Types of Resolutions under Companies Act, 2013: Meaning, Examples & Ready-to-Use Templates
Summary: Under the Companies Act, 2013, every significant corporate action is formalized through a resolution, which serves as the legal record for a company’s decisions. Resolutions are classified by authority, such as Board Resolutions for internal management and Shareholders’ Resolutions for major decisions, and by approval level, including Ordinary (simple majority) and Special (75% majority). They are used for two main purposes: taking a decision, which authorizes a specific action like borrowing funds, or taking note of a report, which formally acknowledges an event like a director’s resignation without initiating further action. Proper drafting and filing of these resolutions are essential for legal compliance, corporate transparency, and maintaining accurate records for audits and inspections.
Why is Correct Drafting Important?
- Ensures legal compliance with Companies Act, 2013.
- Avoids penalties for non-filing or wrong categorization.
- Strengthens corporate governance and transparency.
- Provides a clear legal record for audits and inspections.
Types of Resolutions under Companies Act, 2013: Meaning, Examples & Ready-to-Use Templates
Under the Companies Act, 2013, every significant corporate action or decision is formalized through a resolution, either passed by the Board of Directors or by the shareholders in a general meeting. Resolutions form the legal backbone of corporate governance, ensuring transparency, compliance, and proper documentation.
This guide explains the types of resolutions, their legal provisions, real-life examples, and provides sample templates for both
– Resolutions for Taking a Decision
– Resolutions for Taking Note of Reports
1. What is a Resolution under Companies Act, 2013?
A resolution is a formal decision or opinion of a company, adopted in a duly convened meeting of its Board or shareholders. It reflects the company’s approval, direction, or acknowledgment of matters discussed during the meeting and is recorded in the minutes as per Section 118 of the Companies Act, 2013.
2. Types of Resolutions under Companies Act, 2013
Resolutions are classified based on:
– Authority: Board Resolution or Shareholders’ Resolution
– Approval Level: Ordinary Resolution, Special Resolution, or Resolution with Special Notice
– Purpose: Decision-making vs. Taking Note
A. Based on Authority
1.Board Resolutions – Passed in Board Meetings (Section 173) or by circulation (Section 175). Used for internal management, operational decisions, compliance approvals.
2. Shareholders’ Resolutions – Passed in AGMs, EGMs, or through postal ballot. Required for matters needing member approval such as issuing shares, altering articles, approving borrowings beyond limits, etc.
B. Based on Approval Level
1. Ordinary Resolution (Section 114(1)) – Simple majority (>50%)
2. Special Resolution (Section 114(2)) – 75% majority
3. Resolution Requiring Special Notice (Section 115) – Specific notice by members for items like removal of a director or auditor.
3. Resolution for Taking a Decision
These resolutions involve an active corporate decision, directing the company to act.
Real-Life Example: Borrowing Approval (Section 180)
A company intends to borrow funds exceeding its paid-up share capital and free reserves.
Sample Template:
RESOLVED THAT pursuant to the provisions of Section 180(1)(c) and other applicable provisions of the Companies Act, 2013, the consent of the members be and is hereby accorded to authorize the Board of Directors to borrow funds from any bank, financial institution, or other sources, for an amount not exceeding ₹10 crore (Rupees Ten Crore only), on such terms and conditions as may be deemed fit by the Board.
RESOLVED FURTHER THAT Mr./Ms. [Name], Director of the Company, be and is hereby authorized to execute all documents and deeds necessary for giving effect to this resolution.
4. Resolution for Taking Note of Reports
These are non-executory resolutions used to formally acknowledge a report, disclosure, or update. They ensure transparency but do not trigger any actionable step unless otherwise specified.
Real-Life Example: Noting Director’s Resignation A director resigns from the company.
Sample Template:
RESOLVED THAT the Board of Directors of the Company do hereby take note of the resignation of Mr. Rakesh Sharma (DIN: XXXXXXXX) from the position of Director with effect from 1st September 2025.
RESOLVED FURTHER THAT the Board places on record its appreciation for the valuable contribution made by him during his tenure.
5. Related Provisions under Companies Act, 2013
Key legal provisions include:
– Section 117 – Filing certain resolutions with the Registrar (Form MGT-7)
– Section 118 – Maintenance of minutes of meetings
– Section 175 – Passing resolutions by circulation
– Section 179 – Powers of Board to be exercised by resolution
– Section 180 – Restrictions on Board’s powers (special resolution)
– Secretarial Standards (SS-1 and SS-2) – For Board and General Meetings
6. Decision vs. Taking Note: Key Differences
Decision Resolution – To approve or authorize action. Creates enforceable action.
Taking Note Resolution – To acknowledge or record information. Non-executory.
Examples: Decision – Borrowing approval, issuing shares. Taking Note – Resignation, compliance reports.
Conclusion
Resolutions are a cornerstone of good corporate governance. Whether passing a decision-making resolution or a taking note resolution, the wording and type must align with legal requirements.
To remain compliant:
– Draft clear and precise resolutions
– File where necessary under Section 117
– Follow Secretarial Standards (SS-1 & SS-2) for meetings
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