-
Special Resolution Definition:
-
A vote on a resolution presented to a corporate body which has obtained the assent of a number of the members present greater than a majority.
Also known as an
extraordinary resolution.
A special resolution is a high threshold and an exception to the rule of a simple majority, as required for ordinary
resolutions.
The requirement of an extraordinary resolution has the potential to hinder the responsiveness of a corporate entity.
Traditionally, the threshold of a special resolution has been three quarters (3/4 or 75%) although it may also be two thirds (2/3 or 66.7%) of the members present.
For example, the
Canada Business Corporation Act defines a special resolution in the context of a
shareholder's meeting, as follows:
"Special resolution means a resolution passed by a majority of not less than two-thirds of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution."
However, the three-quarters (3/4) threshold is customary for substantial changes such as altering the constitution of the corporate entity, or some such other significant change. For example:
- A move of the head office;
- A proposal to amalgamate with another corporation;
- The sale of a substantial portion of the corporation's assets; or
- The dissolution or winding-up of the corporation.
Most jurisdictions, or the corporations created under their jurisdiction, a strict requirements in terms of notice of the presentation of an extraordinary resolution.
Because, generally speaking, and subject to the terms of a corporate entity's constitution, and extraordinary resolution requires an affirmative vote by 75% of the members who attend the meeting, not a 75% vote of all the members at-large. The 3/4 threshold applies only to the members that attend the duly-called meeting.
Conversely, abstentions can have a significant impact on the vote on a special resolution and in effect, and can the same effect as an opposing vote.
References: