Resolutions

A resolution is the final form of a decision taken at a meeting by voting on a motion, with or without amendment.

A motion is con­sidered at a meeting, a resolution is the outcome of the discussion. A resolution is binding on the organisation. It becomes effective when it is passed but minutes make the evidence of such resolution. Sometimes there is a legal formality, as we find in the Companies Act, to file a copy of a resolution with some appropriate authority (e.g., the Registrar of Companies) to make it effective.

Rules Regarding Resolution:

Every association has to function guided by the resolutions adopted at the meetings at different levels resolutions passed at general meetings, at executive meetings and at committee meetings, if any. In an Assembly or in Parliament proposed Bills are passed in the forms of resolutions which become the Acts subsequently. Therefore, the importance of reso­lutions is immense. Certain rules have to be strictly observed for passing resolutions.

They are:

(1) The drafting of a resolution has to be carried out with great care so that the purport or meaning of the resolution is easily and clearly understandable and there is no ambi­guity (double meaning). The secretary, who is supposed to be an expert in the line, helps in the drafting process. The motion itself shall be drafted in such a manner that it can be adopted as a perfect resolution. This is particularly true for a formal resolution.

(2) There are different styles and forms of drafting a resolution. Any one style can be followed. It is desirable that a formal resolution is drafted in a specialized style.

(3) A resolution must be entered in the Minute Book in verbatim, i.e., word for word.

(4) Once a resolution is passed it cannot be revoked or cancelled either at the same meeting or at any subsequent meeting by passing another resolu­tion.

Types of Resolutions:

(1) Ordinary Resolution:

This type of resolution has the following characteristics:

(a) This can be passed by a simple majority of votes and even by a margin of one vote. It can be passed (or lost) by the casting vote of the chairman.

(b) This type of resolution is necessary to take decisions on ordinary matters of the association.

(c) This is the most common type of resolution.

(d) Formalities for passing such a resolution (unlike a special resolu­tion) are not so strict.

(2) Special Resolution:

This type of resolu­tion has the following characteristics:

(a) It needs a specific margin of votes to be passed. For example—Two-thirds majority or three- fourths majority. Every association in its bye-laws mentions what shall be the margin. There may be statutory rules too. For example, the Companies Act states that there shall be three-fourths majority out of the members present (in person or by proxy) and voting. According to our Constitution, any Article of the Constitution can be altered by two-thirds majority of all the members of Parliament.

(b) Such resolutions are necessary when any decision has to be taken affecting the very constitution of the organisation, e.g., altering the objects of the organisation

(c) This type of resolution is not commonly necessary.

(d) There may be strict formalities to be followed for the purpose (as found in the Companies Act).

Concept of types of resolutions comes mostly from the Companies Act. There are various types of resolutions mentioned in the Com­panies Act, mainly applicable to members’ meetings.

Resolutions as found in the Companies Act:

(1) Ordinary Resolution:

According to Sec. 189(1), an ordinary resolution is that which can be passed at a general meeting by simple majority (including a casting vote of the chairman, if any), votes being cast by the members present either in person or by proxy and either by show of hands or by poll.

(2) Special Resolution:

According to Sec. 189(2), a special resolution is that which can be passed at a general meeting, votes being cast by the members present either in person or by proxy and either by show of hands or by poll, provided that (a) in the agenda it is mentioned that the resolution shall be passed as a special resolution, (b) a notice has been duly issued and (c) three-fourth of the votes cast are in favour of the resolution.

It has to be noted that at a Board meeting there is no question of any special resolution. But, sometimes to pass a particular type of resolution the consent of all the directors present is necessary. (In the past, special resolution was known as extraordinary resolution).

(3) Resolution with Special Notice:

According to the Com­panies Act, certain resolutions require a special notice for their validity. The resolution itself may be passed as an ordinary resolution. The notice for a members’ meeting is prepared and issued by the Board of Directors (the secretary does it in practice) and the agenda is includ­ed in the notice.

If any member who wants to move any motion at the meeting must be given the opportunity to do it and generally for that this Section has been provided. According to Sec. 190, certain resolu­tions, as wanted by the Act or as mentioned in the articles, require special notice.

It means that a member, intending to move a resolution, shall give a notice to the company at least fourteen days before the meeting and the company shall circulate the notice of the resolu­tion to all the members at least seven days before the meeting.

