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Motion vs Resolution: Difference between them in Company Law

In this post, the terms "motion" and "resolution" as described herein are in the context of such terms being used in the meeting of the board of directors and meeting of members / shareholders / creditors etc of a company.

'Motion'

A motion is a formal proposal put forth before a meeting by a member of that meeting for further discussion on that and if passed, for the adoption of the same as a 'resolution'.

Such members of the meeting must have the right to put forth the motion. Not all participants of a meeting are eligible to propose a motion.

According to the general practice:
(1) one member proposes/makes one motion (an idea or a thought, which needs to be passed for its implementation);
(2) another member seconds that motion (meaning that he agrees/supports the proposed motion); and
(3) other members either vote for or against it or remain neutral either by show of hands or by a Poll.





'Resolution'

A motion becomes a resolution once the motion is carried out and passed by the majority as required under the provisions of the company law.

A resolution passed and adopted by the members is binding in nature.

Amendment to the resolution:
The resolution passed in the earlier meeting can be amended by passing an amendment resolution in any of the subsequent meetings.


Example

In a meeting of shareholders of ABC Limited, Mr. X proposed a motion to declare a dividend on equity share at the rate of 200% per share for the financial year 2020-21. Mr. Y seconded the motion. The Chairman of the meeting put the motion to vote on a show of hands. Majority members voted in favor of the motion. The Chairman declared the resolution as carried by majority votes.



Comments

  1. I was confused between the meaning of these two terms. Now I have a clear understanding on it. Well at least better than before. Thanks!

    ReplyDelete
  2. Your good example clear my all doubts.....
    Thank u vry much

    ReplyDelete

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