• Divyanshita Singh

Resolutions Requiring Special Notice & Resolutions passed at Adjourned Meeting

Updated: Oct 4

Resolutions requiring special notice (Sec 115)


1. Legislative background-

"Clause 115 — This clause corresponds to section 190 of the Companies Act, 1956, and seeks to provide that, where a special notice of any resolution is required, such number of members holding not less than one percent of the total voting power or holding shares on which an aggregate sum of not less than one lakh rupees has been paid-up in such manner as may be prescribed."


2. Resolution requiring special notice-

Resolutions requiring certain information are governed by section 115 of the Companies (Management and Administration) Rules, 2014, and rule 23. Special resolutions and resolutions requiring special notice are not the same things. The former is a procedure that occurs before the presentation of a resolution proposed by a group of members for approval at a general meeting. In contrast, the latter is a resolution passed under section 114 of the Act. A special resolution may or may not be required for the resolution for which special notice is required. Ordinary resolutions apply to all matters for which special notice is required under the Act.


The following situations necessitate a special notice under the Act's provisions:

a) Section 140, subsection (4), for appointing someone other than a retiring auditor or expressly stating that the retiring auditor will not be reappointed.


b) In the same meeting, remove a director and appoint someone in their place under sub-sections (2) and (5) of section 169.

Furthermore, the articles may include provisions for additional matters that require special attention.


3. Notice by the requisite number of members

When a special notice of the intention to move a resolution is required, a notice of the intention to move the resolution must be given to the company by a number of members holding not less than one percent of the total voting power or holding shares worth not less than five lakh rupees on the date of the notice. Only the paid-up face value of shares should be counted when calculating the amount paid up on shares.


Members must give the company notice at least 14 days before the meeting at which the resolution is to be moved, but not more than three months before the meeting.

It was held in Pedley v. Inland Waterways Association Ltd. [(1977) 1 All ER 209: 1978 Tax LR 2218 (Ch D. as quoted in Ernakulam Financiers and Kuries Private Limited v. Joseph Chandy And Ors 1998 93 CompCas 275 CLB] while analyzing the members' rights. "(English) Section 142 merely gave members of a company the right to receive notice of any resolution for which special notice was required and had already been duly given and which was to form part of the agenda to be dealt with at the relevant meeting in the manner provided by that section." The phrase in Section 142 beginning: 'and the company shall give its members notice' was merely part of the machinery designed to ensure that members generally, as well as the director or auditor concerned, had at least 21 days' notice of any resolution for which special notice was required. As a result, unless a single member could rely on (English) Section 140 or a provision in a company's articles of association, the member had no right to force the inclusion of such a resolution on the agenda."


4. Obligation of the company-

The company is required to give its members notice of the resolution within seven days of receiving the notice, excluding the day of dispatch of the notice and the day of the meeting. This notice must be given in the same manner as any other general meeting notice. If giving the notice to the members in this manner is not feasible, the notice shall be published in English in an English newspaper and in vernacular language in a vernacular newspaper with wide circulation in the State where the company's registered office is located. Furthermore, such notice shall be posted on the company's website if one exists. The notice must be published at least seven days before the meeting, excluding the day of publication and the conference itself.


5. Punishment and Compoundability-

5.1 Contravention of section: There are no penalties specified in this section for violating it. As a result, section 450 of the Act will apply.

As a result, the penalty for a contravention is a fine of up to Rs. Ten thousand for the company and every officer of the company who is in default, with a fine of rupees 1,000 for each day of infringement if the contravention continues.


5.2 Contravention of rules: According to rule 30 of the Companies (Management and Administration) Rules, 2014, a violation of the rules made under this section can result in a fine of up to Rs.5,000 for the company and every officer of the company who is in default, with a fine of Rs. 500 for each day of contravention. Section 441 of the Act allows for compounding offenses committed under this section and rule.




Section 116: Resolutions Passed at Adjourned Meetings

Introduction- According to rule 30 of the Companies (Management and Administration) Rules, 2014, a violation of the rules made under this section can result in a fine of up to Rs.5,000 for the company and every officer of the company who is in default, with a fine of Rs. 500 for each day of contravention. Section 441 of the Act allows for compounding offenses committed under this section and rule.


Purpose of Section 116- This section is concise and states that a resolution passed at an adjourned meeting of a company, holders of any class of shares in a company, or the Board of directors of a company is treated as passed on the day it was passed, not on any earlier date.


Situation Before Enactment of Section 116- This section corresponds to Section 191 of the 1956 Act (Resolutions passed at adjourned meetings). The Act of 2013 has not resulted in any changes.


Application of Section 116- This section applies whenever a resolution is passed at an adjourned meeting. This section establishes the basis on which the company will be said to have approved this resolution.


Conclusion- This is a short but important section that clarifies the status of a resolution passed at an adjourned meeting, allowing the resolution to have a greater impact on the company's and shareholders' best interests.