Hi there Nicholas Campion here with the next instalment of the first summations
video series today we're going to be looking at company resolutions focusing
particularly on what our company resolutions
what are the different types how are resolutions passed how are they filed
and what happens next so the majority of routine day-to-day decisions in private
companies are made by the directors but significant matters that go beyond
the scope of the director's powers must be addressed by the company's
shareholders these types of shareholder decisions
require company resolutions to pass a company resolution
shareholders need to cast their votes for or against a proposed course of
action this can be either done at a general meeting
or in writing with what's called a written resolution an ordinary
resolution is passed when more than 50 of the votes are cast in
favour of the resolution and it's used by shareholders to make a
decision whether directors have no authority
typically these types of decisions include paying dividends
appointing or removing directors approving direct to service contracts
and approving directors loans. Next there are special resolutions
a special resolution is required for exceptional or sensitive matters the
company's act on the articles association
will outline which decisions require this type of resolution
a special resolution can only be passed when at least 75%
of the shares are voted in favor of the resolution
this type of resolution is most commonly used to alter the articles association
change a company name restructure a company waive the right to pre-emption of issuances
reduce share capital or even wind up a
company. Shareholders can stipulate the need for
a special resolution for other decisions but this must be clearly stated within
the articles themselves.
So what is a written resolution a written resolution is a resolution
which can either be an ordinary or special that's passed in
writing as opposed to at a general meeting with
people voting in person or via proxy written company resolutions can be
proposed by director or shareholders owning at least five
percent of the voting rights all decisions in the private company can
be dealt with using the written resolution procedure
with the exception of a removal of a director or auditor
however public companies aren't allowed to use this procedure whatsoever.
Now about the noticed the notice period of a proposed ordinary
or special resolution at a general meeting is 14 days but
where a resolution is proposed to remove a company director or auditor
a special 28 days notice is required the director or auditor in question
needs to be informed and a special procedure must be followed in addition
to the time and date and location of the general
meeting the notice will state the intention
of the proposed resolution as well as its actual content.
Now the procedure for a written resolution is slightly different
each member needs to be given a copy of the resolution
in paper or electronic form, this should be accompanied by a statement which
outlines the way in which the members must indicate
their agreement as well as the deadline for passing the resolution
generally the notice period of a written resolution is 28 days
from the time that the members receive the copy. So how do we pass
company resolutions passing resolutions can be done
either by a poll or a show of hands at a general meeting or through the written
resolution procedure if the required majority of votes is
achieved the resolution is passed and this means the decision is legally
binding; copies of special resolutions must be delivered to companies house
within 15 days of it being approved any registered
company details or documents that are altered as a result of the resolution
should also be sent to companies house. Now to determine whether the required
majority of votes has been achieved the number of voting shares must be
counted not the number of members who vote most
shares will carry one vote each but shareholders can own
varying quantities of shares and indeed in some companies there may
be multiple classes of shares each carrying more than one vote each
furthermore if the resolution is voting on in a
general meeting then the number of votes for is taken as
a percentage of the total voting rights in attendance
instead of the total voting rights in the company
for example if you've got a company of four equal shareholders and one
shareholder doesn't attend the meeting to pass an ordinary resolution requires
two of the shareholders to vote in favor
that's because they represent a majority greater than 50% of the voting
rights in attendance but if the resolution is voted on using
the written resolution procedure it would require three shareholders to
approve it as they represent greater than 50%
threshold. If the required majority of votes is
obtained the resolution is passed if the required majority votes is not
obtained then the resolution is rejected. So how do you record company decisions
company decisions have got to be recorded by taking
minutes of all general meetings and decisions
copies of minutes and company resolutions must be kept at the
register's office or sale address for at least
10 years and made available for inspection statutory company records and
registers should also be updated accordingly where required
when you make changes to your company you'll usually need to tell companies
house special resolutions need to be delivered
to companies house within 15 days of them being passed it is not
possible to deliver these documents by electronic means
ordinary resolutions don't generally need to be delivered to companies house
and you should simply store them in your company records
as standard you've got to keep copies of your company resolutions for a minimum
of 10 years from the date they're passed as
well as any minutes of the meetings these records should be stored at your
registered office or sale address where they should be available for inspection
on request and that's it so today we've looked at the different
types of company resolutions there are how they're passed and what happens next
but if you've got any other questions or comments about company resolutions or
other company services please get in touch by leaving a comment
we're always happy to help and we can't wait to hear from you
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you