Special Resolution

A special resolution is a shareholders' resolution defined in Section 114(2) of the Companies Act, 2013, that is passed only when the votes cast in favour are at least three times the votes cast against it — in effect a 75% majority of members present and voting, whether in person, by proxy or by postal ballot. It is reserved for decisions that materially change a company's constitution or affect shareholders' rights, and so demands a far higher threshold than an ordinary resolution's simple majority.

Legal basis and procedure

The notice calling the general meeting must expressly state the intention to move the item as a special resolution and must reach members at least 21 clear days in advance (Section 101), accompanied by an explanatory statement. Once passed, most special resolutions must be filed with the Registrar of Companies in Form MGT-14 within 30 days under Section 117.

When a special resolution is required

• Altering the memorandum — change of company name, object clause, or shifting the registered office to another state (Section 13)
• Amending the articles of association (Section 14)
• Reduction of share capital (Section 66) and buy-back of shares (Section 68)
• Issuing sweat equity shares (Section 54) or making a private placement (Section 42)
• Initiating a members' voluntary liquidation (Section 59 of the IBC, 2016)

A common misconception

Increasing authorised share capital does not need a special resolution. Section 61(1)(a) permits it by ordinary resolution (filed in Form SH-7), provided the articles already allow it — only amending the articles to add that power requires a special resolution.