Resolutions under Companies Act, 2013 form vital part of day to day working of the corporate. Resolutions are nothing but important decisions taken by Board of Directors of the company who are appointed by shareholders of company accustomed to take decisions for smooth conduct of business of the company. Resolutions and thereby decisions of the company decide the fate of company and shareholders/stakeholders at large. Corporate actions are reflected through resolutions passed by companies.
Drafting of resolutions is an art and the artist of the resolution should bear in mind various legal aspects, Relevant Section /Provisions of the Companies Act, 2013 and rules made there under from time to time. The resolution may be Ordinary or Special Resolution depending upon nature of business and provisions applicable to the resolution .The Purpose of this Article is to highlight essence of drafting resolutions and points to be considered before drafting a good resolution by any professional.
- The intent or Object of the resolution to be considered at the outset and planning of suitable words for resolution drafting to be in the mind of a person drafting the resolution. Resolution need to be visualized first with respect to content of the resolution.
- Relevant Section/Sub section/rules, applicable law relating to resolution to be considered before drafting the resolution and such section/sub section should be specifically mentioned in the initial part of resolution.
- The resolution should specifically mention purpose of resolution like authority to directors, instructions to various authorities, implementation of decision.
- Resolution should also mention specific reference to earlier resolution passed in this regard and modification. Amendment to the earlier resolution vides this resolution to be mentioned specifically like renunciation of earlier resolution or modification of earlier resolution.
- The resolution should specifically mention name of director authorized to sign/digitally sign on behalf of Board with mention of his DIN Number to clearly specify the authority and responsibility of said director.
- It is suggested that the resolution should mention authority to a Practising Professional to sign such forms, resolutions to give effect to above resolution. It will safeguard his professional interest.
- The resolution should be signed by a person other than a director authorized sign the forms/documents to have transparency and independence in passing the resolution and avoid conflict of interest if any.
- The resolutions should be properly numbered in compliance with applicable provisions of the Companies Act, 2013 and applicable Secretarial Standards issued by ICSI from time to time.
- The resolutions should form part of minutes of meeting and disclose true and fair view of the state of affairs of the company being having legal evidence in case of disputes.
- The resolution should mention proper date and place of signing of resolution to be effective in legal terms.
- When vote cast in favour of resolutions exceeds votes cast against the resolution, the resolution is said to be passed for further action. Some resolutions require simple majority and some resolutions require clear majority for passing of resolution.
- The resolution should mention persons giving their consent or dissent for passing of resolution for better corporate governance practices.
Thus it can be concluded that a well drafted resolution enhances the value and importance of a good decision and facilitate smooth implementation of decision thereby improves much need corporate governance and protects shareholders/stakeholders and interest of corporate at large.
Also Read:
Alteration of Share Capital under Companies Act, 2013 with draft Resolutions
Concept of Resolutions under Companies Act, 2013
Resolution-A Vital Concept under Companies Act, 2013
Compliances for Passing Board Resolutions through Circulation under Companies Act, 2013
Draft Resolutions For Professionals under Companies Act,2013
Author Bio
