11. Written Resolutions PDF

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Summary

Written Resolutions...

Description

When can a written resolution be used? S281(2) Private companies

Public Companies

Private limited companies can always use the shareholders' written resolution procedure, except in two circumstances: (a) a GM must be called to dismiss a director (SS168(1) and 288(2)) (b) a GM must be called to dismiss the company's auditors (SS510(2) and 288(2)).

Cannot use shareholders' written resolution procedure in any circumstances

Who can call for a written resolution?

Directors

Shareholders

The directors will normally initiate the written resolution procedure S291(1)

The shareholders have the right to require a written resolution to be circulated among the shareholders, together with a statement of not more than 1,000 words about the resolution (S292-295)

Permitted by MA8(2) and TA93

In order to use this right, the shareholders requisitioning the written resolution must: (a) together own at least 5% of the voting shares in the company (unless a lower percentage is specified in the articles) ( S292(4) and (5)); (b) The request must identify the resolution; (c) be in hard copy or electronic form, (d) be effective if passed; (e) be authenticated by a signature of the persons making it; and (f) must not be defamatory, vexatious or frivolous S292(2) and (6). The company must then circulate the resolution and statement within 21 days of the requirements under S292 being met (S293(1) and (3)).

Who should it be circulated to?

(a)

"all eligible members" (S291(2)) AND

(b)

the auditors (S502(1))

Who is an eligible member?  Director/shareholder entitled to vote on the 'circulation date' of the written resolution ( S289(1)).  Circulation date is the date on which a resolution is first sent to an eligible member ( S290)  If a shareholder transfers his shares to a new shareholder on the circulation date, the shareholder who owned the shares at the time the first copy of the resolution was circulated is eligible S289(2).

How do you circulate the resolution?

How do you agree & what is the deadline for agreement?

The written resolution can be circulated by sending:

The written resolution must contain a statement which informs the shareholder: (a) how to signify agreement; and (b) the date by which the resolution must be passed if it is not to lapse.

(1)

separate copies of the resolution to each eligible member at the same time by directors S291(3)(A) or by requisitioning shareholders S293(2)(A); or

(2)

One copy of the resolution prepared, and this same copy is sent to each eligible member in turn by the directors S291(3)(B) or by requisitioning shareholders S293(2)(B)

Circulation can be in: (a) hard-copy; or (b) electronic form; or S291(3) (c) by using a website 293(2). (d) Non-hard copy methods can only be used if requirements relating to electronic communication with shareholders have been complied with (SS298 and 299).

The shareholder must send within 28 days: (a) an authenticated document to the company (b) which identifies the resolution; and (c) indicates the members agreement (S296(1)) The proposed written resolution must be passed: (a) before the end of 28 days beginning on the circulation date; or (b) the period specified in the articles if different After that time, it will lapse (S297(1)) and any agreement by an eligible member after this date is ineffective S297(2)

What is the requisite majority to pass a written resolution?

Ordinary Resolution  

What would be passed as an ordinary resolution will pass as a written resolution. More than 50% of the total voting rights of all eligible members must agree to the resolution S282(2)  7/10 people could agree to it, but they might not hold more than 50% total voting rights, so it would fail.  3/10 might respond, two of which agree, and together those 2 hold 50% of the total voting rights - it would pass.

Special Resolution  

What would pass as a special resolution will pass as written resolution. More than 75% of the total voting rights of all eligible members must agree to the resolution S283(2)  7/10 people could agree to it, but they might not together hold 75% total voting rights, so it would fail.  3/10 might respond, two of which agree, and together those 2 hold 75% of the total voting rights - it would pass.

Admin  No requirement to keep copies of written resolutions, S248 only applies to board meetings.  This is a matter for the articles. Article 15 MA requires a written record of a written resolution/unanimous decision to be kept for 10 years....