Written Resolutions

Although there has been much said of procedures to conduct a meeting amidst a worldwide pandemic, one should not forget that there is a useful alternative; the ability to use written resolutions.  Written resolutions can be utilised by directors and also shareholders and allow for greater flexibility in that decisions can be made in writing rather than having to convene a meeting.

• Written Resolutions of Directors

Provisions regarding written resolutions of directors are contained within the articles of association of a company.  Model Article 8(2) provides that a unanimous decision of directors may be made in writing so long as each eligible director has signed such or otherwise indicated their agreement.  The reference to 'eligible' is to account for the fact that some directors may not be able to participate in some decisions due to their interest or a conflict. 

Under Model Article 15, directors must ensure that the company keep records of every unanimous and majority decision of directors for at least 10 years. 

Your company's articles may contain these exact articles or something similar therefore be sure to check your own articles before proceeding with a director's written resolution to ensure one is permitted and any specific requirements are met.

• Written Resolutions of Shareholders

Private companies must comply with the statutory procedures set out in the Companies Acts 2006 and a company cannot override these provisions.  Resolutions may be ordinary resolutions (passed by a simple majority) or a special resolution (passed by a majority of not less than 75%).  There are certain decisions which cannot be made by written resolution; removing a director or auditor before the expiry of their term.  This is simply something to remember.

Either directors or shareholders may propose a written resolution of the shareholders.  Where this is proposed by directors, it is good practice to accompany this with board minutes.  A certain percentage of shareholders entitled to vote (determined by statute or the company’s articles) may also propose a written resolution.

Regardless of who proposed a written resolution of the shareholders, a copy of such must be sent to every eligible member (the reference to eligible applies here in the same way as it does to written resolutions of directors).  Copies must be sent to all at the same time either in hard copy form, electronically or via the company website. 

Shareholders must also be informed of how they can indicate agreement and the date on which the resolution must be passed so as not to lapse.  A written resolution will lapse if not passed within 28 days.  A shareholder indicates their agreement to a written resolution when the company receives from them (i) something indicating the resolution referred to and (ii) their agreement.  Once a shareholder agrees to a written resolution it cannot be revoked and a written resolution shall be passed when the required majority of eligible members have indicated their agreement.

Companies need to maintain copies of all written resolutions for a period of 10 years and generally speaking, ordinary resolutions need not be filed at Companies House but all special resolutions do.

Our commercial team are happy to assist with any queries you may have in connection with conducting meetings currently or making use of written resolutions.  Please contact Kirstin Ejsmont at kirstin@mackinnons.com in the first instance.