Shareholder Meetings and Resolutions

Shareholder meetings and resolutions

A company may be required to take a decision of its shareholders, a shareholder resolution, for a number of reasons.  These include resolutions relating to changes in the company’s Articles of Association, the issue of shares, changes to the share capital structure and the removal of a director.

What’s the difference between an ordinary resolution and a special resolution?

Resolutions will be either ordinary or special resolutions.  An ordinary resolution requires approval by a simple majority vote.  A special resolution requires approval by a 75% vote.  Whether a matter requires approval as a special resolution or an ordinary resolution is determined by the Companies Act 2006 and the company’s Articles of Association.

As examples, on the basis that the company has adopted the Model Articles applicable to private companies:

Special resolutions:

• amend Articles of Association
• change company name
• disapply pre-emption rights on the issue of new shares

Ordinary resolutions:

• grant authority to the directors to allot shares
• remove a director
• approve a share buyback out of distributable profits

Which shareholder resolutions need to be filed at Companies House?

The Companies Act 2006 requires all special resolutions of shareholders to be filed at Companies House within 15 days.

In addition, other specific ordinary resolutions may be required to be filed at Companies House within 15 days by any Act.  To the extent applicable to a private limited company, these are likely to be limited to an ordinary resolution to grant directors authority to allot shares under section 551 of the Companies Act 2006.

How are shareholder resolutions passed?

Shareholder resolutions can be passed either at a duly convened shareholder meeting or (with limited exceptions) by written resolution of shareholders.

What is a general meeting?

A shareholder meeting, referred to as a general meeting, must be convened by the company giving notice to shareholders.  Shareholders can also agree to hold a shareholder meeting on short notice.

Shareholders who are unable to attend the meeting may appoint a proxy to attend for them.  A corporate shareholder may appoint a representative to act as the corporate’s representative at the meeting.

A private limited company used to have to hold an annual general meeting but this is no longer a requirement under the Companies Act 2006.

How are shareholder written resolutions passed?

A written shareholder resolution is usually a much quicker and efficient way in which to pass a shareholder resolution concerning a matter on which does not require debate or discussion between shareholders.  The written resolution can be signed by shareholders on separate pieces of paper, including electronically, and comes into effect when the required voting percentage (simple majority for an ordinary resolution and 75% majority for a special resolution) has been obtained.

This section includes documents relating to shareholder meetings and written resolutions of shareholders, including template documents for a meeting, template documents for written resolutions and sample shareholder resolutions.