Incorporation of Company under the Companies (Incorporation) Rules, 2014

Section 3 – Incorporation of company

A private company other than a company registered under section 8 of the Act having paid up share capital of fifty lakhs rupees or less or average annual turnover during the relevant period is two crore rupees or less may convert itself into one person company by passing a special resolution in the general meeting.

Section 5 – Articles

Special Resolution is required for altering Articles of Association of a public company for providing that specified clauses can be altered only if conditions restrictive than those applicable in case of special resolutions are met.

Section 8 – Formation of companies with charitable objects

Special resolution shall be passed if a company registered under section 8 intends to convert into a company of any other kind [Rule no.21 of the Companies (Incorporation) Rules, 2014].

Section 12 – Registered office of companies

Special resolution is required for shifting the registered office outside the local limits of any city, town or village.

Section 13 – Alteration of Memorandum

Special resolution is required by the company for altering the memorandum of Association, subject to other conditions, as provided therein. Special resolution is required for altering its objects clause, if a company has raised money from public through prospectus for such object and any amount of such issued capital is still unutilized.

Section 14 – Alteration of articles

Special resolution is required for altering the Articles of Association

Section 27 – variation in terms of contract or objects in prospectus

Special resolution is required for altering the terms of contract referred to in or objects for which prospectus is issued at any time by the company.

Global Depository Receipt

Special resolution is required for issuing Global Depository Receipt by the company, subject to other conditions. Special resolution passed under section 62 for issue of shares underlying the depository receipts, shall be deemed to be a special resolution for the purpose of section 41 as well.

Section 42 – Offer or invitation for subscription of securities on private placement

Special resolution is required to be passed by the company before making any offer securities or invitation to subscribe securities through issue of a private placement offer letter provided. In case of offer or invitation for non-convertible debentures, it shall be sufficient if the company passes a previous special resolution only once in a year for all the offers or invitation for such debentures during the year. [Second provision to rule 14(2) of the companies (Prospectus and Allotment of Securities) Rules, 2014]

Section 54 – Issue of sweat equity shares

Special resolution is required for issuing the Sweat Equity Shares subject to other conditions. A company other than a listed company, which is not required to comply with the Securities and Exchange Board of India Regulations of sweat equity, shall not issue sweat equity shares to its directors or employees at a discount or for consideration other than cash, for their providing know how or making available rights or value additions, by whatever name called, unless the issue is authorized by a special resolution passed by the company in general meeting. [Rule No. 8(1) of the companies (share capital and Debentures) Rules, 2014]

Section 55 – Issue and redemption of preference shares

For issuing preference shares authorization of shareholders is required by passing a special resolution. [Rule No.9 (1)(a) of The Companies (Share capital and Debentures) Rules, 2014].

Section 62- Further issue of share capital

Special resolution is required to offer the shares to persons other than the existing shareholders or employees by the company having share capital, subject to other conditions. A company, other than a listed company, which is not required to comply with Securities and Exchange Board of India Employees Stock opinion scheme guidelines, shall not offer shares to its employees under a scheme of employee’s stock option unless the issue has been approved by the shareholders of the company by passing a special resolution. [Rule No 12(1) of the companies (Share Capital and Debentures) Rules, 2014]. The company may by special resolution vary the terms of employee’s stock option scheme not yet exercised by the employees.

Section 67 – Restrictions on purchase by company or giving of loans by it for purchase of its shares

The company shall not make a provision of money for the purchase of its own shares by employees or by trustee for the benefit of employees unless approved by the members by passing special resolution in a general meeting.

Section 68 – Power of company to purchase its own securities

Special resolution is required for the buy-back of the shares and other specified securities of the company, subject to certain other conditions.

Section 71 – Debentures

Special resolution is required for issuing debentures which are either wholly or partly convertible into shares at the time of redemption.

Section 76 – Acceptance of deposits from public by certain companies

Eligible company shall before accepting any deposit from person other than its members shall obtain the prior consent of the company in general meeting by means of a special resolution.

Section 94 – place of keeping and inspection of registers, returns etc.,

Special resolution is required for keeping the registers and the annual return at any place other than the registered office (which more than one-tenth of the total members of the company resides) in India.

Section 139- Appointment of Auditors

Special resolution is required to appoint any auditor other than the retiring auditor or for providing that the retiring auditor shall not be re-appointed.

Section 140 – Removal, resignation of auditor and giving of special notice

Special resolution is required for removal of auditor from his office before the expiry of his term subject to the approval of central government.

Section 149 – Company to have board of directors

Special resolution is required by the company for appointing more than 15 directors. Special Resolution is required for the re-appointment of an independent director. Special resolution is required for specifying lesser number of companies in which director of the company may act as director.

Section 184 – Restrictions on powers of board

Special resolution is required to sell, lease or otherwise dispose of the whole of the undertakings of the company. Special resolution is required to invest, otherwise in trust securities, the amount of compensation received by it as a result of any merger or amalgamation. Special resolution is required to borrow money exceeding the aggregate of its paid-up share capital and free reserves. Special resolution is required to remit, or give time for the repayment of any debt due from a director.

Section 185 – Loan to directors

Special resolution is required to permit managing and whole-time director, to avail loan from the company or avail guarantee or any security in connection with any loan taken by them.

Section 186 – loan and investment by companies

Special resolution is required for granting any loan or providing any security or guarantee in connection with any loan or for making any investment by way of subscription, purchase or otherwise for an amount exceeding the prescribed limit.

Section 188 – Related party transactions

Special resolution is required for entering into any specified contract or arrangement with the related party, in case of companies having prescribed paid up share capital or the amount of the transaction to be entered exceeds the prescribed amount, subject to other conditions. A company having a paid up share capital of 10 crore rupees or more shall not enter into a contract or arrangement with any related party without the prior approval of shareholders by way of special resolution.  A company shall not enter into following transactions with related party without the prior approval of shareholders by way of special resolution-

• As contacts or arrangements with respect to clauses (a) to (e) of the sub-section (1) of section 188 with criteria, as mentioned below.
• Sale, purchase or supply of any goods or materials directly or through appointment of agents exceeding twenty five percent of the annual turnovers.
• Selling or otherwise disposing of, or buying, property of any kind directly or through appointment of agents exceeding ten percent of net worth.
• Leasing of property of any kind exceeding ten percent of the net worth or exceeding ten percent of turnover.
• Availing or rendering of any services directly or through appointment of agents exceeding ten percent of the net worth.
• Appointment to any office or place of profit in the company, its subsidiary company or associate company at a money remuneration exceeding two and half lakh rupees. Remuneration for underwriting the subscription of any securities or derivatives there of the company exceeding one percent of net worth.

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