Chapter 1

Definition and Kinds of

Resolutions
Synopsis
1.1 Introduction
1.2 Characteristics of a Company
1.3 Kinds of Companies
1.4 Incorporation
1.4.1 Corporate Identity Number of a company
1.5 Management of Company
1.6 Definition of Resolution
1.7 Need and Obligation of Resolutions
1.8 Validity of Resolution
1.9 Kinds of Meetings
1.10 Board's Resolutions
1.11 Members' Resolutions
1.11.1 Ordinary Resolution
♦ Votes required for ordinary resolution
♦ Casting vote
1.11.2 Special Resolutions
1.11.3 Resolutions Requiring Special Notice
1.11.4 Resolution by Circulation
1.11.5 Resolutions Passed by Postal Ballots
1.11.6 Resolutions passed at Adjourned Meetings
1.12 Resolutions and Motions
1.1 INTRODUCTION
As per section 2(10) of the Companies Act, the term “company” means a company
as defined under section 3 which defines “company” as a company formed and registered
under the present Act or an existing company formed and registered under any of the
previous company law.
An incorporated company is a body corporate but many bodies corporate are not
incorporated companies.1
Company is a 'juristic person' and it can file a suit as an 'indigent person'. An
expression 'person' includes not merely a natural person but also other juridical persons.
A company being a juristic person would be represented before a Court of law or any
other place by a person competent to represent it. A company is a legal person, but it is
not citizen so as to claim the fundamental rights granted to citizens by the Constitution.2
1.2 CHARACTERISTICS OF A COMPANY
A company registered under the Companies Act has the following features:—
(a) Separate legal entity;

1 Madras Central Urban Bank Ltd. v Corporation of Madras (1932) 2 Comp Cas 328 (Mad).
2 Tata Engineering & Locomotive Co. Ltd. v State of Bihar (1964) 34 Comp Cas 458 (SC).
 (b) Incorporated body;
(c) Artificial legal person;
(d) Perpetual succession;
(e) Limited liability;
(f) Common seal;
(g) Right to own property;
(h) Right to sue;
(i) Right to enter into contracts;
(j) Flexibility of investment;
(k) Separation of control from the ownership.
1.3 KINDS OF COMPANIES
The following kinds of companies can be incorporated under the Act:
(i) a private company limited by shares.
(ii) a public company limited by shares.
(iii) a company limited by guarantee with or without share capital which can be a
public company or a private company.
(iv) an unlimited company having a share capital.
(v) a company formed under section 25 of the Act, which can be a public company
or a private company.
1.4 INCORPORATION
A company is incorporated when the Registrar of Companies (ROC) so certifies
under his hand [Section 34(1)]. In the case of a limited company, he will further certify
that the company is limited. Upon incorporation, a company becomes a legal persona1
and not a mere aggregate of the shareholders2.
The date of registration of a company is the date mentioned in the certificate of
incorporation and not that on which the signature of the Registrar was written.3 Therefore
the date mentioned in the certificate is the first day of the company's corporate existence.
1.4.1 Corporate Identity Number of a company4
1. All Registrar of Companies allocate a corporate identity number (CIN).
2. The CIN has been designed to help easily identify companies belonging to a State,
industry ownership or age. It will be 21 digit number.
3. The first letter denotes the listed or unlisted company. The first five digits
represent the economic activity of the company's, the second two places represent the
State in which the company's registered office is located, the next four places indicate the
year in which the company was incorporated, the next three places indicate ownership

1 Sheffield & C Society (1888) 22 BD 470.

2 Flitcroft's case (1882) 21 Ch D 519.
3 Jubilee Cotton Mills, In re (1923) 1 Ch 1 on appeal (1924) AC 958.
4 Circular No. 12/2000, dated 25-10-2000.
code and the last six places in the CIN are the unique number assigned to every company
in any particular economic activity, in a particular State, of a particular year of
incorporation and of a particular ownership category,
1.5 MANAGEMENT OF COMPANY
The members of a company have certain corporate rights, which can be exercised by
the members collectively by means of democratic process, usually by majority unless
otherwise stipulated. Corporate rights are the rights, which each member has agreed to be
exercised by majority at general meetings. This involves the principles of submission by
all members to the will of the majority, provided that the will is exercised in accordance
with the law and the Memorandum and Articles of Association of the company and
exercise control over the management of the company.
Thus, the shareholders have full right to participate in the management of the
company and keep a check and balance on the directors. These powers are exercised at
the forum called 'General Meeting'. In order to provide annual review of the working and
management of the company an annual general meeting has been made mandatory for
every company, while more such meetings can be called as and when necessary.
The shareholders have wide powers of management including, inter alia, the powers
of appointment and removal of directors and auditors and review and approval of annual
accounts. These powers are exercised at the general meeting.
A general meeting is an assembly of shareholders for transacting some lawful
business. There must be at least two members to constitute a meeting in case of a private
limited company and five persons in case of a public limited company. A meeting must
be convened and held in accordance with the provisions of the Companies Act to bind the
company. It may be noted that an individual member or shareholder, irrespective of his
shareholding cannot bind the company by his individual act.
As the company management is vested in the Board of directors of the company, its
functioning is also directed through the meetings.
1.6 DEFINITION OF RESOLUTION
The term 'resolution' has not been defined in the Companies Act, 1956. A resolution
is a motion after it has been agreed to by the meeting and is entered on the records of
proceedings or minutes of the meeting.
A resolution is a written motion adopted by a deliberative body. The substance of the
resolution can be anything that can normally be proposed as a motion.
The resolution is often used to express the body's approval or disapproval of
something which they cannot otherwise vote on.
Thus the resolution can be defined as:
(i) a formal expression by a meeting; agreed to by a vote;
(ii) settlement: something settled or resolved; the outcome of decision making;
(iii) a decision to do something or to behave in a certain manner.
(iv) an expression of opinion or intention by a meeting"1.

1 Osborn's Concise Law Dictionary, 7th edition, 1983, page 290.

 It is defined as the "formal expression of opinion by legislative body or public
meeting"1.
Palmer says; "questions for submission to a general meeting are, generally,
expressed in the form of resolutions"2.
Thus, company resolutions may be defined as decisions of company meetings at which
the proposals relating thereto are placed.
A resolution passes through three stages:—
(i) It originates as a 'motion' i.e. a proposal submitted to the meeting.
(ii) The motion when approved by the meeting becomes a 'resolution'.
(iii) The resolution when entered in the minute book becomes a 'minute'.
1.7 NEED AND OBLIGATION OF RESOLUTIONS
The business of a meeting is conducted in the form of resolution proposed and the
decision taken and formalised in the form of a resolution passed. Resolutions once passed
become binding on the company and its members or the Board of directors, as the case
may be.
Once a resolution is placed before the general meeting it cannot be withdrawn
without the approval of the members.
The resolutions are the result of collective decision making, which is not a new
concept, but are in vogue since ages.
The need for passing resolutions arises from the fact that the company is a separate
legal entity distinct from its members3. The separate existence of the company will exist
even though an individual may practically hold all the shares4.
It, therefore, follows that whereas members constitute a company, a company is not
just a group of members.
However, a company is though a juristic person5, it cannot take decision as an
individual, a natural person.
The decisions are taken and the powers of a company exercised by—
(a) the members; or
(b) the Board of directors,
by passing 'resolutions'.
1.8 VALIDITY OF RESOLUTION
A resolution is said to be valid if it shows that:—
(a) the decision was taken by a body authorised to take such decision;
(b) the body comprised of the individuals, who are the legal part of the said body;

