed to be taken by any person
4. Capitalization of company’s profit or reserve to issue fully paid bonus shares [sec 63(2)(b)]
5. For accepting deposits from its members u/s 73(2) or accepting deposits from public u/s 76
6. For declaration of dividend under section 123.
7. Sec 139 (1) appointment of auditor from the conclusion of first general meeting till the conclusion of sixth AGM ( i.e. 5 years) and thereafter till the conclusion of every sixth meeting.
8. Under section 139 (8), if there arises any casual vacancy in the office of auditor because of resignation of auditor. BoD shall fill the vacancy within 30 days which shall be approved by ordinary resolution. This provision is not applicable if the auditor is appointed by comptroller and Auditor General of India.
9. To appoint any person as an auditor other than a retiring auditor under section 140 (4).
10. Under section 142 (1), the remuneration of auditor shall be fixed in general meeting. It shall require ordinary resolution.
11. Remuneration of cost accountant shall also be fixed by ordinary resolution under section 148(3).
12. Sub section 2 of section 152 provide for appointment of every director in the general meeting. Every appointment of director/s shall require ordinary resolution.
13. Sec 169 (1) : removal of any director u/s 242 before the expiry of his period. However the section shall not be applicable in case the director is appointed by Tribunal. Opportunity of being heard shall be provided before the removal.
14. Appointment of any person as director in case of vacancy created due to removal [ sec 169(2)]
15. Contribution to bonafide charitable and other funds an amount >5% of its average net profits for three immediately preceding financial years, for this purpose the permission shall be obtained by passing ordinary resolution. ( proviso to section 181).
16. Sec 197 (1) along with 1st proviso to sec 197(1) : public company may authorized the payment of remuneration, which is calculated in the manner provided u/s 198, to its director, managing director, whole time director or manager exceeding 11% of the net profits.
17. For payment of remuneration in excess of 5% of net profits to any one managing director or whole time director or manager. If in case there is more than one such director, the remuneration in excess of 10% of the net profits to all such directors and manager taken together. ( as per 2nd proviso to sec 197 (1))
18. Payment of remuneration to directors other then managing directors or whole time director in excess of 1% of net profit in case of managing director, whole time director or manager. Payment of remuneration in excess of 3 % of net profit in any other case. ( as per 2nd proviso to sec 197 (1))
19. In case of voluntary winding up of company u/s 304 (a)
20. In case of winding up, appointment of official liquidator and fixing remuneration of liquidator. ( sec 310(4))
21. Sec 311(4) :To fill the vacancy in the office if official liquidator caused by:
a. Death of liquidator
d. Or otherwise
22. Sec 315: if there are no creditors, for the purpose of appointment of committee to supervise liquidation.
23. Sec 318: if majority of the members are satisfied that company shall be wound up, these member may pass resolution for dissolution. They have to consider the report of official liquidator for this purpose.
By CA. Tarun Nagpal
Areas of specialization: Taxation, corporate law, International Law
Tags :Corporate Law