The special resolution system is the best way to help protect those shareholders that hold minority shares. Special resolution means a resolution that needs a clear majority to approve the resolution at the general meeting. The resolution to be carried as a special resolution must be clearly and explicitly spelled out in the notice and must be notified at least 21 clear days before the meeting. It is to be noted carefully that when the notice clearly states “that the following resolution will be proposed as a special resolution”.
Following Decisions Can Be Passed Via an Special Resolution
1. Company name change. [Sec. 11(6)]
2. Objective clause provision change [Sec.12(1)]
3. Alteration in the Articles of Association [Sec. 20]
4. Reduction of Capital [Sec. 59 & 70]
5. Increasing the authorized share capital [Sec. 88 (1)]
6. Creation of Reserve Capital [Sec. 74]
7. For making the liability of directors unlimited [Sec. 76(1)]
8. Fixation of remuneration to a managing agent [Sec. 119(2)]
9. Appointment of inspectors to investigate the company’s affairs. [Sec. 207(1)]
10. Removal of auditor before expiry [Sec. 210(9)]
11. On court winding up [Sec. 241(i)]
12. To confer authority on the liquidator of a voluntary winding up [Sec. 294(1)]
13. Power to substitute memorandum and articles for deed of settlement. [Sec. 368(1)]
Voting Power Of Special Resolution
It is to be passed by a majority of not less than three-fourth (i.e.,75%) of the members present and vote in person or by proxy. Therefore, a shareholding ratio of 75% or higher means that a shareholder has the authority to make the above decision.
-Section 87(2)
Right to convene Special resolutions, right to request business investigation Shareholders with a shareholding ratio of 10% or more are granted the right to convene a special resolution and the right to request a business investigation.
-Section 84; 195
Right to propose agenda: Shareholders with a shareholding ratio of 5% or more are granted the right to propose the agenda.
-Section 85 (2) (a)