1 The Redler's Digest Great Encyclopaedic Dictionary, 2nd edition, Volume 2, page 750.
2 Palmer's Company Law, 24th edition, 1987, page 846.
3 Spencer & Company Ltd., Madras v Commissioner of Wealth-tax, Madras AIR 1969 Mad 359
(363).
4 Ibid.
5 Bacha F. Guzdar v CIT AIR 1955 SC 74 (77).
 (c) the power was exercised by the body with the due authority and within the
authority available to the body;
(d) the decision was taken with consensus of individuals comprised in the said
body;
(e) the decision so taken was recorded and is verifiable.
The resolutions are record of decision taken in a meeting. This is not only
circumscribed by statutory requirement, but are the evidence of good company practice,
which encompasses beyond the law.
It is a condition precedent to the validity of any resolution that the resolution is cast
in terms which comply with the Act and that it does not attempt to do something in a way
which departs from the substance what is therein laid down.
If a resolution attempts to do any thing, which is in contravention of the provisions
of the Companies Act or the memorandum or articles of association of the company or is
in excess of power of the company, it shall be deemed to be void.
However, irregularity in resolution can be rectified by passing of subsequent
resolution, which is validly passed.
1.9 KINDS OF MEETINGS
Company meetings may be of the following kinds:—
(1) Meetings of the Members of a company.
(a) Statutory meetings [Section 165].
(b) Annual general meetings [Section 166].
(c) Extraordinary general meetings.
(d) Class meetings [Section 170].
(2) Meetings of Board of directors [Section 285]
(3) Meetings of the Committees of directors.
(3) Meetings of Debentureholders. [Section 170].
(4) Other Meetings:—
(a) Meetings of Shareholders and/or Creditors etc. convened by Court for
amalgamation, compromise or arrangement.
(b) Meetings of Creditors and Contributories convened for winding-up.
For a discussion on meetings of the Board see Chapter 4, post and for the meetings
of the shareholders Chapter 5, post.
1.10 BOARD'S RESOLUTIONS
The nature of the powers to be exercised depends upon the provisions of the
Companies Act, 1956 ('the Act' for short) read with Table A or the Company's Articles of
Association, as the case may be.
Section 292 of the Act provides:—
"292. Certain powers to be exercised by Board only at meeting.—(1) The
Board of directors of a company shall exercise the following powers on behalf of the
company, and it shall do so only by means of resolutions passed at meetings of the
Board:—
(a) the power to make calls on shareholders in respect of money unpaid on their
shares;
 1[(aa) the power to authorise the buy-back referred to in the first proviso to clause
(b) of sub-section (2) of section 77A;]
(b) the power to issue debentures;
(c) the power to borrow moneys otherwise than on debentures;
(d) the power to invest the funds of the company; and
(e) the power to make loans:
2[Provided that the Board may, by a resolution passed at a meeting, delegate to

any committee of directors, the managing director, 3[* * *] the manager or any other
principal officer of the company or in the case of a branch office of the company, a
principal officer of the branch office, the powers specified in clauses (c), (d) and (e)
to the extent specified in sub-sections (2), (3) and (4) respectively, on such
conditions as the Board may prescribe:
Provided further that the acceptance by a banking company in the ordinary
course of its business of deposits of money from the public repayable on demand or
otherwise and withdrawable by cheque, draft, order or otherwise, or the placing of
moneys on deposit by a banking company with another banking company on such
conditions as the Board may prescribe, shall not be deemed to be a borrowing of
moneys or, as the case may be, a making of loans by a banking company within the
meaning of this section.
Explanation I.—Nothing in clause (c) of sub-section (1) shall apply to
borrowings by a banking company from other banking companies or from the
Reserve Bank of India, the State Bank of India or any other banks established by or
under any Act.
Explanation II.—In respect of dealings between a company and its bankers, the
exercise by the company of the power specified in clause (c) of sub-section (1) shall
mean the arrangement made by the company with its bankers for the borrowing of
money by way of overdraft or cash credit or otherwise and not the actual day to day
operation on overdraft, cash credit or other accounts by means of which the
arrangement so made is actually availed of.]
(2) Every resolution delegating the power referred to in clause (c) of sub-section
(1) shall specify the total amount 4[outstanding at any one time] up to which moneys
may be borrowed by the delegate.
(3) Every resolution delegating the power referred to in clause (d) of sub-section
(1) shall specify the total amount up to which the funds may be invested, and the
nature of the investments which may be made, by the delegate.
(4) Every resolution delegating the power referred to in clause (e) of sub-section
(1) shall specify the total amount up to which loans may be made by the delegate, the
purposes for which the loans may be made, and the maximum amount of loans which
may be made for each such purpose in individual cases.

