CA Intermediate · Corporate and Other Laws · Management & Administration
Narmada Pharma Ltd, a listed company, held its AGM and members passed a special resolution to alter its articles. Among 600 votes cast on a poll, 410 were in favour and 190 against. The company's secretary says the resolution is validly passed. Applying the Companies Act, 2013, what is the correct conclusion?
The resolution fails as a special resolution because the votes in favour must be at least three times the votes against. Here 410 votes in favour are less than three times 190, which is 570. It would have passed only as an ordinary resolution.
- AThe resolution is not validly passed as a special resolution because the votes in favour are less than three times the votes againstCorrect
- BThe resolution is validly passed because votes in favour exceed 50% of the votes cast
- CThe resolution is validly passed because votes in favour exceed two-thirds of all members of the company
- DThe resolution is not validly passed because a special resolution needs 75% of the total members on the register
Explanation
A special resolution requires votes cast in favour to be at least three times the votes cast against. Three times 190 is 570, and 410 is less than 570. Equivalently, 410/600 is about 68.3%, below 75% of votes cast. Therefore it fails as a special resolution, although it would pass as an ordinary resolution. The 50% option confuses the two kinds of resolution.
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