Company Resolutions and Meetings - Clarified

Minutes and resolutions are part and parcel of running a limited company; it is especially important if the company has more that one director and shareholder.

All resolutions and minutes must follow the rules and procedures set out in company law, the articles of association, and any shareholders’ agreement that may exist.

What is a general meeting in a limited company?

Any formal meeting of limited company members (the shareholders or guarantors) is a general meeting and are conducted or governed by the Companies Act 2006, the articles of association, and any shareholders agreement.

Directors usually call a general meeting when there is a need for members to discuss and make formal decisions on the following types of matters:

• the appointment of directors or removal of directors

• altering the articles of association

• approving significant financial transactions

• changing the name or structure of the company

• approving the issue or transfer of shares where the directors are not authorised to do so

• altering the company’s share capital

• approving the creation of new share classes

• dissolving the company

Members have the power to request a general meeting if they represent at least 5% of the company’s paid-up share capital or voting rights.

Private limited companies are no longer required, by law, to hold general meetings unless explicitly required under the company’s articles. However, best practice dictates that, at the very least, an Annual General Meeting of the members should be held. 

Providing notice of a general meeting

Companies Act 2006 requires that a notice period of at least 14 days is given to every member. However, the company’s articles may stipulate a longer notice period. In some instances, a general meeting can be held on short notice with the consent of a majority of members holding at least 90% of the company’s voting rights.

The notice should contain the following information:

• date, time, and location of the meeting

• type of general meeting

• general nature of the business to be conducted

• intention to propose a special resolution (if applicable) and the specific wording of the resolution

• a statement declaring that every shareholder has the right to appoint a proxy

• date the notice is issued

• name of the individual(s) calling the meeting

The company must send notice to every member, the directors, and any proposed shareholder.

Shareholder decisions at general meetings

Any decisions taken by shareholders at a general meeting are formalised by ‘passing a resolution’. These decisions are legally binding once passed, and certain resolutions must be filed with Companies House within 15 days.

Minutes of general meetings

Minutes are an official record of proceedings at a meeting, the names of all persons present, and any formal decisions that are taken. The company should keep copies of all minutes and resolutions at its registered office or Single Alternative Inspection Location (SAIL address).

Board meeting of limited company directors.

A board meeting is a formal meeting of limited company directors. They are necessary when directors need to take important decisions, raise concerns, review the financial position of the business, and discuss strategies.

By law, there is no obligation for private companies to hold board meetings. However, where a company has two or more directors and members, it may be beneficial to hold them. 

Taking minutes of meetings

Aside from being a legal requirement, taking minutes is extremely beneficial, as it provides a written record of everything that occurs in a meeting. This greatly reduces the risk of mistakes, miscommunication, and disagreements further down the line. 

Typically, minutes of general meetings and board meetings should contain the following details:

• company name and number

• time, date, and location of the meeting

• name of every person in attendance (apologies for any absences)

• any proxies present

• who will be the chair, notice and quorum and declarations of interest in the company

• proposals put forth for consideration

• proposed resolutions (‘motions’) put to a vote at the meeting 

• decisions that were taken (any resolutions that were passed)

• names of persons who supported or opposed any proposed resolutions

• queries and objections raised

• any other matters raised or discussed during the meeting

• signature of the chair, a director, or company secretary

Limited companies must maintain copies of all minutes at their registered office or SAIL address for a minimum period of ten years after the date of the meeting. 

What are company resolutions?

A company resolution is a legally binding decision made by directors or shareholders. If a majority vote is achieved (depends on whether ‘normal’ or ‘special’), it is ‘passed’.

Shareholders can pass ordinary resolutions or special resolutions at general meetings. Alternatively, certain resolutions can be passed in writing, without the need to call and attend a general meeting.

All types of collective decisions of directors are simply referred to as ‘resolutions’ or ‘board resolutions’. These decisions can be made at board meetings or in writing.

Ordinary resolutions

Any resolution which is not special or extraordinary is classified as ordinary.  At a general meeting ordinary resolutions are used to obtain approval by means of a simple majority of the votes that are cast in person or by proxy.  Ordinary resolutions are passed if 50% plus 1 of the shares that are voted are in favour.

The types of routine decisions made by ordinary resolution include: 

• appointing and removing directors and company secretaries

• directors’ employment contracts

• amending the directors’ powers set out in the articles and shareholders’ agreement

• approving annual accounts

• authorising the transfer of shares

• approving shareholder dividends

Companies under pre-CA 2006 will have a few ordinary resolutions which will need to be filed within 15 days to Companies House.  Things like changes to authorised share capital.

Two ordinary resolutions require special notice being given to the members, that is at least 21 days’ notice, with full details of the proposal any objections or representations of the other party/ies:

• Any resolution relating to any auditor other than re-election or to settle their remuneration; and

• The removal of a director.

  
  

Special resolutions

A special resolution which needs the approval of at least 75% of eligible shareholders’ votes to be passed. This kind of resolution is reserved for the most important and exceptional decisions that cannot be passed by an ordinary resolution, such as:

• changing a company name

• reducing issued share capital/issuing more shares

• creating different share classes

• altering the articles of association

• adding, removing, or altering pre-emption rights of shareholders

• re-registering a company

• changing a private company to a public company, or vice versa

• winding up a company by members’ voluntary liquidation

Members cast their votes on special resolutions at general meetings, either on a show of hands or a poll. Alternatively, they may be passed by written resolution, unless restricted under the company’s articles or shareholders’ agreement. 

Special resolutions must be delivered to Companies House by post within 15 days of being passed. A copy must also be given to all shareholders and the company auditor. Furthermore, the company must keep a copy of all resolutions at its registered office address or SAIL address.

Written resolutions

They offer a practical solution where shareholders are unable to convene in person, for example, if they live in different places. Written resolutions are used when shareholders wish to make decisions without the need to call and attend a general meeting. 

Any written ordinary resolution must be passed by a simple majority of shareholders’ votes. Written special resolutions require a 75% majority vote. Shareholders cast their votes by signing the written.

Board resolutions

Board resolutions are formal decisions taken by the directors, either at board meetings or in writing. The types of decisions that company directors can make depend entirely on the powers they are granted by the shareholders. Their rights and powers are outlined in the articles of association and shareholders’ agreement.

Typically, a simple majority vote of the directors is all that is required to pass a board resolution. However, some companies amend their articles to include provisions specifying that a higher majority or unanimous agreement is required for some or all board resolutions.

Authored by: Company Secretarial Team