Ordinary Business and Special Business

In the governance of companies, the proceedings of shareholder meetings play a critical role. The agenda items discussed in these meetings can be broadly categorized into two types: Ordinary Business and Special Business. Understanding the distinction between these two is vital for both compliance with legal requirements and the smooth operation of the company.

Ordinary Business

Ordinary business refers to routine matters that are usually addressed at the Annual General Meeting ("AGM") of a company. These are standard agenda items which are typically expected to recur every year and are necessary for the regular functioning of the company.

As per Section 102 of the Companies Act, 2013, the following matters to be considered as ordinary business:

• Consideration of Financial Statements and the reports of the Board of Directors and auditors: This includes the adoption of the company's audited accounts, balance sheet, profit and loss account, Auditors Report and Directors Report including consolidated financial statements.
• Declaration of dividend: Declaration of dividend as recommended by the Board of Directors, if any.
• Appointment of Directors in whose place of those retiring: As per the company's articles of association or pursuant to the provisions of Section 152, the directors may retire by rotation or are due for re-election. The appointment or reappointment of such Directors falls under ordinary business.
• Appointment of the auditors and fixing of their remunerations: The shareholders approve the appointment of Statutory Auditors and fix their remuneration.

Special Business

Special business refers to business categories that are not the same as regular business, however, items other than the above mentioned items transacted at an AGM shall be considered as Special business. Further, an Extra-Ordinary General Meeting ("EOGM") is convened for transacting Special or Urgent business that may arise in between two AGM, hence all business transacted at an EOGM are called as special business, some of the common examples of special business are as follows:

• Amendment of Articles of Association or Memorandum of Association: Changes to these charter documents of the company are considered special business because they can significantly alter the company's governance or operational framework.
• Issue of Securities: Approval for the issuance of new shares, debentures, or other securities.
• Changes in Capital Structure: Matters like increasing or reduction of share capital, or altering the rights of different classes of shares.
• Mergers, Acquisitions, and Disposals: Any major corporate actions such as mergers, acquisitions, or the sale of substantial assets.

Some of the key Points of Difference between the two are mentioned as follows

Conclusion

The distinction between ordinary and special business in corporate governance is more than just a procedural matter; it reflects the varying levels of significance and impact of different agenda items. Ordinary business ensures the smooth, routine functioning of the company, while special business addresses significant issues that may shape the future of the organization. Properly categorizing and addressing these agenda items is crucial for ensuring legal compliance, protecting shareholder interests, and maintaining effective corporate governance.