Types of resolutions required for various matters (In case of Private Companies) l Companies Act l Resolutions l Resolutions

The Companies Act, 2013, prescribes the necessity to take different types of approval for different kinds of matters. 

In this blog, we have discussed the types of resolutions that are required for approving various matters in the case of Private Companies.

Matters that require the approval of the Board of Directors:

S. No.	Matter	Gover.  Section	Remarks
1	Appointment of Additional Director
2	Specified Related party Transactions (Not on Arms Length Basis)		The matters that have been specified are:  (a) sale, purchase,   or supply of any goods or materials; (b) selling or otherwise disposing of, or buying, property of any kind; (c) leasing of property of any kind; (d) availing or rendering of any services; (e) appointment of any agent for purchase or sale of goods, materials, services, or property; (f) such related party's appointment to any office or place of profit in the company, its subsidiary company or associate company; and (g) underwriting the subscription of any securities or derivatives thereof, of the company.
3	Appointment of First Auditor of the Company	Section 139
4	Casual Vacancy of the Auditor except due to resignation	Section 139
5	Issuance of securities on Right Issue basis	Section 62
6	Borrowing monies including availing ECBs not convertible to shares of the Company	Section 179
7	Approval of Financial Statements and Board Report	Section 134
8	Appointment of Managing Director	Section 196
9	Other operational day-to-day matters	-

Matters that require the approval of the members along with the majority requirements:

S. No.	Matter	Gover.  Section	Majority Requirement	Remarks
1	Alteration of MoA	13	3/4th or more
2	Alteration of AoA	14	3/4th or more
3	Increase in Authorized Share Capital	61	More than 50%
4	Issuance of Shares on Private Placement Basis	62	3/4th or more
5	Issuance of Debentures	71	3/4th or more
6	Availing financial assistance in the form of ECB with an option to convert it into shares after a specific time	62	3/4th or more
7	Removal of Auditor	140	3/4th or more	Subject to prior approval of the Central Government
8	Resignation of Auditor	139	More than 50%	The appointment shall be made by the Board of Directors and such appointment shall be confirmed by the members within 3 months
9	Removal of Director	169	More than 50%	A special notice by the members holding not less than one percent of the total voting power or holding shares on which an aggregate sum of not less than five lakh rupees has been paid shall be required to move this resolution
10	Giving Loan to Director	185	3/4th or more
11	Loans/Guarantees exceeding a specified limit	186	3/4th or more	Threshold Limit: exceeding sixty percent. of its paid-up share capital, free reserves, and securities premium account or one hundred percent. of its free reserves and securities premium account, whichever is more.
12	Specified Related Party Transactions (Not on Arms Length Basis)	188	More than 50%	1) sale, purchase, or supply of any goods or material, directly or through the appointment of an agent, amounting to ten percent or more of the turnover of the company; 2) selling or otherwise disposing of or buying property of any kind, directly or through the appointment of an agent, amounting to ten percenter more of the net worth of the company; 3) leasing of property any kind 6[amounting to ten percent or more of the turnover of the company], as mentioned in clause (c) of sub-section (1) of section 188; 4) availing or rendering of any services, directly or through the appointment of an agent, amounting to ten percent or more of the turnover of the company; 5)  appointment to any office or place of profit in the company, its subsidiary company, or associate company at a monthly remuneration exceeding two and a half lakh rupees; 6) is for remuneration for underwriting the subscription of any securities or derivatives thereof, of the company exceeding one percent of the net worth. ****In the case of a wholly-owned subsidiary, the 2[resolution] is passed by the holding company shall be sufficient for the purpose of entering into the transaction between the wholly-owned subsidiary and the holding company.

Matters that are dealt with at the Annual General Meeting of the Company: 

S. No	Matter	Gover.  Section	Majority Requirement
1	Adoption of Annual Accounts of the Company	134	More than 50%
2	Appointment of Auditor	139	More than 50%
3	Declaration of Dividend	123	More than 50%
4	Appointment of Additional Director as a Director of the Company	152	More than 50%

Author – CS Kartik Arora is a member of The Institute of Company Secretaries of India and can be reached at cskartikarora@gmail.com.

Kind Attention: The information provided herein is for educational purposes only and the author assumes no responsibility or liability for any errors or omissions in the content.