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CA Foundation · Business Laws · The Companies Act, 2013

At an extraordinary general meeting of Kaveri Pharma Ltd, a special resolution is put to vote. Of the members who voted, 80 votes were cast in favour and 30 votes against. Which statement is correct?

The resolution fails. A special resolution needs votes in favour of at least three times the votes cast against. With 30 votes against, at least 90 votes in favour are needed, but only 80 were cast. A simple majority works only for an ordinary resolution.

  1. AThe resolution is passed because votes in favour are more than votes against
  2. BThe resolution is passed because votes in favour are at least three times the votes against
  3. CThe resolution fails because votes in favour are less than three times the votes againstCorrect
  4. DThe resolution fails because a special resolution needs 75% of all members on the register

Explanation

A special resolution requires the votes cast in favour to be not less than three times the votes cast against. Three times 30 is 90, and 80 is less than 90, so the resolution fails. Option A applies the test for an ordinary resolution. Option D wrongly uses all members rather than those who voted.

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