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What is resolution in accounting?

An organization may face a number of problems in the regular course of its operation. It should take them in such a way that they can be democratically solved. So, the resolution is a subject matter or problem presented in a meeting for discussion and decision. The resolution of an organization may relate to formulating plans and policies, making rules and regulations, the electric board of directors, the appointment of an auditor, etc. Before conducting the meeting, the organizer has to present the proposal in written form. It is discussed at the meeting and finalized with the majority. Thus a proposal forwarded in a meeting and accepted by the majority becomes a solution.

What is resolution  in accounting?

Objectives of dissolution

The objective of a solution as follows

  • To forward the problem, case, the situation on the meeting in a systematic manner.
  • To conduct the meeting as its objectives.
  • To formulate plans, policies and rules regulations and pass with a majority.
  • To give legal information of the decision and help for handling misunderstanding.
  • To help for making effective decisions.
  • To collect and solve the problems of organizations in a democratic way.

Importance of resolution

The importance of the solutions are as follows:

  • It helps to prove our problems, cases, situations etc on the meeting which assist to conduct the meeting in a systematic manner.
  • It helps to conduct the meeting as for the objectives and avoids unnecessary discussion on the meeting.
  • It helps to collect opinions, views, ideas, etc. From meetings and agendas are passed with a majority.
  • It plays a significant role for making plans, policies, rules and regulations etc.
  • It helps to collect and solve the problem of an organization in a democratic way.
  • It is in written form and works as legal evidence for solving misunderstandings and disputes.

Types of resolution

There are various types of resolution like formal, informal, internal, external, etc. but here we will talk about two major types of solutions with our ordinary resolution and special resolution.

1. Ordinary solution

The solution containing the general or regular types of matters for open discussion is called ordinary solution. This resolution is passed by the simple majority i.e 51% of the participant in the meeting. It contains the following as and as for discussion on the meeting.

  • Discussion on the audit report.
  • Discussion on dividend and bonus declaration.
  • Appointment of directors, auditors and Advisors.
  • Fixation of remuneration of auditor, directors and Advisors.

2. Special resolution

The special resolution containing the subject matters of the company presented for the discussion in the special meeting on major diseases and cases is called a special resolution. This resolution is passed by the special majority i.e 75% of the participant in the meeting. It contains the following agendas to discuss at the meeting.

  • Change in name and address of a company.
  • Change in exciting law of company.
  • Change in the memorandum of association.
  • Change in articles of association.
  • Convergence and liquidation of the company.

Difference between ordinary and special resolution

Ordinary resolution

  • It is the resolution presented for open discussion in simple cases and passed by simple majority.
  • It is the regular type of solution forwarded for regular cases.
  • It is presented in regular meetings.
  • The simple thought that matters like the discussion of audit reports, dividend and bonus declaration, the appointment of directors and auditors etc comes on the ordinary resolution.
  • Discussions are made by a simple majority, i.e 51% of the participants.
Special resolution

  • It is the resolution presented for open discussion in major cases and passed by the special majority.
  • It is the special type of resolution forwarded for the major cases.
  • It is presented in a special meeting.
  • The measures of that metres like changing name, objectives and capital of a company, liquidation of a company etc. come under special resolution.
  • Decisions are made by the special majority ie. 75% of the participants.