Question Tag: Ordinary Resolution

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  • 16 Marks

BCL – May 2020 – L2 – Q5b – Company Meetings and Resolutions

List four transactions for which directors of limited liability companies require ordinary resolution approval.

State FOUR (4) transactions for which Directors of Limited Liability Companies require an Ordinary Resolution approval.
(16 marks)

Directors of Limited Liability Companies require an Ordinary Resolution approval for the following transactions:

  1. Disposal of Substantial Assets:
    • When the company proposes to dispose of the whole or substantial portions of its undertaking or assets.
      (Section 202(1a) of Act 179)
  2. Issuance of New or Unused Shares:
    • When the company proposes to issue new or unused shares (other than treasury shares) in the company.
      (Section 202(1b))
  3. Charitable Contributions:
    • When the company proposes to make voluntary contributions to charitable or other funds in excess of the greater of a prescribed amount or 2% of the income surplus of the preceding financial year.
      (Section 202(1c))
  4. Borrowing or Charging Assets:
    • When the company proposes to exercise its powers to borrow money or charge any of its assets, where the monies to be borrowed or secured will exceed the stated capital for the time being of the company.
      (Section 202(5))

(4 points for 4 marks each = 16 marks)

  • 4 Marks

BCL – May 2020 – L2 – Q5a – Company Meetings and Resolutions

Distinguish between an ordinary resolution and a special resolution.

Distinguish between an Ordinary Resolution and a Special Resolution.
(4 marks)

  1. Ordinary Resolution:
    • An ordinary resolution is one that is passed by a simple majority of votes cast by members entitled to vote, either in person or by proxy, at a general meeting.
    • Typically used for routine decisions such as the appointment of directors, approval of dividends, and other standard business matters.
  2. Special Resolution:
    • A special resolution requires a higher threshold and is passed by not less than three-fourths (3/4) of the votes cast by members entitled to vote, either in person or by proxy, at a general meeting.
    • Special resolutions are used for significant decisions such as amending the company’s constitution, changing the company’s name, or approving a merger or liquidation.

(2 marks each = 4 marks)

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