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Why is it Important to Have a Written Resolution?

Throughout your trading year, it's likely that you'll have meetings galore in order to sort through any critical decisions. Any general meetings that take place like this will need to include company members and directors, and they must be compliant with company law.

Any decisions (resolutions) made in these meetings must be accurately recorded. In some situations, directors may also need to report meeting-matters with Companies House.

What is a General Meeting?

A general meeting (G.M.) is an organised, formal meeting of a limited company's shareholders. The process and conduct of the GM should adhere to the Companies Act 2006, any shareholders' agreement(s) and the articles of association.

General meetings are usually called for shareholders to discuss the following matters:

  • Appointment or removal of a director
  • Changing the directors' powers
  • Amending the Articles of Association
  • Amending the Shareholders' Agreement
  • Finances of the company
  • Changing the company name
  • Changing the structure of the company
  • Amending the targets and goals of the company
  • Issuing additional shares
  • Approval of share transferred
  • Creation of new share classes
  • Dissolving the company
  • Legal claims and proceedings
  • Company filing and reporting requirements

Meeting Agenda

General Meeting Notice Information

If you call a general meeting, then you need to give all shareholders and attendees a 14-day notice. The notice needs to contain the following:

  • Date, time and location
  • Date the notice is issued
  • Type of general meeting / nature of the meeting
  • Statement declaring that every shareholder has the right to appoint a proxy
  • Name of the person who is calling the meeting

Minutes must be taken at all general meetings that will officially be recorded. These minutes will need to contain the “content of the meeting”, the names of attendees, and those in attendance when important decisions are made.

All formal decisions that are made will need a “passing a resolution”. This means the decision will be legally binding and copies of the resolution will be filed with Companies House within 15 days. All copies will also need to be kept at the <a href=”/blog/the-differences-between-service-and-registered-address”>company's registered office</a> or SAIL address.

What are the Different Types of Resolution?

There are three types of resolutions; special, ordinary, and written. In order to pass a resolution, shareholders have to vote for or against the proposed course of action. This can either take place at a general meeting or through a written resolution.

What is an Ordinary Resolution?

Ordinary resolutions can be passed if there only needs to be a majority vote cast in favour (above 50%). So long as the Companies Act or the Articles of Association don't state the need for a special resolution, an ordinary resolution can be used for any decisions made by directors and shareholders.

An ordinary resolution requires a vote to be taken at either a general meeting, a board meeting of shareholders, or by a written resolution.

An ordinary resolution can be used for the following:

  • Appointment and removal of directors
  • Appointment and removal of secretaries
  • Matters pertaining to directors' employment contracts
  • Amendment of directors' powers
  • Approval of dividend payments
  • Authorisation of directors' loans
  • Authorisation of the transfer of shares

What is a Special Resolution?

Special resolutions are used for unique or sensitive issues. The Companies Act 2006 and the articles of association will both explain the decisions that will require a special resolution. However, it may be used for the following:

  • Amending the Articles of Association
  • Amending shareholders' agreements
  • Changing the company name
  • Changing the structure of the company
  • Share capital reduction
  • Winding-up the company

Notepad
Ensure minutes are kept so there's a record of the meeting taking place

If a special resolution is needed for any other decision, this must be stated in the Articles of Association.

To pass a special resolution, 14 days' notice has to be sent to each member about the proposed resolution and its intention (unless otherwise stated in the Articles of Association). Companies House must receive any special resolutions by post within 15 days of it being passed.

What is a Written Resolution?

A written resolution can be either an ordinary resolution or a special resolution and is passed in writing rather than a general meeting whereby members can cast votes in person or by proxy. A written company resolution may be proposed by a director or any shareholder who owns at least 5% of voting rights.

Written resolutions can be used for all decisions apart from the decisions to remove a director or an auditor.

A Point to Remember

Even if you are the only director or shareholder of your company, you still need to hold “meetings” in specific situations. This is just a formality that allows you to stick to corporate guidelines.

Copies of company resolutions need to be kept for 10 years from the date on which they are passed in addition to the recording of minutes of the meetings.

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