Ordinary Resolution vs. Special Resolution: Know the Difference
By Shumaila Saeed || Published on January 17, 2024
Ordinary Resolution requires a simple majority to pass, typically for routine decisions, while Special Resolution needs a higher majority, often 75%, for significant changes or decisions.
Key Differences
An Ordinary Resolution is a standard decision-making tool in corporate governance, requiring more than 50% of votes for approval. It is used for regular, routine matters. In contrast, a Special Resolution is used for more significant, often structural, changes within a company and requires a higher majority, usually 75%, to pass. This distinction ensures that more critical decisions receive greater consensus.
Shumaila Saeed
Jan 17, 2024
The key difference lies in the voting thresholds. Ordinary Resolutions pass with a simple majority, reflecting their use in everyday company decisions. Special Resolutions, requiring a higher vote percentage, reflect the gravity and potential impact of the decisions they represent, such as amending a company's constitution or authorizing significant transactions.
Shumaila Saeed
Jan 17, 2024
Ordinary Resolutions might include approving annual financial statements or appointing auditors. Special Resolutions, on the other hand, are typically reserved for actions like altering the company's name, changing share structures, or approving a merger or acquisition. This delineation ensures appropriate governance mechanisms for decisions of varying significance.
Shumaila Saeed
Jan 17, 2024
Legally, the distinction between Ordinary and Special Resolutions is crucial as it dictates the level of agreement required among shareholders or board members. For instance, an Ordinary Resolution suffices for approving standard contracts, while a Special Resolution is often legally mandated for altering the rights attached to shares.
Shumaila Saeed
Jan 17, 2024
Ordinary Resolutions are more common in the day-to-day governance of a company. They usually require standard notice to shareholders. In contrast, Special Resolutions are less frequent, given their nature, and typically require a longer notice period to allow shareholders ample time to consider the implications.
Shumaila Saeed
Jan 17, 2024
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Comparison Chart
Legal Significance
Less significant legally
Often legally mandated for major changes
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Jan 17, 2024
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Ordinary Resolution and Special Resolution Definitions
Ordinary Resolution
An Ordinary Resolution is passed with a simple majority for routine matters.
The company passed an Ordinary Resolution to appoint a new auditor.
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Jan 09, 2024
Special Resolution
A Special Resolution is for major decisions, needing a higher vote majority.
Changing the company's name was approved by a Special Resolution.
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Jan 09, 2024
Ordinary Resolution
Ordinary Resolutions are standard decisions in company meetings.
An Ordinary Resolution was used to approve the annual financial statements.
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Jan 09, 2024
Special Resolution
Special Resolution requires a larger consensus for key decisions.
The merger with another company was authorized through a Special Resolution.
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Jan 09, 2024
Ordinary Resolution
An Ordinary Resolution requires more than half the votes in favor.
A new investment strategy was adopted through an Ordinary Resolution.
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Jan 09, 2024
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Special Resolution
Special Resolutions are legally binding for major corporate actions.
Amending the articles of association needed a Special Resolution.
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Jan 09, 2024
Ordinary Resolution
Ordinary Resolutions handle non-critical company matters.
The appointment of the legal advisor was an Ordinary Resolution.
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Jan 09, 2024
Special Resolution
Special Resolutions reflect the gravity of critical decisions.
The divestment of a major business unit was a Special Resolution.
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Jan 09, 2024
Ordinary Resolution
Ordinary Resolution involves everyday governance decisions.
The board passed an Ordinary Resolution for a minor policy update.
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Jan 09, 2024
Special Resolution
Special Resolutions address significant changes in a company.
A Special Resolution was passed to alter the company's share structure.
Shumaila Saeed
Jan 09, 2024
Repeatedly Asked Queries
How is the voting threshold different between the two?
Ordinary Resolutions need over 50% votes, Special Resolutions usually need 75%.
Shumaila Saeed
Jan 17, 2024
Are Ordinary Resolutions common in companies?
Yes, they are common for routine decisions in company meetings.
Shumaila Saeed
Jan 17, 2024
What defines a Special Resolution?
A Special Resolution is a decision requiring a higher majority, often 75%, for significant company changes.
Shumaila Saeed
Jan 17, 2024
What constitutes an Ordinary Resolution?
An Ordinary Resolution is a decision passed by a simple majority in company governance.
Shumaila Saeed
Jan 17, 2024
How do notice periods differ for each resolution type?
Special Resolutions generally require a longer notice period than Ordinary Resolutions.
Shumaila Saeed
Jan 17, 2024
Can Ordinary Resolutions be reversed?
Yes, through subsequent resolutions if necessary.
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Jan 17, 2024
What majority is considered a 'simple majority'?
More than 50% of votes cast.
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Jan 17, 2024
Is shareholder approval necessary for both types?
Yes, both require shareholder votes, but the majority needed differs.
Shumaila Saeed
Jan 17, 2024
What type of decisions require a Special Resolution?
Decisions like altering the company constitution or significant mergers.
Shumaila Saeed
Jan 17, 2024
Can Ordinary Resolutions impact company structure?
Typically, they are for less significant matters and do not alter company structure.
Shumaila Saeed
Jan 17, 2024
Does a Special Resolution require a specific form of voting?
It may require a formal vote, often with a higher quorum.
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Jan 17, 2024
What's an example of a Special Resolution?
Authorizing the sale of a significant company asset.
Shumaila Saeed
Jan 17, 2024
What is an example of an Ordinary Resolution?
Approving annual budgets or minor policy changes.
Shumaila Saeed
Jan 17, 2024
Is shareholder input different for each resolution?
Yes, Special Resolutions often involve more in-depth shareholder engagement.
Shumaila Saeed
Jan 17, 2024
Are Special Resolutions used for everyday decisions?
No, they are reserved for more substantial, impactful decisions.
Shumaila Saeed
Jan 17, 2024
Is a Special Resolution needed for amending bylaws?
Typically, yes, as it's a significant change.
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Jan 17, 2024
How are these resolutions documented?
Both are recorded in company minutes and relevant legal documents.
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Jan 17, 2024
Can an Ordinary Resolution be used to dismiss a director?
Yes, if it aligns with the company's governance rules.
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Jan 17, 2024
Are Special Resolutions legally binding?
Yes, they are legally binding and often filed with regulatory bodies.
Shumaila Saeed
Jan 17, 2024
Can Ordinary Resolutions affect share prices?
They can, depending on the nature of the decision.
Shumaila Saeed
Jan 17, 2024
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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