Passing a company resolution is an important part of any corporation’s processes. But what is a company resolution and how do you pass one? Let’s look into all the ins and out of passing a company resolution.

What is a Company Resolution?

A resolution is a formal way in which a company can note decisions that are made at a meeting of company members. There are two types of resolutions: ordinary and special.

Under the Corporations Act 2001, most of the decisions that affect a company need to be made by a resolution. Additionally, a company’s constitution may have its own rules about what decisions need to be made by resolution.

How to pass a Resolution

For a resolution to pass, it must meet the following criteria:

  • the resolution is passed at a meeting which is properly convened, and satisfied with any quorum (minimum number of members are present) requirements
  • the resolution is put into the company’s records within one month of the meeting being held, and
  • the minutes of the meeting where the resolution was passed must be signed by the chairperson (chair) of the meeting, or the chair of the following meeting.

If these criteria aren’t met, the resolution could be considered as invalid. You also need to determine if you are required to pass an ordinary resolution or a special resolution.

Voting on Resolutions

Where a company has share capital, a member has one vote for each share they hold. These votes are subject to any rights or restrictions attached to their specific class of shares.

If the company doesn’t have share capital, each member is entitled to one vote. The chair has a casting vote. If the chair is also a member, they have a member’s vote as well.

Notice of a meeting of members for a company or scheme

Before a meeting of members takes place, the company must give its members at least 21 days notice. A listed company must give at least 28 days notice.

Shorter notice can be given if the members that hold at least 95% of the company’s votes agree. This does not apply for a resolution to appoint/remove a director or remove an auditor.

Registered schemes must give at least 21 days notice. This cannot be shortened.

The notice must include:

  • the date and time of the meeting
  • the location
  • an electronic address (i.e. email)
  • planned business for the meeting
  • information about any proposed special resolutions, and
  • information about proxy votes.

Proxy documents for members of listed companies

The notice must also provide an electronic address (e.g. email) where any proxy vote documents can be sent.

Listed companies are required to record in the minutes:

  • the total number of proxy votes, and
  • how they were cast.

This must be done for each separate resolution voted on at a meeting of members.

The above requirements are mandated by law and must be followed for both ordinary and special resolutions, regardless of any conflicting requirements in the company’s constitution.

Ordinary Resolutions

Ordinary resolutions are not specifically defined in the Corporations Act and need only a simple majority (i.e. normally, more than 50% of votes cast in favour) to pass.

Some decisions that may only require an ordinary resolution include:

  • election/re-election of directors
  • appointment of an auditor
  • acceptance of reports at the general meeting
  • strategic or commercial decisions
  • increasing or reducing number of directors
  • passing a board limit resolution (for public companies).

Special Resolutions

Special resolutions are needed for certain changes as defined in the Corporations Act. Decisions like changing a company’s name, winding up the company, or changing the company’s type will require a special resolution.

Special resolutions must meet certain criteria before they can be voted on, or passed:

Notice of a meeting of members for a company or registered scheme

If a special resolution is being proposed at a meeting, the notice to members must include the intention to vote on the special resolution and details of its contents. This is in addition to the other standard requirements like providing a date and time, proxy information, etc.

Passing a special resolution at a meeting

For a special resolution to pass, at least 75% of the votes cast must be in favour.

Passing a special resolution without holding a meeting

A proprietary company with only one member of the company can pass a special resolution by signing a document that sets out the details of the resolution.

A proprietary company with more than one member can pass a special resolution by getting all members entitled to vote to sign a document that states they’re in favour of passing the resolution.

Need Help?

If you would like help with respect to company law or corporate resolutions, contact our team of experienced corporate lawyers by calling us on 1300 QUINNS or alternatively, +61 2 9223 9166 to arrange a teleconference or appointment.