Special resolutions, special business

To understand what is “special business”(sb) you must first understand what is “ordinary business” (ob)

Ob is any business that is ordinarily carried out at a company’s annual general meeting and, in theory, such business does not need to be spelled out on the agenda when the notice of the agm is sent out to the members – in practice, it is always spelled out in detail on that notice of the meeting

These matters are 4 in number:

1 the formal acceptance of the financial statements
2 the re-election of directors retiring by rotation
3 the re-appointment of the auditors for another year, and
4 the approval of the dividend that has been proposed by the directors

And sb is any business that isn’t ob

Special resolutions are those that require a majority of 75% – this is greater than the simple majority that is required to pass resolutions that do not require the approval of this special majority

Special resolutions are required for those matters which have a major effect of the status of the company. Thus, for example, where a company wishes to change its name – that needs a special resolution. Where a public company wishes to convert to a private company (or where private wishes to become public) the members must approve such a change by resolution and that resolution requires a majority voting in favour of not less that 75%

Is that any better for you?

You’re welcome

No, that’s not correct

Ordinary business is passed by ordinary resolutions

But ordinary resolutions are also used for business that is not ordinary business

Similarly, special business is SOMETIMES passed by special resolutions

But special business is sometimes passed by ordinary resolutions

The big thing here to sort out in your mind is the definition of ordinary business and I’ve given you the gist of what comprises ordinary business earlier on in this thread … it’s business that is commonly transacted at an AGM and approved by ordinary resolution without any formal notice being required when notice of the meeting is sent to the company’s members

There are 4 elements … spelled out for you at the start of this thread

Any other business (note, ANY other business) is, by definition ‘special business’ (because it doesn’t satisfy the definition of ‘ordinary business’)

Ordinary business is ALWAYS approved by just an ordinary resolution

But some special business is also approved by ordinary resolution

For example, the appointment of a new director. That’s not ordinary business. Therefore it’s special business. But it requires only an ordinary resolution

Some ordinary resolutions require special notice … and therefore they are special business because they don’t satisfy the definition of ordinary business … because part of the definition of ordinary business is ‘without any formal notice being required’

For example, the removal of a director

ALL matters that require a special resolution are, by definition, special business … because they don’t satisfy the definition … (‘commonly transacted at an AGM and approved by ordinary resolution’)

So, in summary, ‘ordinary business’ is ALWAYS approved by ordinary resolution with no particular notice period required (not even detailed notice on the agenda for the meeting at which the resolution is to be proposed for approval)

Special business (by definition that’s ALL business that isn’t ordinary business) …

sometimes requires an ordinary resolution with no particular notice period other than being specifically included on the AGM agenda,

sometimes requires an ordinary resolution with special notice of 21 days, and

sometimes requires a special resolution

All clear now?

After this thread, you should be praying for questions like this!

Have a good festive season

🙂