A Complete Guide on Ordinary Resolution and Special Resolution: Understanding the Key Differences

A Complete Guide on Ordinary Resolution and Special Resolution: Understanding the Key Differences


In the realm of corporate decision-making, resolutions play a pivotal role in shaping the course of business affairs. Two common types of resolutions that often arise during shareholder meetings are Ordinary Resolutions and Special Resolutions. Understanding the distinctions between these two is crucial for anyone involved in corporate governance. This guide aims to provide a comprehensive overview of what Ordinary Resolutions and Special Resolutions entail, as well as highlighting the key differences between them.

What is an Ordinary Resolution?
An ordinary resolution is a resolution passed by the shareholders of a company by a simple or bare majority, either at a called meeting of shareholders or by circulating a resolution for signature in certain common law jurisdictions.

Ordinary Resolution:

An Ordinary Resolution is a resolution passed by a simple majority of the shareholders during a general meeting. Typically, a simple majority requires at least 50% plus one vote to pass. Ordinary Resolutions are commonly used for routine matters that don’t significantly alter the company’s structure or constitution. Examples of issues resolved through ordinary resolutions include the approval of annual financial statements, appointment of auditors, or the declaration of dividends.

What is Special Resolution?
A Special Resolution is a resolution in which the number of votes in favour must be three times the number of votes against it. Certain acts can only be done by the corporation if a special resolution is approved at a properly convened general meeting. The members should be given proper notice of the general meeting, and the notice should include the desire to purpose the resolution as SR, which should be indicated expressly.

Special Resolution:

A Special Resolution, on the other hand, requires a higher level of approval and is usually reserved for more significant decisions that impact the company’s fundamental structure or constitution. It is passed when at least 75% of the shareholders’ votes are in favor. Special Resolutions are necessary for actions such as amending the company’s articles of association, changing its name, or altering its share capital. These decisions are critical and should reflect a broad consensus among shareholders.

Procedure for Passing a Resolution:

A proposed resolution, known as a motion until it obtains approval, transforms into a resolution following due permission in accordance with the provisions of the Companies Act, 2013. Topics requiring a special resolution must be included in the meeting agenda, disclosed when the meeting notice is dispatched. Motions arising from negotiations, not necessitating a special determination under the Act, may be authorized.

According to Secretarial Standard-2, paragraph 7.1, each resolution is typically introduced by one member and seconded by another during the debate. The motion under consideration may undergo changes. The primary motion can be amended in various ways, but an amendment can only be changed once. In cases where a motion incorporates numerous amendments, a new motion encompassing all amendments may be voted upon, and the old motion may be withdrawn with common consent.

For special resolutions, Form MGT – 14 must be filed with the Registrar of Companies within 30 days of passing the resolution. The submission should include:

A copy of the passed resolution.
An explanatory statement, as required by Section 102 of the Companies Act of 2013.
A copy of the Articles of Association (AOA) of Company Incorporation (if altered).
A copy of the Memorandum of Association (MOA) (if altered).
Ensuring compliance with these steps is crucial in navigating the resolution-passing process in accordance with legal requirements.

Key Differences:

a. Voting Threshold:

Ordinary Resolution: Requires a simple majority, typically 50% plus one.
Special Resolution: Requires a higher majority, usually 75%.

b. Nature of Decisions:

Ordinary Resolution: Addresses routine and day-to-day matters.
Special Resolution: Deals with fundamental changes impacting the company’s structure.

c. Examples of Resolutions:

Ordinary Resolution: Approval of financial statements, appointment of auditors.
Special Resolution: Alteration of articles of association, change of company name.

d. Notice Period:

Ordinary Resolution: Generally requires a shorter notice period.
Special Resolution: Typically necessitates a longer notice period to ensure shareholders are adequately informed.

e. Consequences of Non-Compliance:

Ordinary Resolution: Non-compliance may have less severe consequences.
Special Resolution: Non-compliance may lead to more significant legal implications.


In essence, Ordinary Resolutions and Special Resolutions serve distinct purposes in the corporate decision-making process. While Ordinary Resolutions address routine matters with a simple majority, Special Resolutions are reserved for more impactful decisions, demanding a higher level of consensus among shareholders. A clear understanding of these resolutions is indispensable for corporate stakeholders to navigate the complexities of governance and make informed decisions in the best interest of the company.

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