by Ordinary Resolution
An Ordinary Resolution is a formal decision-making process commonly used by organizations, corporations, and associations to approve regular business matters during meetings of shareholders or members. It contrasts with a special resolution, which is typically required for more significant or fundamental changes within an organization.
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Approval of Routine Matters:
Ordinary resolutions are used for routine business matters that do not fundamentally alter the structure or constitution of the organization. These can include approving annual financial statements, appointing directors, authorizing dividends, or ratifying routine contracts.
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Majority Vote:
They require a simple majority vote of those entitled to vote and present at the meeting. The specific threshold for passing an ordinary resolution is usually defined in the organization’s bylaws or governing documents but typically requires more than 50% of the votes cast.
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Notice Requirements:
Organizations must provide adequate notice to all entitled members or shareholders regarding the proposed ordinary resolutions to ensure transparency and give stakeholders an opportunity to participate in the decision-making process.
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Record Keeping:
Like all resolutions, ordinary resolutions must be documented in meeting minutes and maintained as part of the organization’s official records. This helps ensure accountability, transparency, and compliance with legal and regulatory requirements.
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Flexibility and Efficiency:
Ordinary resolutions provide a flexible and efficient mechanism for organizations to address routine business matters without the procedural complexity or higher voting thresholds associated with special resolutions.
Special Resolution
Special Resolution is a formal decision-making mechanism used by organizations, corporations, or associations to approve significant changes or actions that go beyond the scope of ordinary business matters. It contrasts with an ordinary resolution, which is used for routine and less impactful decisions.
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Nature of Matters:
Special resolutions are typically required for matters of significant importance or that involve fundamental changes to the organization. Examples include amending the organization’s constitution or bylaws, changing the company’s name, altering share structures, approving mergers or acquisitions, or winding up the company.
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Higher Voting Threshold:
Unlike ordinary resolutions that usually require a simple majority vote, special resolutions typically require a higher threshold for approval. This threshold is often defined as a specified majority (e.g., two-thirds or three-quarters) of the votes cast by members or shareholders who are entitled to vote.
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Notice Requirements:
Organizations must provide specific and detailed notice to all entitled members or shareholders regarding the proposed special resolutions. This notice must outline the nature of the resolution and its implications, ensuring stakeholders have adequate information to make informed decisions.
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Legal and Regulatory Compliance:
Special resolutions must comply with legal and regulatory requirements governing the organization’s operations. They are crucial for ensuring that significant decisions are made in accordance with the organization’s constitution, applicable laws, and the best interests of stakeholders.
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Record Keeping:
Like ordinary resolutions, special resolutions are recorded in meeting minutes and maintained as part of the organization’s official records. This documentation serves as a historical record of decisions made and ensures transparency and accountability.
Key differences between Ordinary Resolution and Special Resolution
| Aspect | Ordinary Resolution | Special Resolution |
| Type of Matters | Routine | Significant |
| Voting Threshold | Simple majority | Higher majority (e.g., two-thirds) |
| Notice Requirements | Standard notice | Detailed notice |
| Approval Scope | Regular business | Fundamental changes |
| Impact | Moderate | Substantial |
| Examples | Approving financial statements, appointing directors | Amending constitution, changing company name |
| Legal Compliance | Standard procedures | Specific legal requirements |
| Record Keeping | Standard records | Detailed documentation |
| Decision Making | Efficient | Deliberative |
| Frequency of Use | Regularly used | Occasional |
| Complexity | Low | High |
| Importance | Operational | Strategic |
Similarities between Ordinary Resolution and Special Resolution
- Formality:
Both ordinary and special resolutions follow formal procedures outlined in the organization’s governing documents (e.g., bylaws, constitution) and legal requirements.
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Decision-Making Authority:
Both types of resolutions empower stakeholders (such as shareholders or members) to participate in and influence organizational decisions.
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Meeting Requirements:
Both resolutions are typically decided upon during meetings of shareholders or members, where voting takes place according to specified rules.
- Documentation:
Both resolutions require accurate documentation in meeting minutes to record the decisions made and ensure transparency and compliance.
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Legal Standing:
Both resolutions have legal implications for the organization, impacting its governance, operations, and compliance with regulatory requirements.
- Notification:
Both types of resolutions require that stakeholders are informed in advance about the proposed resolutions, allowing them to participate effectively in the decision-making process.
