Ordinary VS Special Majority

Ordinary Majority

Special Majority

The votes cast, whether on a show of hands, or electronically or on a poll, as the case may be, in favour of the resolution, including the casting vote, if any, of the Chairman, by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy or by postal ballot, exceed the votes, if any, cast against the resolution by members, so entitled and voting.

In simple words, votes cast in favour of the resolution must exceed the votes cast against it i.e. the consent of at least 51% of the members must be obtained to have a valid resolution passed – Section 114 (1)

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, for a special resolution to be passed at a General Meeting, a supermajority is required in favour of it i.e. at least 75 % of the members voting in favour of the resolution.

It helps to make quick decisions. It has fewer formalities and is cost-effective. It is more suitable for routine matters. Less time-consuming.

There is limited control over Company matters. A small group may manipulate the decisions.

It helps to make major company decisions with a high level of consensus. A special majority usually requires a higher threshold of agreement. This ensures that the decision has broader support among members, which can lead to more stable and widely accepted outcomes. It can help prevent decisions that might only have marginal support. It makes it more challenging for transient or temporary majorities to enact significant changes.

Some of the matters that require an Ordinary Resolution are:

• Adoption of the Financial Statements

• Declaration of Dividend

• Appointment and Removal of Directors

• Appointment of Auditors and their remuneration.

• Increasing Authorised capital, cancellation of unissued shares, subdivision or consolidation of capital.

Some of the matters that require a Special Resolution are:

• Alteration of Memorandum of Association or Articles of Association.

• Buyback of shares.

• Shifting of Registered Office of the company from One ROC to Other ROC jurisdiction or at different State.

• Issue of sweat equity shares.

• Reduction of share capital.

• Removal of an auditor before the expiry of his term.

• Appointment of more than 15 directors.

• Appointment of a working director and his remuneration (a person above age of 70).

• Loans and investments by the company.

Minority Shareholders can voice their opinion. It takes care of ordinary shareholders.

It helps Management to control the Company and make certain crucial decisions. Safeguards the interest of Promoters/majority shareholders. control over significant changes. Majority rule ensures that the preferences of the majority are reflected in the decisions made. This enhances the legitimacy of the decisions and promotes the idea of equal representation and participation.