12.11.9 (Motions, Resolutions and Amendments)

Decisions of a company are taken by resolution of its members, passed at their meetings. Also, the Board of Directors takes certain decisions at its meeting by passing certain resolutions after due deliberations.

The term 'mortion' indicates a proposition made at a meeting by any member. Such a motion may be passed without any change or modification. But if some members feel that the motion in the form proposed needs some change or modification, they may move an amendment. A motion when passed with or without amendment is called a resolution.

A motion should always be in writing and before it is brought before the meeting, the necessary notice must be given. A person proposing a motion is called the mover and the motion should be signed by him.

An amendment is proposed alteration or modification in the terms or wording of the motion which is yet to be considered by the meeting. An amendment to a motion may - (i) add some new words to the motion, or (ii) replace some words of the motion by some other words, or (iii) drop some words from the motion, or (iv) change the place or position of words or certain phrases in the motion.

An amendment to be valid should comply with the following rules: (a) The amendment should always be worded in the affirmative and should be put in writing. (b) It should be seconded. (c) It should not be a counter proposal. (d) If the amendment is carried, the chairman should incorporate the same in the main motion. (e) When the amended motion is put to the meeting, it becomes a substantive motion and when passed, it becomes a resolution. (f) An amendment cannot be withdrawn without the permission of the meeting.

Then these are formal motions. They are also known as 'procedural' or' dilatory' motions as they are concerned with the procedure at a meeting and are meant for the purpose of interrupting the proceedings. Formal motions are in addition to the amendments which interrupts the proceedings of the meeting. They take precedence over all other motions and need not be in writing. Also they do not require any notice. A member may move such a motion during the proceedings of the meetings. For example, a motion may be moved by a member with the object of either: (i) dropping any item on the agenda; (ii) adjourning the meeting; (iii) applying closure to the meeting; (iv) adjourning the debate on a motion.

Once the motion has been put to the members and they have voted in favour of it,

it becomes a resolution. In the case of a company, there are three kinds of resolutions:

(i) ordinary resolution; (ii) special resolution; (iii) resolution requiring special notice.

Ordinary resolution [s.189(1)]. When a motion is passed by simple majority of the members voting at a general meeting, it is said to have been passed by an ordinary resolution. In other words, votes in favour of the resolution are more than 50 per cent. still in other words, a resolution shall be an ordinary resolution where the votes cast in favour of the resolution are more than the votes cast against the resolution. According to s.189(1), "A resolution shall be an ordinary resolution when at a general meeting of which the notice required under the Act has been duly given, the votes cast (whether on show  of hands, or on 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 to do so, 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."

All matters which are not required either by the Act or the company’ s articles to be done by a special resolution can be done by means of an ordinary resolution. Some of the cases in which only ordinary resolution is required. are: alteration of authorised capital, declaration of dividend, appointment of auditors, election of directors.

Special resolution [s.189 (2)]. A resolution is a special resolution in regard to which: (a) the intention to propose the resolution as a special resolution has been specifically mentioned in the notice calling the general meeting; (b) 21 days notice has been duly given for calling the meeting; (c) the number of votes cast in favour of the resolution is three times the number cast against it.

Some of the cases in which a special resolution is necessary: alteration of objects clause; change of registered office from one State to another; alteration of the Articles; changes in the name of the company; reduction of share capital.

Resolution requiring special notice (s.190). Some resolutions require special notice. The object of special notice is to give the members sufficient time to consider the proposed resolution and also to give the Board of directors an opportunity to indicate views, on the resolution if it is not proposed by them but by some other shareholders. Under this, a notice of intention to move the resolution should be given to the company not less than 14 days before the date of the meeting at which it is proposed to be moved. The company in turn must immediately give notice by advertisement in a newspaper or in any other mode allowed by the Articles, but not less than seven days before the meeting. Some of the cases in which a special notice is necessary are: appointing an auditor, a a person other than a retiring auditor; moving a resolution that a retiring auditor will not be re-appointed; removing a director before his term expires.

Section 192 requires that a printed or a type written copy of each special resolution should be sent to the Registrar within 30 days thereof.

Passing of resolutions by postal ballot (s. 1924). The companies (Amendment) Act,2000 has inserted a new section containing following provisions for passing of resolution by postal ballot:

            (i)  A listed company may and in the case of resolution relating to such business as the central Government may, by notification, declare to be conducted only by postal ballot, shall get any resolution passed by means of a postal  ballot, instead of transacting the business in general meeting of the company

            (ii)  Where a company decides to pass any resolution by resorting to postal ballot, it shall send a notice to all the shareholders, along with a draft resolution explaining the reasons therefore and requesting them to send their assent or dissent in writing on a postal ballot within a period of 30 days from the date of posting of the letter.

            (iii)  The notice shall be sent by registered post acknowledgement due, or by any other method as may be prescribed by the Central Government in this behalf and shall include with the notice, a postage pre-paid envelope for facilitating the communication of the assent or dissent of the shareholder to the resolution within the said period.

            (iv)  If a resolution is assented to by a requiste majority of the  shareholders by means of postal ballot, it shall be deemed lo have been duly passed at a general meeting convered in that behalf.

            (v)   If a shareholder sends under (2) above his assent or dissent in writing on a postal ballot and thereafter any person fraudulently defaces or destroys the ballot paper or declaration of identify of the shareholder, such person shall be punishable with imprisonment for a term which may extend to 6 months or with fine or with both.

            (vi) If a default is made in complying with provisions in  (1)to(4),the company

and every officer of the company, who is in default shall be punishable with fine

which may extend to Rs 50,000 in respect of each default.

Circulation of members’ resolution (s. 188). When some members of  a company want (i) to propose a resolution at the company’s next AGM; or (ii) desire to circulate to members any statement with respect to the matter referred to in any proposed resolution or any business to be dealt with at any general meeting, the Act allows them to use the administrative machinery of the company for the purpose.

If the requisite number of members make arequisition as aforesaid, the company shall be bound to: (i) give a notice of the resolution to be moved at the next AGM; (ii) circulate the statement among the members entitled to notice of any general meeting. However, before the obligation of the company, in respect of the above may arise, the following conditions shall have to be satisfied:

            (1)  The requisition must have been signed by at least: (a) members having 1/20^th is to be at one place of the total voting rights of all the members having the right to vote on on the resolution; or (b) members, numbering 100 (having the right to vote at the resolution) and commanding a paid-up share capital of Rs 1 lakh or more.

            (2)  The requisition must have been deposited at the registered office of the

 company: (a) at least 6 weeks before the meeting in case of a-requisition  requiring notice of a resolution; and (b) at least 2 weeks before the meeting in  cur case of any other requisition.

            (3)  The statement to be circulated does not contain more than 1000 words.

            (4)  The requisitionists must have deposited with the company a sum reasonably sufficient to meet the expense of the requisition.

Exceptions. Section 188 authorises a company not to circulate a resolution or statement of the requisition in the following cases: (a) The CLB, on the application of the company or any other aggrieved party, is satisfied that the rights so conferred are being abused to secure needless publicity for defamatory matters. (b) The Board of Directors of a banking company considers that the circulation of the statement would injure the interests of the company.

Registration of certain resolution and agreements [s.192]. A copy of the resolutions or agreements as enumerated in this section must within 30 days after their passing or making be forwarded to the Registrar of Companies who shall record the same: