Special Resolution vs. Ordinary Resolution: Key Differences

Special Resolution vs. Ordinary Resolution: Key Differences

1. Nature:

• Ordinary Resolution: Passed for regular business matters, requiring a simple majority (more than 50% of votes).
• Special Resolution: Passed for significant matters, requiring a higher majority (usually 75% or more of votes).

2. Majority Required:

• Ordinary Resolution: More than 50% of votes cast by shareholders present or represented.
• Special Resolution: Typically, 75% or more of votes cast by shareholders present or represented.

3. Notice Period:

• Ordinary Resolution: Minimum notice period is 21 days.
• Special Resolution: Minimum notice period is 21 days, but the nature of the resolution must be stated explicitly.

4. Types of Matters:

• Ordinary Resolution: Regular operational matters like the appointment of directors, declaration of dividends, etc.
• Special Resolution: Fundamental changes like alteration of the company's articles of association, change of company name, or winding up.

5. Threshold for Approval:

• Ordinary Resolution: Standard business decisions that don’t significantly impact the company's structure.
• Special Resolution: Decisions that have a profound impact on the company's constitution or structure.

6. Examples:

• Ordinary Resolution: Approving annual financial statements, appointing auditors, etc.
• Special Resolution: Changing the company's name, altering the articles of association, approving a scheme of arrangement.

7. Stringency:

• Ordinary Resolution: Less stringent; simpler to pass.
• Special Resolution: More stringent; requires a higher level of shareholder approval.

8. Filing Requirements:

• Ordinary Resolution: Filed with the Registrar of Companies (ROC) within 30 days.
• Special Resolution: Filed with the ROC within 30 days; also, additional regulatory approvals may be needed.

9. Use Cases:

• Ordinary Resolution: Routine decisions in the ordinary course of business.
• Special Resolution: Fundamental changes, restructuring, or decisions with long-term consequences.

10. Legal Implications:

• Ordinary Resolution: Standard legal implications, often straightforward.
• Special Resolution: Significant legal implications, often involving complex changes or restructuring.

11. Complexity:

• Ordinary Resolution: Generally simpler in terms of the decision-making process.
• Special Resolution: May involve complex issues and require more detailed consideration.

Understanding these differences helps companies ensure they follow the correct procedures for various types of decisions, promoting transparency and good governance.