Sections 114, 115, 116 and 117 of the Companies Act, 2013: Resolutions, Special Notice and ROC Filing

Sections 114 to 117 of the Companies Act, 2013 regulate important aspects of company decision-making. They distinguish ordinary and special resolutions, prescribe the concept of special notice, fix the effective date of a resolution passed at an adjourned meeting, and require specified resolutions and agreements to be filed with the Registrar of Companies.

Section 114 - Ordinary and Special Resolutions

Ordinary resolution: A resolution is an ordinary resolution where the notice required by the Act has been duly given and the votes cast in favour by members entitled to vote exceed the votes cast against it. Voting may take place by the methods permitted by the Act, including voting in person, by proxy where allowed, electronically, on a poll or by postal ballot as applicable.

Special resolution: A resolution is a special resolution when the intention to propose it as a special resolution is duly stated in the notice, the required notice has been given, and the votes cast in favour are not less than three times the votes cast against the resolution. In practical terms, this is the statutory 3:1 voting requirement among votes cast by members entitled and voting.

Section 115 - Resolutions Requiring Special Notice

Section 115 applies where the Companies Act, 2013 or the articles of a company require special notice of a resolution. The intention to move the resolution must be notified to the company by the prescribed qualifying members. The section refers to members holding not less than one per cent of the total voting power or holding shares on which the prescribed aggregate paid-up amount, not exceeding Rs. 5 lakh, has been paid.

The company must then give notice of the proposed resolution to its members in the manner prescribed under the Companies (Management and Administration) Rules, 2014. Special notice is relevant to specific statutory matters; it is not the same thing as merely classifying a resolution as a special resolution under section 114.

Section 116 - Resolutions Passed at an Adjourned Meeting

Where a resolution is passed at an adjourned meeting of a company, a class of shareholders, or the Board of Directors, section 116 treats the resolution as having been passed on the date on which it was actually passed. It is not deemed to have been passed on the date of the original meeting.

This rule is important when calculating statutory timelines that run from the date of passing of a resolution.

Section 117 - Resolutions and Agreements to be Filed

Section 117 requires a copy of every resolution or agreement relating to the matters specified in section 117(3), together with the explanatory statement under section 102, if any, annexed to the meeting notice, to be filed with the Registrar within 30 days of its passing or making, in the prescribed manner and with the prescribed fees.

A resolution that alters the articles, and every agreement covered by section 117(3), must also be embodied in or annexed to every copy of the articles issued after the resolution is passed or the agreement is made.

Penalty for failure to file

If the company fails to file within the statutory period, section 117(2) provides a penalty of Rs. 10,000 and, for a continuing failure, a further penalty of Rs. 100 for each day after the first, subject to a maximum of Rs. 2 lakh for the company. Every officer in default, including the liquidator if any, is liable to Rs. 10,000 plus Rs. 100 per day for continuing failure, subject to a maximum of Rs. 50,000.

Matters covered by section 117(3)

The section covers, among other matters, special resolutions; resolutions unanimously agreed to that otherwise would require a special resolution; specified resolutions or agreements relating to the appointment or terms of a managing director; specified class resolutions or agreements; voluntary winding-up resolutions under section 59 of the Insolvency and Bankruptcy Code, 2016; resolutions under section 179(3), subject to the statutory exceptions; and any other prescribed resolution or agreement placed in the public domain.

The current text also contains an exception concerning specified resolutions under section 179(3)(f) for loans, guarantees or security in the ordinary course of business by prescribed financial-sector entities.

Practical Compliance

Before a meeting, identify whether the proposal requires an ordinary resolution, a special resolution, or special notice. Ensure that the notice and explanatory statement comply with the Act and applicable rules. After the resolution is passed, determine whether section 117 applies and, where filing is required, complete the prescribed ROC filing within 30 days. The MCA portal should be checked for the current electronic form, filing process and applicable fee requirements.

Related Provisions

These sections should be read with section 102 on explanatory statements, the relevant provisions governing notice and voting, section 179 on powers of the Board, and the Companies (Management and Administration) Rules, 2014. For a statutory filing, the current Act, rules, notifications and MCA filing instructions should be checked before submission.