Suppose, a director is to retire by rotation and his name has been mentioned in the notice as offering for re-election A member wants to propose the name of another person. He must send the name of that person at least fourteen days before the meeting and the company shall circulate the name at least seven days before the meeting (Sec. 257).

(4) Resolution by Circulation:

The Board of Directors of a Company (or the members of a committee appointed out of the directors of a company) may pass a resolution without holding a meeting. This can be done by circulating a draft of the resolution together with necessary papers, if any, to all the directors (or the members of the committee) at their usual address in India, and who are in India.

The resolution is deemed to be passed provided:

(a) The all or the majority have approved it and

(b) The total number of directors then in India is not less than the quorum (Sec. 289).

(5) Resolutions to be filed:

Copies of some resolutions, e.g., as resolution on change of any clause of any document, have to be filed with the Registrar (Sec. 192).

Section 193 of the Act provides as follows:

1. Every company shall keep Minutes of all proceedings of every General Meeting, meetings of its Board of Directors, and of every committee of the Board. Entries in the Minute Books must be made within 30 days of the conclusion of a meet­ing. The pages of the Minute Book must be con­secutively numbered.

Each page must be signed and the last page recording the proceedings of a meeting must be dated and signed:

(a) In the case of Board Meetings or committee meetings, by the Chairman of the meeting or the succeeding meet­ing; and

(b) In the case of General Meetings, by the Chairman of the same meeting, or in the event of his death or liability by a director duly authorised by the Board. Entries in a Minute Book must not be attached to it by pasting or otherwise.

2. The Minutes of each meeting shall contain a fair and correct summary of the proceedings.
3. All appointments of officers made at the meeting shall be included in the Minutes.
4. In the case of a meeting of the Board of Di­rectors or of a committee of the Board, the Minutes shall also contain:

(a) The names of the directors present at the meeting.

(b) In the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concur­ring in, the resolution.

5. The Minutes need not contain any matter which, in the opinion of the Chairman of the meet­ing:

(a) Is or could reasonably be regarded as de­famatory of any person;

(b) Is irrelevant or immaterial to the pro­ceedings; or

(c) Is detrimental to the interests of the com­pany.

The Chairman’s discretion, as regards what is to be included in the Minutes, is final. The minutes kept in accordance with the afore­said rules shall be evidence of the proceedings in a meeting. They are presumed to be correct record of proceedings, unless otherwise proved.

The minutes of General Meetings are to be kept at the Registered Office of the company and can be inspected by members. Copies of Minutes are to be furnished upon payment of the requisite fees. Apart from the Minutes, no reports of the pro­ceedings of a General Meeting are to be published at the expense of the company.

Annual Return:

The Annual Return is a statement of particu­lars, which is required to be filed by a company after every Annual General Meeting.

Section 159 of the Act provides that every company having a share capital shall, within 60 days from the day on which each Annual Meeting is held, prepare and file with the Registrar a Return containing particulars regard­ing the following:

(a) Its Registered Office;

(b) The register of its members;

(c) The register of its debenture-holders;

(d) Its shares and debentures;

(e) Its indebtedness;

(f) Its members and debenture-holders, past and present; and

(g) Its Directors, Managing Directors, man­aging agents, secretaries and treasurers, managers and secretaries, past and present.

Where full particulars as to past or present members were given in any of the two immediately preceding Returns, a Return may mention only the changes that have occurred in shareholding.

The copy of the Annual Return is filed with the Registrar by a director and by the manager or secretary of the company or where there is no man­ager or secretary, by two directors of the company, one of whom shall be the managing director where there is one.

In the case of private companies, the directors must certify that there has been no violation of the rules of private companies regarding number of members and invitation to the public for purchase of shares. The directors must also certify that 25 p.c. or more of the shares are not being held by any bodies corporate and, if so, why the company will continue to be treated as a private company.

Motion:

A motion is a definite proposition or proposal formally submitted to the meeting for considera­tion and adoption. The motion is, however, liable to be amended before it is adopted.

The requisites of a motion can be summed up as follows:

1. The motion must be in writing.
2. It should be signed by the proposer and seconded by another.
3. It must be within the scope of the agenda and within the powers of the meeting.
4. It should always be affirmative in form and it will start ‘resolved that’
5. It should not contain arguments, de­famatory or ironical expressions and should not bring any aspersions on the character of a member.