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CA Intermediate · Corporate and Other Laws · Management & Administration

Meghna Pharma Ltd, an unlisted public company, passes a resolution at a general meeting. The notice stated it as a special resolution. Votes cast: 70 in favour and 30 against, all by members voting in person. The Chairman declares it passed as a special resolution. What is the correct position?

A special resolution needs votes in favour to be at least three times the votes against. Here three times 30 is 90, but only 70 votes were cast in favour. The resolution therefore fails as a special resolution, although it would have passed as an ordinary resolution.

  1. AIt is not validly passed, as a special resolution needs votes in favour to be at least three times the votes againstCorrect
  2. BIt is validly passed, as a special resolution needs a simple majority
  3. CIt is validly passed, as a special resolution needs at least 60% in favour
  4. DIt is not validly passed, as a special resolution needs unanimous consent

Explanation

A special resolution requires the votes cast in favour to be not less than three times the votes cast against. Here 70 is less than 3 x 30 = 90, so it fails. 70% in favour does not meet the three-times test.

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