Ordinary vs Special Business at an AGM: What’s the Difference?

What is ordinary business at an AGM?

The Companies Act, 2013 distinguishes between ordinary business and special business at an Annual General Meeting.

Section 102 identifies the matters treated as ordinary business at an AGM. These generally include consideration of financial statements, the Board’s report and auditor’s report; declaration of dividend, where applicable; appointment of directors in place of those retiring, where applicable; and appointment of auditors and fixing their remuneration, where applicable.

The actual agenda depends on the company’s circumstances and applicable provisions.

What is special business?

Business other than the ordinary business specified for an AGM is generally treated as special business.

Examples may include certain changes to the company’s governance arrangements, approval of transactions or other matters requiring shareholder approval under the Companies Act or the company’s Articles.

Whether a particular matter requires an ordinary or special resolution depends on the relevant legal provision. Special business does not automatically mean that a special resolution is required.

Why is an explanatory statement important?

Under Section 102, an explanatory statement must accompany the notice for special business at a general meeting.

It should disclose material facts relevant to the proposed business. It also requires disclosure of the nature of concern or interest of directors, managers, key managerial personnel and their relatives, where applicable.

The purpose is to help shareholders understand the matter before voting.

Ordinary resolution versus special resolution

These are voting thresholds, not categories of business.

An ordinary resolution is generally passed when votes cast in favour exceed votes cast against.

A special resolution requires votes in favour to meet the statutory threshold under Section 114: votes in favour must be at least three times the votes against.

A special business item may require an ordinary resolution or a special resolution, depending on the applicable provision.

What should a company do?

Before issuing the AGM notice, identify every agenda item, classify the business correctly, determine the required resolution type and prepare an explanatory statement where necessary.

Conclusion: Correctly distinguishing ordinary and special business helps companies prepare a complete AGM notice and enables shareholders to make informed decisions.