1 Inserted by the Companies (Amendment) Act, 2001, w.r.e.f. 23-10-2001.

2 Substituted by Act 65 of 1960, section 98, for the proviso.
3 Omitted by the Companies (Amendment) Act, 2000 as provisions relating to managing agents,
etc. had become redundant after abolition of system by Act 17 of 1969.
4 Inserted by Act 65 of 1960, section 98.
 (5) Nothing in this section shall be deemed to affect the right of the company in
general meeting to impose restrictions and conditions on the exercise by the Board of
any of the powers specified in sub-section (1)."
A 'Resolution' passed by the Board in exercise of its powers can be said to be the
decision or expression of opinion or intention of the directors who are vested with powers
to manage the affairs of the company.
Matters are generally decided at the Board meetings by way of formal resolution
with simple majority of the directors present at the meeting. Resolutions can also be
passed by circulation among the directors in accordance with the provisions of section
289 of the Companies Act, 1956. The following types of resolutions are generally passed
by the Board of directors of a company.
(a) Resolutions passed by simple majority
(b) Resolutions passed by circulation
(c) Resolutions passed with the consent of all directors present at the meeting
For a discussion on resolutions of the Board, see Chapter 4, post.
1.11 MEMBERS' RESOLUTIONS
The manner of decision making by members in the general meeting of a company is
to pass a formal special or ordinary resolution considering the requirements of the
Companies Act, 1956, the Memorandum of Association and Articles of Association of
the company. The following types of resolutions are required to be passed at a general
meeting as per requirements of the provisions of the Companies Act, 1956:
(1) Ordinary resolutions,
(2) Special resolutions, and
(3) Resolutions requiring special notice.
Members' resolutions are normally passed at formal general meetings of the
members even though section 192(4)(b) refers to resolutions passed by members in
circulation. It should be borne in mind that where the resolution is required to be passed
at or in general meeting, it cannot be done by way of written resolutions without a
meeting.
1.11.1 Ordinary Resolution
A resolution passed by a simple majority of members present at a general meeting of
a company is known as an Ordinary Resolution.
Section 189(1) of the Act states that:—
"A resolution shall be an ordinary resolution when at a general meeting of which
the notice required under this Act has been duly given, the votes cast (whether on a
show of hands, 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, exceed the votes, if
any, cast against the resolution by members so entitled and voting."
The salient features of an ordinary resolution are as under:—
(1) Proper meeting
The resolution is placed at a general meeting of which notice required under
the Act has been duly given.
(2) Simple majority
 The votes cast in favour of the resolution exceed the votes against. Where the votes
cast for and against the resolution are equal, the chairman of the meeting, if empowered
by the Articles, can exercise a second or casting vote1.
♦ Votes required for ordinary resolution
An ordinary resolution requires a simple majority of votes in its favour—whether on
show of hands or on poll. Voting must be by show of hands in first instance2. [Section
177]
Where a resolution is required to be passed by a simple majority i.e. more than 50%
of the members, the members may vote in person or appoint a proxy to vote on their
behalf.
In the case of a public limited company or its subsidiary, a proxy is not entitled to
vote on a show of hands unless authorised by the Articles. [Section 176] A member who
is also a proxy is entitled to only one vote on a show of hands3.
Before or on the declaration of the result of voting on a show of hands, a poll may be
demanded. [Section 179] A properly demanded poll cancels the result of the previous
show of hands4. If a poll properly demanded is not taken, the resolution, which has been
passed earlier will be invalid5.
Where there is no particular type of resolution referred to in the Act or articles of
association of a company as being required in order to enable the company to do any
particular act, an ordinary resolution to do that act would suffice.6 In many cases the Act
specifies the type of resolution (ordinary or special) required to do a particular act or take
a decision. But where there is no specification and only the word 'resolution' is used, it
should be taken as ordinary resolution. For example, section 79 or 121(1)(b) uses the
expression 'by passing a resolution' or section 214(1) uses the expression 'by resolution'.
This means an ordinary resolution.
♦ Casting vote
Regulation 54 of Table A provides—
"In the case of an equality of votes, whether, on show of hands or on a poll, the
Chairman of the meeting at which the show of hands takes place, or at which the poll
is demanded, shall be entitled to a second or casting vote."
Even where the Chairman is not a member, he has a right to give only a casting vote.
Such right is however exercisable only where it is expressly conferred by the company's
Articles of Association7.
The Chairman is normally expected to exercise his casting vote in such a way as to
retain the status quo even though he can cast it legally either way.
Where the votes are equal, and the Chairman does not exercise his casting vote, the
resolution is not carried.

