Company Resolutions: Ordinary vs. Special Resolutions

Staff Writer

March 7, 2024

What’s in the article?

Ordinary and special resolutions are the two types of shareholder resolutions that can be passed by a company’s shareholders, with each type dealing with different issues. While ordinary resolutions are more common and deal with a company’s daily operations, special resolutions are reserved for more serious matters that may impact the company’s direction.

What is an Ordinary Resolution?

An ordinary resolution is a resolution that deals with routine matters and can only be passed once it acquires at least 50% of the total number of votes. Shareholders can submit their votes with either a raise of hands or a poll.

The following circumstances are some examples that would require an ordinary resolution to be passed:

  • Issuance of new shares
  • Appointment or removal of directors from the board
  • Approval of annual budgets
  • Declaration of dividends
  • Appointment of auditors

Should a meeting be held for the passing of an ordinary resolution, the shareholders must be given 14 days’ written notice. Alternatively, the company can choose to circulate a written resolution in lieu of a physical meeting to acquire the necessary votes and signatures, with the written resolution requiring the same minimum number of votes to be passed.

What is a Special Resolution?

A special resolution is only reserved for more urgent matters that will severely impact the company’s future, thus requiring a much larger majority vote of at least 75% of the total votes. 

The following are examples of circumstances that will require a special resolution:

Similarly to ordinary resolutions, a special resolution may be passed through a written resolution instead of having to schedule a physical meeting, though public and private companies would have to give shareholders 21 days’ and 14 days’ notice, respectively.

Ordinary Resolution vs. Special Resolution: What’s the Difference?

To summarize, here’s a table showing the differences between ordinary and special resolutions:

Ordinary Resolutions Special Resolutions
Types of Issues Routine and day-to-day matters concerning the company’s operations Urgent matters that need to be resolved immediately and will affect the company’s future and direction
Votes Needed At least 50% of the total votes At least 75% of the total votes
Examples Removing a member from the company’s board of directors Amendments to the company constitution

While these resolutions deal with matters of varying importance, both ordinary and special resolutions serve the purpose of streamlining the decision-making process and ensuring that the interests of the majority of shareholders are protected and acted upon.

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