Understanding Special Resolution

A special resolution is a formal decision passed by a company’s shareholders or members with a higher-than-usual majority, typically used for significant changes or decisions within the company. In Malaysia, the Companies Act 2016 stipulates that a special resolution requires at least a 75% majority vote, in contrast to an ordinary resolution, which requires a simple majority.

 

Application and Importance

Special resolutions are utilised for major corporate actions such as amendments to the company’s constitution, changing the company name, restructuring share capital, or voluntarily winding up the company. This type of resolution underscores the importance of consensus among shareholders for critical decisions, ensuring that significant changes are made with substantial support.

 

Legal Framework and Procedure

The process for passing a special resolution in Malaysia involves giving clear notice of the resolution to all entitled to vote, outlining the intention and specifics of the proposal. The resolution must then be passed at a general meeting or through written resolution in accordance with the company’s articles of association and the Companies Act 2016.

Special resolutions play a crucial role in the governance of companies in Malaysia, providing a mechanism for making pivotal decisions with a strong mandate from the company’s members. This ensures that significant changes are considered carefully and are in the best interest of the company and its stakeholders.