1 Nell v Longbottom (1894) 1 QB 767.

2 In re: Horbury Bridge Coal Iron and Wagon Co (1879) 11 Ch D 109.
3 Ernest v Loma Gold Mines (1897) 1 Ch 1.
4 Anthony v Segar (1789) 1 CHR 9.
5 R v Cooper 1870 LR 5Q B Cas 457.
6 Mihir Hemant Mafatlal v Mafatlal Industries Ltd (1987) 79 Bom LR 86 (Bom).
7 Nell v Longbottom (1894) 1 QB 767.
 The items of business, which can be transacted at a general meeting by way of
ordinary resolutions are given in Part VIII.
1.11.2 Special Resolutions
In relation to a company, a resolution passed by a majority of not less than three-
fourths of such members as, being entitled to do so, vote in person or where proxies are
allowed, by proxy at a general meeting of which valid notice, specifying the intention to
propose the resolution as a special resolution has been duly given:
Thus, “a resolution shall be a special resolution when:—
(a) the intention to propose the resolution as a special resolution has been duly
specified in the notice calling the general meeting or other intimation given to
the members of the resolution;
(b) the notice required under this Act has been duly given of the general meeting;
and
(c) the votes cast in favour of the resolution (whether on a show of hands, or on a
poll, as the case may be), by members who, being entitled so to do, vote in
person, or where proxies are allowed, by proxy, are not less than three times the
number of the votes, if any, cast against the resolution by members so entitled
and voting."
Example: A company has 5,452 members, 25 members attend the meeting when
the special resolution is put to vote, 18 members vote for the resolution, 6 members
vote against and one abstains. The resolution is carried as a special resolution.
Invalid votes must be ignored for this purpose. Such voting may be on a show of
hands or on a poll. The question of Chairman exercising a casting vote does not
arise.
The exact wording of the special resolution must be set out in the notice1.
The Act requires passing of special resolutions for items given in Part VIII.
1.11.3 Resolutions Requiring Special Notice
Section 190 of the Companies Act, 1956 gives a right to every member to give
special notice to the company of his intention to move the resolution at a general meeting
for certain purposes. The condition to be met is that the member shall be competent to
attend the meeting and move the resolution.
Resolutions requiring special notice may either be ordinary or special. Section 190 of
the Act provides:—
"(1) Where, by any provision contained in this Act or in the articles, special
notice is required of any resolution, notice of the intention to move the resolution
shall be given to the company not less then 2[fourteen days] before the meeting at
which it is to be moved, exclusive of the day on which the notice is served or
deemed to be served and the day of the meeting.
3[(2) The company shall, immediately after the notice of the intention to move

any such resolution has been received by it, give its members notice of the resolution

1 Re: Hector Whaling (1936) Ch 208.

2 Substituted by Act 65 of 1960, section 50, for "twenty-eight days".
3 Substituted by Act 65 of 1960, section 50, for sub-sections (2) and (3).
 in the same manner as it gives notice of the meeting, or if that is not practicable, shall
give them notice thereof, either by advertisement in a newspaper having an
appropriate circulation or in any other mode allowed by the articles, not less than
seven days before the meeting.]"
The salient features of resolutions requiring special notice are:—
(1) Special notice may be prescribed either by the Act or by the Articles.
(2) Notice of the intention to move the resolution should be given to the company at
least 14 clear days before the meeting. Even one member can give such notice.
(3) Upon receipt of the notice, the company shall give notice to the members not
less than seven clear days before the meeting.
Notice of the resolution shall be served upon the members in the same manner as it
gives notice of the meeting; if that is not practicable, the notice may be given either:
(a) by advertisement in a newspaper having an appropriate circulation, or
(b) in any other mode allowed by the Articles.
The words "appropriate circulation" would seem to indicate that the newspaper
should have circulation in the neighbourhood where the registered office of the company
is situate. The newspaper may be in any language.
It should however be noted that the notice relating to candidature of persons other
than retiring directors under section 257 should be advertised by the company in at least
two newspapers circulating in the place where the registered office of the company is
located — one in English language and the other in the regional language of that place.
For resolution requiring special notice under section 190 of the Companies Act,
1956, refer Part VIII.
Special notice can be given only by a member and not by a third party. Further the
member should by implication be a member having the right to vote at the meeting.
The notice should indicate the intention of the member to move the resolution.
Having regard to the words "Notice of the intention to move the resolution" it would
appear that the actual text of the resolution should be given in the notice to the company.
It may be noted that section 189(2), which deals with special resolution, contains similar
words namely "the intention to propose the resolution".
The company which has received the special notice, must comply with the obligation
cast upon it under sub-section (2) once it is found that the member giving the notice has
duly complied with the requirement under sub-section (1). There is no need to adjourn
the meeting.1
Harmonious construction of sections 188 and 190 indicate that a special notice under
section 190 can be given by an individual member.
Besides the right to give a special notice under section 190, a member has also the
right under section 257 of the Act to propose the name of a person who is not a retiring
director for appointment to the office of director, such notice should be given not less
than 14 clear days before the meeting concerned. It is not necessary that the actual text of
the resolution should be given in the notice to the company as that section does not talk
of resolution.

