Comprehensive Overview of Ordinary and Special Business in Companies Act, 2013

Under the Companies Act, 2013, company meetings are categorized into two types: Ordinary Business and Special Business.

Ordinary Business

• Ordinary business includes routine matters that are transacted at every annual general meeting (AGM) of the company.
• These are essential activities for a company's functioning and are considered ordinary because they are regular, recurring, and necessary.
• Examples of ordinary business include the consideration of financial statements, declaration of dividends, appointment or reappointment of directors in the place of those retiring, and appointment of auditors.

Special Business

• Special business includes matters that are exceptional and are not part of the routine activities of the company.
• Any business that does not fall under the category of ordinary business is considered special business.
• Examples of special business include altering the company's articles of association, issuing new shares, changing the registered office of the company, and approving related party transactions.

Resolutions in Business

A resolution is a formal agreement made by a company's members during a meeting. These agreements are crucial decisions that guide the company's actions. In the Companies Act, 2013, two distinct types of resolutions are discussed: Ordinary and Special resolutions.

Ordinary Resolution

• Nature of Business: An ordinary resolution is a type of resolution passed for conducting routine business matters at the Annual General Meeting (AGM). It is used for tasks such as adopting financial statements, declaring dividends, appointing directors, and determining auditors' remuneration.
• Voting Percentage: The votes in favor of the resolution must exceed the votes against it. A simple majority (at least 51%) of members' votes is required for the resolution to pass.
• Eligible Members' Votes: Only the votes of members eligible to vote are counted.
• Notice Requirement: Proper notice of the meeting must be given to all members in advance, complying with the Companies Act, 2013 provisions.
• Filing Requirement: In specific cases, a copy of the ordinary resolution must be filed with the Registrar of Companies once it is passed and necessary signatures are obtained.

Special Resolutions

• Specific Intention: The intention to propose the resolution as a special resolution must be specified in the notice calling the meeting given to the members.
• Examples of Matters: Special resolutions are required for significant matters such as amending the Articles of Association, issuing sweat equity shares, changing the registered office, reducing share capital, removing an auditor prematurely, buyback of shares, appointing more than 15 directors, and decisions related to loans and investments by the company.
• Notice Requirement: Proper notice of the meeting must be provided to all members in advance, adhering to the provisions of the Companies Act, 2013.
• Supermajority Requirement: A special resolution requires a significant majority in favor, specifically at least 75% of the members voting in favor of the resolution.
• Eligible Members' Votes: Only the votes of members entitled to vote are considered for the count.
• Stringent Requirement: Special resolutions are used for decisions that have a substantial impact on the company, and therefore, they require a higher level of approval compared to ordinary resolutions.

Difference Between Ordinary Resolutions and Special Resolutions