Understanding Special Resolution

Special ResolutionSummary: Voting for important decisions of a company. Each decision requires at least 75% of the shareholders to agree.

In the corporate world, important decisions often require more than a majority vote. Special resolutions, a crucial aspect of corporate governance, require a majority of at least 75% in favour to be passed. These resolutions are reserved for major business decisions or significant changes to a company.


When Special Resolutions Are Essential

Here’s a quick overview of when special resolution may be necessary:

  • Alteration to Clauses in the Constitution
  • Reduction in the Share Capital
  • Change of Company Name or Rebranding
  • Alteration of Objects in the Memorandum

Additional Instances When Special Resolution May Be Needed

Depending on the jurisdiction, special resolutions may also be necessary for other vital matters outlined in the Companies Act. These could include mergers and acquisitions, the issuance of new shares, or fundamental changes in the business structure.


How to Issue Special Resolution

Special resolutions hold a high threshold to ensure that major decisions receive broad support from company members. Public companies usually require a 21-day written notice for the meeting, while private companies can convene the meeting with a 14-day notice. However, meetings can be scheduled with shorter notice in exceptional cases if 95% of the voting rights holders agree.


In Conclusion

Special resolutions are formal decisions indispensable for guiding a company through critical junctures. They provide a framework for ensuring that major business decisions align with the interests of the company and its stakeholders, promoting transparency and responsible corporate governance.