Resolutions :
A meeting is an important instrument in the corporate decision-making process. The business at a meeting is preceded by a notice containing the agenda. The resolution is the event tha t takes place in the meeting.
Dictionary meaning of the word “resolution‟, is ‘a formal proposal put before a public assembly or the formal determination of such proposal on any matter’. Derived from this meaning, a resolution is a formal agreement as to adoption of proposal put before an assembly of persons or meeting. In the context of company management, it is either a Board meeting or a General meeting of the members. The passing of a resolution should be construed as the manner in which a meeting formally acts expressing the intent and purpose of the meeting and if it is a meeting of members, it means the will of the company, and if it is a meeting of the Board of directors, it means the exposition of the intent of the executive action initiated or to be initiated subject to the limiting and regulatory force of the different statute.
Hints on drafting of resolution
While framing resolution, it is to be ensured that:
(i) They should be expressed clearly and in precise terms, and not vaguely, whether they embody the decisions of the directors or are those passed at general meeting.
(ii) All identification of instruments, persons, etc., referred to in the resolution are properly made.
(iii) If the resolution is being passed in pursuance to the provisions of the Act, it refers to relevant section or sections.
(iv) If the resolution is such as requires the approval of the Central Government/Company Law Board or confirmation of the Court, it states that effect.
(v) If the resolution is to be effective immediately, it is drawn to show that effect.
(vi) The resolution is confined to one subject matter.
Wherever possible, lengthy resolutions should be divided into paragraphs and arranged in their logical order having regard to the subject matter of the resolution.
Members’ resolution
Resolutions that may be passed by a company are of two kinds:
(i) Ordinary resolution and (ii) Special resolutions
Specimen General Meeting Resolutions-Ordinary
Sections 149, 150 and 152 of the Companies Act, 2013- Appointment of Independent Director – Ordinary Resolution
“RESOLVED that pursuant to the provisions of Sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with Schedule IV to the Companies Act, 2013, Mr. —– (holding DIN ——-), Director of the Company who retires by rotation at the Annual General Meeting and in respect of whom the Company has received a notice in writing from a member proposing his candidature for the office of Director, be and is hereby appointed as an Independent Director of the Company to hold office for five consecutive years for a term up to —, 20—.”
Section 433 of the Companies Act, 1956: Winding up by Court-Ordinary Resolution Whereas the company has been unable to pay its debts and whereas the Court is of opinion that it is just and equitable that the company should be wound up. Now therefore it is Resolved that the company be wound up by the Court at _____, which will become effective from the date the Court declares the company to be wound up by such Court and that the Board of Directors be and is hereby authorised to make necessary applications therefor and take action for the winding up of the company by the said Court”.
Note: The above resolution is according to the provisions of section 433 of the Companies Act, 1956 as its corresponding section of the Companies Act, 2013 has not been notified till 31st October, 2015.
Section 394 of the Companies Act, 1956: Approval of scheme of arrangement between company and class of shareholders – Special resolution
Resolved that, subject to sanction by the Court at……………….., a scheme of arrangement in terms of the draft laid before this meeting and for the purpose of identification signed by the Chairman thereof, or with such alteration or modification thereof as may be directed by the said Court, between the company and the holders of the promoters shares and the holders of the equity shares for the purpose of eliminating existing……………….. promoters shares of `…………… each by converting them into……………….. equity shares of `……………… be and is hereby approved.
Note: The above resolution is according to the provisions of section 394 of the Companies Act, 1956 as its corresponding section of the Companies Act, 2013 has not been notified till 31st October, 2015.
Section 180 of the Companies Act, 2013: Power of Board of directors to borrow money– Special resolution
“RESOLVED that pursuant to Section 180(1)(c) and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force), the consent of the Company be and is hereby accorded to the Board of Directors to borrow moneys in excess of the aggregate of the paid up share capital and free reserves of the Company, provided that the total amount borrowed and outstanding at any point of time, apart from temporary loans obtained/to be obtained from the Company‟s Bankers in the ordinary course of business, shall not be in excess of Rs. ___Crores (Rupees ____ crores) over and above the aggregate of the paid up share capital and free reserves of the Company.”
Directors’ Resolutions
(i) Resolutions passed in a Board meeting.
As a general rule, the directors act exercise their powers by resolutions passed at Board meetings. These resolutions may be resolution requiring:
(ii) Adoption by majority: The articles usually provides for a simple majority of votes to secure adoption of directors‟ resolution.
(iii) Unanimous adoption: The resolution must be passed unanimously where the Act as requires. For example: Third Proviso to section 203(3) of the Companies Act, 2013
(iv) Resolution by circulation
1. The Act allows the Board of directors to pass resolution by Circulation also. A resolution shall be deemed to have been duly passed by the Board or by a committee thereof by circulation if:
(a) The resolution has been circulated in draft, together with the necessary papers, if any, to all the directors, or members of the committee, as the case may be,
(b) The resolution should be sent at their addresses registered with the company in India,
(c) It can be sent by hand delivery or by post or by courier, or through such electronic means as may be prescribed, and
The Companies (Meetings of Board and its Powers) Rules, 2014 provides that a resolution in draft form may be circulated to the directors together with the necessary papers for seeking their approval, by electronic means which may include E-mail or fax.
(d) It has been approved by a majority of the directors or members, who are entitled to vote on the resolution.
2. If atleast 1/3rd of the total number of directors of the company for the time being require that any resolution under circulation must be decided at a meeting, the chairperson shall put the resolution to be decided at a meeting of the Board instead of being decided by circulation.
3. A resolution that has been passed by circulation shall have to be necessarily be noted in the next meeting of board or the committee, as the case may be, and made part of the minutes of such meeting.
Specimen Board Resolution passed in the meeting
Section 202 of the Companies Act, 2013: Compensation for loss of office – Board Resolution
“WHEREAS Mr. NBS was employed for a period of three years as the Managing Director of the company from……………….. 20….. and Whereas the company wanted to dispense with the services of the said Managing Director, and WHEREAS the company has duly served notice to the said Managing Director in terms of clause……… of the agreement between the company and the said Mr. NBS governing his terms and condition as the Managing Director of the company, it is hereby resolved that an amount of `…………., be paid to Mr. NBS as compensation for the loss of his office as the Managing Director of the company.” Specimen Board Resolution – Passed by Circulation ………………..Ltd.
To
Mr………………., Director
……………….……………
(Address in India only).
Dear Sir,
The following resolution, which is intended to be passed as a resolution by circulation as provided in Section 175 of the Companies Act, 2013, is circulated herewith as per the provisions of the said section.
If only you are Not Interested in the resolution, you may please indicate by appending your signature in the space provided beneath the resolution appearing herein below as a separate perforated slip if you are in favour or against the said resolution. The perforated slip may please be returned if and when signed within……………….. days of this letter.
However, it need not be returned if you are interested in the resolution.
Yours faithfully,
(Secretary)
………………..Ltd.
Resolution by circulation passed by the directors as per
circulation effected………… 20…..
Resolved
that………………..………………..………………..………………..………………..………………..
[Set out the resolution intended to passed]
*For/Against
Signature
*Strike off whichever is inapplicable.