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Company resolutions

The Articles of Association and Memorandum of Association form the constitution of limited companies, setting out the rules by which they are run and administered. However, in order to make certain decisions - or change the constitution itself - company directors or shareholders need to pass resolutions. These can be made at general meetings or board meetings (ordinary and special resolutions) or sometimes in writing (written resolutions).

Most decisions beyond the normal day-to-day running of a business will require a resolution. These also need to be passed for any decision which affects the constitution or rules of a company. Examples include:

  • Appointing company directors;
  • Changing directors' powers;
  • Changing the name of a company; or
  • Changing the share structure.

The company articles will normally state if a resolution is required for a certain decision and may also determine the type of resolution needed (eg ordinary or special).

The majority of resolutions used for routine changes, which simply need a majority of shareholders or directors to agree or disagree on a decision, are known as 'ordinary resolutions'. This type of resolution can be passed with a show of hands at a meeting. Some decisions which require ordinary resolutions are:

  • Appointment or removal of company directors and secretaries;
  • Authorising director's loans; or
  • Amending the powers of directors of changing their employment contracts.

Special resolutions - also known as 'extraordinary resolutions' - are needed for more important decisions or those affecting the constitution of a company. These require at least 75% of the shareholders or directors to agree - sometimes as much as 95%. Unlike ordinary resolutions, votes are determined by the number of shares given to each shareholder (as opposed to the number of shareholders). Types of special resolution include:

  • Changing the name of the company;
  • Making changes to the Articles of Association; or
  • Changing a private company to a public company.

Although meetings (either general meetings for shareholders or board meetings for directors) are normally required to pass resolutions, some decisions can be passed in writing, without the need for a meeting. If enough shareholders or directors have agreed with a decision (a majority for ordinary resolutions and at least over 75% for a special resolution), this can be confirmed in a written resolution.

Resolutions which are passed in a meeting should be accurately recorded in the minutes of the meeting. Minutes serve as evidence of meeting proceedings and must be kept at the company's registered office or Single Alternative Inspection Location (SAIL) for at least 10 years. Furthermore, all shareholders must receive written notification of any resolutions.

If records are not kept, then an offence will have been committed. The company must make all records or decisions available for inspection and keep them at the company's registered office or other specified location. Every director who doesn't meet this requirement will have committed an offence, which could result in a fine of up to £1,000. 

You must send the completed Resolution (or a copy of it) to Companies House (or Companies House in Edinburgh for companies registered in Scotland) within 15 days of it being passed (ie voted on). Use the Gov.uk form for Giving notice of a special, written or ordinary resolution. This form should be used to notify Companies House of a special, written or ordinary resolution.