Resolutions

Question 1

What are the different types of resolutions?

Answer 1

• Board resolutions in Board Meetings (BM).
• Shareholder resolutions, either in a meeting of the shareholders (referred to as a General Meeting (GM)) or in writing.
• There are two types of shareholder Resolutions under CA 2006 – Ordinary Resolutions and Special Resolutions.

Question 2

What are the rules for Board resolutions

Answer 2

• Unless power to take a particular decision has been delegated to a particular director or committee of directions, a decision of the board of directors of a company must be taken in accordance with the procedure set out in the company’s Articles.
• Art 7(1) MA any decision of the directors can be made by majority decision at a meeting of the directors. Decisions are taken by majority vote on a show of hands.
  *Art 13 MA in the event of a deadlock, the chairperson of the BM (if appointed under Art 12 MA) will have a casting vote. The chairperson’s casting vote and rights may be amended in Articles of some companies.
• A quorum is necessary for a BM to be valid. Art 11 MA no proposal may be voted on at a BM unless a quorum is participating at a meeting; 11(2) the quorum for a directors’ meeting may be fixed by a decision of the directors but it must never be less than two and, unless otherwise fixed, it is two.
• Art 8 MA directors can make decisions, by unanimous agreement, without having to hold a BM. This requires all directors to indicate to each other that they share a common view and can indicate this ‘by any means’ (e.g. written note, telephone call). A written record of the decision must still be kept (Art 15 MA).
• In companies with one director, the sole director can take decisions on their own (Art 7(2) MA).

Question 3

What are the rules for shareholder resolutions?

Answer 3

• Some decisions cannot be taken by the directors without authorisation from the shareholders (changes to constitution, formal declaration of dividends etc.)
• Where the CA 2006 does not specify the type of resolution (ordinary or special), an ordinary resolution is sufficient unless the Company’s Articles require a higher majority (s 281(3) CA 2006).
• Ordinary resolutions must be passed by a simple majority (more than 50%) (s 282(1) CA 2006).
• Special resolutions require a majority of not less than 75% (s 283(1) CA 2006).

Question 4

What are the rules for voting at shareholder meetings (GM)?

Answer 4

• Voting may be done by either a show of hands or a poll.
• Votes are counted out of shareholders who are present and voting at the GM.
• Show of hands – each shareholder is entitled to one vote, regardless of the number of shares held by that shareholder.
• Poll vote – every shareholder has one vote in respect of each share held by him (s 284 CA 2006).
• S 321 CA 2006 sets out conditions that must be met in order for a shareholder to demand a poll vote although these provision may be relaxed by provision in the Articles as they are in MA (see Art 44 MA). (Note this is an example of when Articles of a company may not include provisions more onerous than those in CA 2006).
• A member of a company is entitled to appoint a proxy to exercise all or any of his rights to attend and to speak and vote at any GM, in his place (s 324 CA 2006).
• If a corporation is a member of a company, it may by resolution of its directors authorise a person or persons to act as its representative at any meeting of the company (s 323 CA 2006).
• Quorum required at GM is two qualifying persons (including proxies/representatives of corporate shareholders) (s 318(2) CA 2006.
• Where a company has only one member, one qualifying person is sufficient to constitute forum for a GM (s 318(1) CA 2006).

Question 5

What is a written resolution?

Answer 5

• Private companies may also pass a shareholders’ resolution without holding a GM using written resolution procedure (s 281 CA 2006).
• Votes are cast in writing, the relevant majority is counted out of all the shareholders entitled to vote on the resolution (rather than those present and voting at the meeting).
  *A written resolution is a method of voting, not a type of vote – ordinary and special resolutions still apply.
• Two resolutions may not be passed at written resolutions (s 288(2): removal of a direction (s 168) and removal of an auditor (s 510).