Shareholder Decision Making - Written Resolutions

What is a Written Resolution?
A Written Resolution is a practical alternative to physically convening general meetings, allowing shareholders to pass resolutions without the need for a formal gathering. These resolutions are legally valid and effective, as if passed at a properly convened general meeting. The Companies Act 2014 outlines two types of written resolutions:

1. Unanimous Written Resolution
   A resolution in writing signed by all members of a company entitled to attend and vote on such a resolution at a general meeting.
2. Majority Written Resolutions
   • Special Written Resolution: Signed by members representing at least 75% of the total voting rights.
   • Ordinary Written Resolution: Signed by members representing more than 50% of the total voting rights.

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Administrative Procedures for Written Resolutions

To ensure validity, written resolutions must comply with the Companies Act procedures. Failure to follow the correct procedures may invalidate the resolution.

Unanimous Written Resolution

• Member Obligations:
  Members must deliver the signed resolution documents to the company within 14 days of the resolution being passed.
• Director Obligations:
  • If not signed by all members at the same time, the company must notify members within 21 days of receiving the resolution that it has been passed.
  • The company must retain the documents as though they were minutes of a general meeting.
  • The resolution is deemed to have been passed on the date the last member signed.

Majority Written Resolutions

All eligible members must receive the proposed resolution text and an explanation of its purpose.

• Member Obligations:
  Signatories must deliver the signed documents to the company for the resolution to take effect.
• Director Obligations:
  • The company must retain the documents as if they were minutes of a general meeting.
  • Within 3 days of receiving the resolution, the company must notify all members that the resolution has been passed and provide the date of passing.
  • For special resolutions and certain ordinary resolutions, the directors must notify the Companies Registrar (via forms G1/G2) within 15 days of the resolution passing.

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Delayed Effect of Majority Written Resolutions

Unlike unanimous resolutions, majority resolutions take effect after a mandatory delay:

• An ordinary resolution passed as a majority written resolution is deemed to have been passed 7 days after the last member signs.
• A special resolution is deemed to have been passed 21 days after the last member signs.

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Limitations of Written Resolutions

Written resolutions, whether unanimous or majority, cannot be used for decisions to:

• Remove a director.
• Remove a statutory auditor.
• Acquire its own shares.

 

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