Understanding Ordinary Resolution

Summary: Decision-making by a company’s shareholders by means of a simple majority voting.

An ordinary resolution is a common corporate decision-making process in which company shareholders vote to make their choices. It is typically used for routine business matters and requires a simple majority vote of at least 50% to pass.

 

When Ordinary Resolutions Are Important

Ordinary resolutions can be beneficial in various scenarios like:

Removing Directors: Shareholders may remove a director from office before their term expires.

AGM Determination: They can determine whether a general meeting is the Annual General Meeting (AGM).

Director Appointments: Appoint or re-appoint a director who is above the age of 70 years.

Dividend Declarations: Declare dividends to distribute profits to shareholders.

Auditor Employment: Employ and declare the remuneration of the company’s auditors.

Electing New Directors: Electing new directors to replace retiring ones, maintaining the board’s composition.

 

Passing Resolutions by Written Means

In some cases, companies can pass resolutions without holding a physical meeting. Specific rules govern this process:

Special Resolution

If a resolution is indicated as a special resolution and is formally agreed to by members representing at least 75% (or as required by the constitution) of the total voting rights, it is considered a special resolution.

Ordinary Resolution

Resolutions not marked as special are considered ordinary. They pass when formally agreed upon by a majority (or as required by the constitution) of the total voting rights.

 

Conducting Ordinary Resolution Meetings

To conduct a meeting for ordinary resolutions, specific procedures are followed:

Notice: Shareholders must receive a 14-day notice before the meeting.

Majority Agreement: Ordinary resolutions require a majority vote, typically 50% of the shareholders, to pass.

Voting Process: The vote is conducted through a simple poll or raising hands. The majority is determined by the number of members who vote, excluding proxies and those who abstain.

In conclusion, ordinary resolutions are a fundamental part of corporate governance, ensuring routine business decisions are made with shareholder input and approval. These resolutions offer a straightforward and effective way to address various important matters within a company.