July 7, 2021 / Company Law Compliances

APPROVALS REQUIRING SPECIAL RESOLUTION

LIST OF SPECIAL RESOLUTIONS TO BE PASSED UNDER COMPANIES ACT, 2013

As per section 114(2): A resolution shall be a special resolution when;

The intention to propose the resolution as a special resolution has been duly specified in the notice sent for meeting;
The notice required under this Act has been duly given; and
The votes cast in favour of the resolution, whether on a show of hands, or electronically or on a poll, as the case may be, by members who, being entitled so to do, vote in person or by proxy or by postal ballot, are required to be not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting.

In simple words, A special resolution is a resolution where the intention to propose the resolution as special resolution is specified and at-least 3/4^thvotes required for passing the resolution.

Special resolutions are required for important decisions, such as for altering the terms of the articles of association or the memorandum of association, or making some other major or fundamental changes in an organization.

Note: Whenever a special resolution is passed then MGT-14 has to be submitted.

Given below is the list of Actions/Approvals for which special resolution is required to be adopted:

S.No.	Approvals	Description
1.	For Entrenchment	The provisions for entrenchment u/s 5(3) shall only be made either on formation of a company, or by an amendment in the articles agreed to by a special resolution in case of a public company.
2.	For changing registered office	For changing registered office of the company in accordance with Section 12(5), special resolution is required.
3.	For altering MOA	Save as provided in section 61, a company may, by a special resolution, alter the provisions of its memorandum.
4.	For changing Objects for which money was raised through prospectus	A company, which has raised money from public through prospectus and still has any un-utilized amount out of the money so raised, shall require to pass a special resolution to change its objects for which it raised the money through prospectus.
5.	For altering AOA	Subject to the conditions contained in its memorandum a company may, by a special resolution, alter its articles including alterations having the effect of conversion of: a private company into a public company; or a public company into a private company:
6.	To vary the terms of the contract referred in prospectus or objects for which prospectus was issued	A company shall at any time, vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, by passing the special resolution in the general meeting.
7.	For issuing Depository receipts in foreign country	A company may, after passing a special resolution in its general meeting, can issue depository receipts in any foreign country.
8.	For Variation of Shareholders Right	Where share capital of the company is divided into different classes of shares, and the company intends to vary the rights attached to the shares of any class in accordance with Section 48(1), if such action is permitted under the AoA or MoA of the company,or such variation is not prohibited by the terms of issue of the shares of that class.
9.	For issue of Sweat Equity Shares	A company may, after passing a special resolution, issue sweat equity shares from classes of shares already issued.
10.	For Increasing the subscribed capital by the issue of further shares	Where a company having share capital proposes to increase its subscribed capital by the issue of further shares and such shares are to be offered to- employees under a scheme of employees’ stock option, or to any persons either for cash or for a consideration other than cash (when the price of such shares is determined by the valuation report of a registered valuer ), as per Section 62.
11.	For reducing share capital	Subject to confirmation by the Tribunal on an application by the company, a company limited by shares or limited by guarantee and having a share capital may, by a special resolution, reduce the share capital of the company.
12.	For purchasing of its own shares.(Buy-back)	Where a company intends to purchase its own shares or other specified securities out of: its free reserves; the securities premium account; or the proceeds of the issue of any shares or other specified securities and such buy-back is authorized by its articles.The requirement for special resolution is not applicable in the following cases- (a) where the buy-back is, 10% or less of the total paid-up equity capital and free reserves of the company; and (b) such buy-back has been authorized by the Board by means of a resolution passed at its meeting.
13.	For issuing of debentures with an option to convert such debentures into shares	A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption, by passing a special resolution.
14.	For changing of place of keeping registers, returns, etc	Where registers or copies of return of a company is to be kept at a place in India, other than the registered office of the company, in which more than one-tenth of the total number of members entered in the register of members reside.
15.	For Removing auditor appointed u/s 139 before the expiry of his term.	Where the auditor appointed u/s 139 is to be removed from his office before the expiry of his term, after obtaining the prior approval of the Central Government to that effect and giving the auditor a reasonable opportunity of being heard.
16.	For Appointing more than 15 directors in a company	Where a company intends to appoint more than fifteen directors, i.e. number of directors beyond statutory limit provided under Section 149(1)(b), a special resolution is required.
17.	For Re-appointment of Independent Director	Where a company intends to reappoint an independent director after he has served for a term up to five consecutive years on the Board of the company, a special resolution is required.
18.	For specifying any lesser number of companies in which a director of the company may act as director	Section 165(1) provides that no person can hold office as a director, including any alternate directorship, in more than twenty companies (if it is a private company) and in more than ten companies (if it is a public company) at the same time. When a company intends to specify any lesser number of companies for this purpose (i.e. less than 20 or 10) special resolution is required to be passed by the company.
19.	For exercise of certain powers by Board of Directors	A special resolution is required to be passed when Board of Directors of a company intends to exercise the following powers-· to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company ;or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings; to invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation;or to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company’s bankers in the ordinary course of business; and to remit, or give time for the repayment of, any debt due from a director.
20.	For giving any loan or guarantee or providing any security or the acquisition beyond certain	Where a company intends to-(a) give any loan to any person or other body corporate;(b) give any guarantee or provide security in connection with a loan to any other body corporate or person; and(c) acquire by way of subscription, purchase or otherwise, the securities of any other body corporate, exceeding 60% of its paid-up share capital, free reserves and securities premium account or 100% of its free reserves and securities premium account, a special resolution is required to be passed.
21.	For appointment of a Managing Director, whole-time director, or manager.	Where a company has to appoint a person as its Managing Director, whole-time director, or manager who has attained the age of seventy years. In such a case, explanatory statement annexed to the notice for such motion should indicate the justification for appointing such person
22.	For fixing remuneration of directors	Where a company has to fix the remuneration payable to the directors of a company, including any managing or whole-time director or manager (if the Articles so requires).
23.	Investigation by Central Government	Where a company desires to intimate central government that the affairs of the company ought to be investigated, a special resolution is required to be passed.
24.	For removal of name of company from the Register of Companies	Where a company intends to extinguish all its liabilities for the purpose of filing an application to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in Section 248(1).
25.	For approval for Scheme of Amalgamation of a sick company	Where a company intends to approve a scheme relating to amalgamation of the sick company with any other company.
26.	For Winding up by Tribunal	Where a company has to take a resolution that the company be wound up by the Tribunal.
27.	For voluntary Winding Up	Where a company is to be wound up voluntarily for any other reasons not covered Section 304(a).
28.	For conferring certain powers on the Company Liquidator	Where a company intends to confer general authority or power on the Company Liquidator to accept shares, etc., as consideration for sale/transfer of whole or any of its business property in the course of being wound.
29.	For authorizing Company Liquidator to exercise certain powers	Where in the course of voluntary winding up, a company intends to authorize Company Liquidator for exercising the following powers- pay any class of creditors in full; make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, against the company, compromise any call or liability to call, debt, and liability capable of resulting in a debt, and any claim, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or alleged to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or liabilities or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim, and give a complete discharge in respect thereof.
30.	For disposal of books and papers of the company upon winding up	In the case of voluntary winding up, when the affairs of a company have been completely wound up and it is about to be dissolved, then its books and papers and those of the Company Liquidator has to be disposed in the manner as the company by special resolution with the prior approval of the creditors direct.
31.	Application of Table-F in Schedule-I	Where the company intends to make provisions of Table F in Schedule I applicable to it to any particular extent.

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