1 Pazhamalai (S) v Aruna Sugars Ltd (1984) 55 Comp Cas 500 (Mad).
 It is however interesting to note that under section 257 a person who is not even a
member can give to the company notice signifying his candidature. The company is then
bound to give notice thereof to its members as required by the section.
Further, it may be noted that a member intending to give notice to company under
section 257 need not first satisfy the requirements of section 188. In fact, the provisions
of sections 188 and 257 cover two different fields. Section 257 is independent and is not
subject to section 1881.
Similarly, section 284 of the Act is an independent provision providing for removal
of directors, and there is nothing to insist on compliance with the provisions of section
188(2). The requisition for removal of a director given under section 284 need not give
the reasons2.
However, it has been held that it is not possible to impute to the legislature an
intention to confer on a single member right to compel inclusion of a resolution for
appointment or removal of an auditor in the agenda of AGM3.
1.11.4 Resolution by Circulation
Resolutions can also be passed by circulation to the individuals, who comprise of the
meeting, which is authorised to and intending to take a decision. There is no explicit
provision in the Act with regard to passing by circulation the resolutions of members.
The resolutions of the Board can be passed by circulation among the directors, except in
case of the matters decisions on which must be taken only at a duly convened board
meeting. [See Chapter 4 and Chapter 5, post]
1.11.5 Resolutions Passed by Postal Ballot
Postal Ballot means the casting of vote by a shareholder by postal or electronic mode
instead of voting personally by being present for transacting business in a general
meeting of the company.
Members' resolutions can also be passed by postal ballot. In this process the notice of
resolution is sent to the members together with a postal ballot. The members cast their
vote and send the ballot by post to the Scrutineers appointed beforehand. The scrutineers
scrutinise the postal ballots and submit their report on the results. Later the company
announces the results.
Section 192A provides for passing of certain prescribed resolution by a listed
company only by postal ballot.
For discussion on postal ballot see Chapter 8, post.
1.11.6 Resolutions passed at Adjourned Meetings
Where a meeting of the shareholders or a class meeting or a meeting of the Board of
Directors is adjourned and held at a subsequent date, the resolution passed at such
adjourned meeting is treated as having been passed on the date on which it was in fact
passed (i.e. at the adjourned meeting) and not on the earlier date.

1 Gopal Vyas v Sinclair Hotels & Transportation Ltd (1990) 68 Comp Cas 516 (Cal): (1990) 1
Comp LJ 388 (Cal).
2 Karnataka Bank Ltd. v A.B. Datar (1994) 79 Comp Cas 417 (Kar).
3 Amarnath Malhotra v MCS Ltd. (1993) 76 Comp Cas 469 (Del).
1.12 RESOLUTIONS AND MOTIONS
Whereas a resolution is the decision of the meeting, a motion is a proposal submitted
to the meeting for consideration. The Act however uses the term "resolution" to indicate
both. A motion does not become a resolution until the meeting adopts it. The meeting
may reject a motion. Hence all resolutions are motions but all motions are not resolutions.
Usually members of a company who attend a meeting of the company receive notice
of motion to enable them to consider the motion before the meeting. Generally, a motion
relates to some action to be taken or issue of policy to be decided. It is 'moved' or
'proposed', i.e. put forward for consideration and discussion of the meeting. It is then
discussed and put to vote. If the motion is finally passed, it becomes a 'resolution'
(because the meeting so 'resolves' or decides). This distinction between motion and
resolution is, however, in practice not strictly observed and proposals for resolutions,
though technically motions, are referred to as resolutions.
A resolution, then, is a motion which has been carried. A resolution means a formal
expression of opinion or intention made, usually after voting; a formal statement of
opinion or determination adopted by an assembly or other formal group. In the context of
companies, it is a binding decision made by the members of a company. Resolution arises
from a motion moved at a meeting. Though, conventionally, resolutions are formal
decisions taken at meetings, resolutions may be passed without holding meetings, such as
those referred to in section 192(4)(b) and (e) or resolutions passed by postal ballot in
terms of section 192A of the Act.
If the motion is passed by a required majority of the members of the company, it
becomes a resolution. If the meeting decides to amend the motion, the amended motion,
known as the substantive motion, is then discussed and voted upon. If a motion is put
before the members of a company at a general meeting and the required majority vote in
favour of it, the motion is passed and becomes a resolution. In the Companies Act, the
term resolution is also used to describe a motion; the Act does not make a distinction
between the two terms. That is why in all respects in relation to Board or general
meetings, it is customary to use the term 'resolution' even at the stage prior to the moving
of a proposal, e.g. in the notice of a general meeting or agenda of a Board meeting. Even
at a general meeting, what is proposed is a resolution and not a motion though at that
stage it is in the nature of a motion.
Further motions may be formal also. Formal motions are procedural motions e.g.
those, which interrupt discussion on some matter or which, are intended to secure
postponement of proceedings. Please refer to Chapter 3, post for detailed discussion on
motions and resolutions.