BOARD RESOLUTIONS

Meaning of Board Resolutions

Resolutions passed by the members of a company i.e. the individuals whose names are mentioned in the Register of Members of the company are known as Board Resolutions.

Board resolutions are similar to a poll which is conducted by a company during its board meetings and annual general meeting with the sole purpose of passing orders regarding the affairs of the company.

The members of the company generally cast their votes in the form of yes or no.

Normally, in a medium sized company it happens by show of hands for “Yes” and “No” in a judgment to be taken by the company regarding its affairs.

Types of Board Resolutions

  1. Ordinary Resolution
  2. Special Resolution

 

1. Ordinary Resolution

An ordinary resolution is a resolution passed by the cast of votes either by show of hands or electronically on a poll both after a notice has been served to the members relating to this aspect according to the procedure laid down in the Companies act, 2013.

Generally, a resolution passed by a simple majority of the members of the company who have been permitted to vote at the General meeting is called an Ordinary Resolution.

A simple majority in passing an ordinary resolution means that the votes casted in favor of the resolution which includes the Chairman of the Company exceeds the amount of votes casted in opposition of the resolution.

Matters passed as an ordinary resolution:

  1. Amendment to authorized capital of Company.
  2. Declaration of dividend of Capital.
  3. Nomination of Auditors.
  4. Determination of salaries.
  5. Appointment of Directors of the Company.

 

2. Special resolution

Section 114(2) of Companies Act, 2013 specifies the provisions for a Special Resolution.

A resolution is said to be a Special Resolution only if the following special circumstances have been fulfilled:

  1. A Notice calling all the members of the Company for a general meeting has been compulsorily given.
  2. The Notice contains the intention to pass a special resolution in it.
  3. The Notice should be given to the members of the Company minimum 21 days in advance to the date of the specified General Meeting.
  4. The Resolution should be passed by the members of the company personally or by proxy who are entitled to vote in the General Meeting of the Company either by display of hands, or by electronic means or on a poll or by postal ballot.
  5. The resolution is passed only if the votes casted in favor of the resolution are not less than three times the number of votes casted in opposition to the said resolution.

Matters passed as a Special Resolution:

  1. Decision to amend the Object clause of Memorandum of Association of the Company.
  2. Decision to shift the Registered Office of Company from one state to another.
  3. Decision to decreases the share capital of the company.
  4. Decision to alter the Articles of Association of the Company.

 

Board Resolutions and Directors of the Company

On incorporation of a company, the company shall conduct its first board meeting within 30 days from the date of incorporation. Thereafter, the Company shall conduct 4 board meetings of its Board of Directors each year in such a manner that the period between two meetings doesn’t exceed 120 days.

The Directors of the Company can participate in the board meetings either in person, by video conferencing or any other audio visual mode which is capable of recording and recognizing the participation of the Directors of the Company.

The Notice for the board meeting should be served to the Directors of the company not less than 7 days prior to the date of the meeting. The notice should be in writing to every director and should be addressed to the address of the Director as specified by him/her to the Company. The Notice should be delivered either by hand or post or by any electronic mode.

 

SUMMARY

Resolutions passed by the members of the Company are known as Board Resolutions. Such resolutions pertain to the daily affairs of the Company. The Resolutions are passed by casting of votes generally in the form of “Yes” or “No”.

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