SPECIAL RESOLUTION

Special resolution is described in section 87(2) of the Companies Act. A special resolution is a resolution -i) which has been passed by such a majority as required for passing an extraordinary resolution; ii) in the notice it was mentioned that the resolution would be a special resolution; and iii) a notice of not less than 21 days’ has been given.

So, from section 87(1) and 87(2) of our Companies Act, it transpired that the basic difference between extraordinary resolution and special resolution is that for special resolution, you must serve a 21 days’ notice to the shareholders.

But, for holding a valid shareholder meeting (except Annual General Meeting), you must serve a 21 days’ notice to the shareholders. (There is also the option of calling a shareholder meeting with a short notice. For this post, we will not discuss short notice.) So technically there is no difference between a special resolution and an extraordinary resolution.

Having said that, you cannot disregard the requirement/ restriction imposed by the act for special or extraordinary resolution. For some specific acts, you will need either special or extraordinary resolution. For those acts, you will have to mentioned in the notice that the resolution would be either special or extraordinary resolution and serve a 21 days’ notice. If you do not do that, you are risking the validity of the resolution.

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