What types of resolutions are there?
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At general meetings there may be the following types of resolutions:
Ordinary resolution: passed by a simple majority of the votes cast. The chair may be entitled to a casting vote (see Table A, art. 50).
Special resolution: passed by a three-quarters majority of the votes cast. 21 days notice required (unless passed on short notice): CA 1985, sec378(2).
Extraordinary resolution: Passed by a three-quarters majority.
No particular requirements as to notice, depends on the meeting: sec378(1).
Used on a resolution to wind up when the company is unable to pay its debts
(Insolvency Act 1986, sec84(1)(c).
Ordinary resolution with special notice: An ordinary resolution but subject to sec379: the resolution is not effective unless notice of the intention to move it has been given to the company at least 28 days before the meeting. The company must give notice of the proposed resolution to the members with the notice of the meeting or, if that is not practicable, at least 21 days before the meeting. Used for the removal of a director (CA 1985, sec303) or auditor CA 1985, sec391). The company must notify the director or auditor forthwith.
Elective resolution: See CA 1985,sec379A. Passed by all the members entitled to attend and vote (either in person or by proxy). Requires 21 days notice of the meeting. Used to adopt the 'elective regime'. Can at any time be revoked by an ordinary resolution.
Written resolution
The courts have held that a decision of all the members is as valid and effective as one passed at a meeting, and this is recognized by Table A:
Art. 53: A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present shall be as effectual as if it had been passed at a general meeting duly convened and held and may consist of several instruments in the like form each executed by or on behalf of one or more members.
This was put on a statutory basis by CA 1989, sec113 which added new sections 381A to 381C of the 1985 Act. Unfortunately, these added some cumbersome procedures giving auditors' rights, which had to be amended by the Deregulation (Resolutions of Private Companies) Order 1996 (SI 1996/1471).
CA 1985, sec381A(1) Anything which in the case of a private company may be done-
(a) by resolution of the company in general meeting, or
(b) by resolution of a meeting of any class of members of the company, may be done, without a meeting and without any previous notice being required, by resolution in writing signed by or on behalf of all the members of of the company who at the date of the resolution would be entitled to attend and vote at such a meeting.
(2) The signatures need not be on a single document provided each is on a document which accurately states the terms of the resolution.
(3) The date of the resolution means when the resolution is signed by or on behalf of the last member to sign.
(4) A resolution agreed to in accordance with this section has effect as if passed-
(a) by the company in general meeting, or
(b) by a meeting of the relevant class of members of the company, as the case may be; and any reference in any enactment to a meeting at which a resolution is passed or to members voting in favour of a resolution shall be construed accordingly.sec381A(6) makes it clear that this procedure applies to any type of resolution, including special, extraordinary and elective resolutions, but sec381(7) says the section applies subject to the exceptions specified in Schedule 15A, Part I and subject to the procedural requirements in Part II of that Schedule.
There are two exceptions in Schedule 15A, Part I:
(a) a resolution under CA 1985, sec303 to remove a director, and
(b) a resolution under sec391 to remove an auditor (both ordinary resolutions which require special notice).
Schedule 15A, Part II specifies certain adaptations to procedures under various sections of the Act which must be followed where a written resolution is used. The sections affected are:
sec95: Disapplication of statutory pre-emption rights on the allotment of shares.
sec155: Financial assistance for purchase of shares.
sec164, 165, 167: Company buying own shares (off-market purchase).
sec173: Authority for permissible capital payment where company buying own shares.
sec319: Approval of directors' service contract over five years.
sec337: Loan to director so as to assist performance of duties.
In all these cases the modifications are, in essence, that where documents or information have to be made available to members at the registered office prior to the meeting, or sent out with the notice of the meeting, or made available at the meeting, they should be provided to the member before signing the written resolution.
Rights of auditors
sec381B(1): A copy of any written resolution proposed to be agreed to in accordance with sec381A shall be sent to the company's auditors.
At board meetings there are no different types of resolution (unless, very exceptionally, the company's articles specify to the contrary). All resolutions are passed by a simple majority.
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