Company resolutions: an overview

What is a company resolution?

A company resolution is used by company directors and shareholders to approve or make decisions about the way the company operates. Resolutions may be passed at a meeting by a show of hands or may be written.

Types of resolutions

Under the Companies Act 2006 there are two types of resolutions:

  • members resolutions;
  • directors’ resolutions.

Members resolutions

An ordinary resolution can be passed at a meeting on a show of hands by a simple majority of the members present entitled to vote or by their duly appointed proxies.

An ordinary written resolution can only be passed by a simple majority of the total voting rights of eligible members. If the required number of those entitled to vote do not respond to a request to approve a written resolution, the resolution cannot be passed meaning written resolutions can offer a practical solution for businesses but are not useful when it comes to contested issues or ones that require considerable discussion before finalising.

A special resolution of the members (or of a class of members) of a company must be passed by a majority of not less than 75 per cent if made at a meeting. The resolution is not a special resolution unless the notice of the meeting included the text of the resolution and specified the intention to propose the resolution as a special resolution.

Similarly, if a special written resolution is put forward, it will not be a special resolution unless it stated that it was proposed as a special resolution. It must be passed by a majority of at least 75 per cent of those entitled to vote.

Directors’ resolutions

Unless a company’s articles of association say otherwise, resolutions made by directors at a board meeting are all passed by a simple majority.

Filings

Certain resolutions need to be filed at Companies House for them to be effective, such as changing your company’s registered office address.

Your company’s new registered office address must be in the same part of the UK that the company was registered (incorporated). This means, for example, that if your company was registered in England and Wales, the new registered office address must be in England or Wales. Your address will not officially change until Companies House has registered it.

You must tell Companies House within 14 days if you make changes to:

  • the address where you keep your records, and which records you keep there;
  • directors or their personal details, such as their address;
  • company secretaries (appointing a new one or ending an existing one’s appointment).

You must tell Companies House within a month if you issue more shares in your company.

You must inform HMRC if your business’ contact details change (eg, your name, business name or your personal or trading address) or if you appoint an accountant or tax adviser.

Practical considerations for resolutions

  • company officers should ensure they know exactly what they are intending to pass and the necessary majority to pass such a decision;
  • the number and types of shareholders or members need to be considered to determine whether a meeting is necessary or a written resolution would be more practical;
  • once the resolutions have been passed, the appropriate filings need to be done at Companies House and copies put on the company books with the register updated as appropriate.