The article discusses about the types of resolutions that can be passed in an England formation company, Along with that, there will be discussion on different regulations on resolutions as given in Companies Act and different requirements for the registration of resolutions and agreements passed in a company.
Resolutions play an important role in deciding about any action that has to be taken by the UK company incorporation. The resolutions that are passed become the actions of the company. Resolutions may be passed in meetings as in public companies or they may be just limited to the circulation of written resolutions, as in the case of private companies. The two basic types of Resolutions are ordinary and special resolutions.
The resolutions that are passed with a simple majority, that may be of at least 50% where each of the member is allotted one vote for one share. This scheme of allotting votes will be followed generally unless any different scheme is given by the articles. This has been mentioned in Sections 281(3), 282 and 284 of Companies Act 2006.
A special resolution may be required where the matter is highly risky and is related to the protection of the company and the members. The passage of such resolutions require votes by a special majority that may not be less than 75 %, as mentioned in Section 283 of Companies Act 2006. Special resolutions may be passed in the following situations:
- Amendment of articles (Section 21(1) of Companies Act 2006)
- Misapplying the rights of pre-emption of the members at the time of issuing shares (subsection 569-571 of Companies Act 2006)
- For reducing the amount of share capital (Section 641(1) of Companies Act 2006)
- Redemption of the shares whose ownership lies with the company (Section 716(1) of Companies Act 2006) etc.
Additional Types of Resolutions as per Companies Act 1985
Companies Act 1985 specifies provisions for some other types of resolutions. These include extraordinary and elective resolutions.
Provisions for Special and Extraordinary Resolutions
Section 378 of Companies Act 1985 states that:
- A resolution is said to be an extra-ordinary resolution if it gets passed at a general meeting by the votes of three fourth of the total members who are entitled to vote or in case where proxies are permitted, by the persons who are appointed as proxies to the members. It is required that the meeting’s notice must be given duly as such that it specifies about the intention of proposing an extra ordinary resolution in the meeting.
- A resolution is termed to be a special resolution if it gets passed by the same majority as required for the passage of an extra-ordinary resolution. It should be passed at a general meeting whose notice is given duly at least 21 days before and specifies the aim of presenting a special resolution in the meeting.
- If any of the following majority of the members who are authorised to vote at a meeting assent, the proposal of a resolution may be given and its passage may be done as a special resolution at a meeting whose notice is given at least 21 days before:
- The majority holds altogether 95% of the shares’ nominal value that give those rights.
- If the company does not have a share capital than they should altogether hold 95% of the total voting rights held by the members at a meeting.
- A company that is private is allowed to choose via elective resolution, meeting the requirements of Section 379 A, to make the above mentioned provisions effective in a way that the 95% requirement is replaced by a lesser percentage, however, it should not be lesser than 90%. The new percentage may be mentioned in the resolution or decided at the meeting by the company.
- Where ever at a meeting, a submission is made of either an extra-ordinary resolution or a special resolution for passage, if the chairman declares that the resolution is carried, it will be taken as final evidence for the fact with no proof about the votes’ proportion or number that was recorded supporting or contradicting the resolution, as long as no demand for poll is made.
- When a poll is demanded to whether pass or reject the extra-ordinary or special resolution, and the poll’s majority is computed, the reference is to be had to the number of votes that have been either casted in favour of or in contradiction to the resolution.
- In relation to this section, a notice is considered to be shared duly and the meeting duly conducted, if the notice is given and the meeting is conducted in a manner following the rulings given by this Act or the articles of association of the company.
Special Notices for Resolutions
Section 379 of Companies Act 1985 provides for the resolutions that may require distribution of special notice. It states that:
- If any provision of this Act demands a special notice to be given regarding a resolution, it should be ineffective unless a notice specifying the intention of circulation such a resolution at the meeting is given to the company at least 28 days in prior the meeting.
- It is preferred that the notice of such resolution is shared with the members by the company in the same way and at the same the time when notice about the meeting is given to them. If it is not possible practically, the notice should be given via any newspaper ad, that may be moved around the members, or by any other way, when at least 21 days are left in the meeting.
- If 28 days or lesser days after the notice stating about the aim to circulate the resolution is shared with the company, a meeting is arranged, then the notice will be considered as to have been shared properly, even when it is not shared within the time limit.
Private Company’s Right for Elective Resolution
Another type of resolution is the elective resolution. Private companies after UK company incorporation benefit from this facility. It is stated by Section 379 A of Companies Act 1985 that:
- If a company arranges an election for either of the following purposes:
- Electing the duration given for the authority of allotting shares as specified by Section 80 A of Companies Act 1985.
- Electing the dispense for presenting the accounts and reports in front of general meeting as specified by Section 252 of Companies Act 1985.
- Electing for the dispense of arranging annual meetings as mentioned in Section 366 A of Companies Act 1985.
- Electing for deciding the majority needed to ratify the holding of meeting at short notice as mentioned in Section 369(4) or 378(3) of Companies Act 1985.
- Electing for the decision of appointing auditors on a yearly basis. As it is stated in Section 386 of Companies Act 1985.
- Then, the election shall be held by the resolution that has been constructed according to the provisions of this section. A resolution made in accordance with this section will be termed as an elective resolution in this Act.
- The elective resolution only becomes effective when the following conditions are fulfilled:
- A written notice of meeting, specifying the aim of circulating an elective resolution at the meeting and its conditions, is given to the company at least 28 days before the meeting is held.
- And the resolution is passed by all the members personally or by all the proxies of the members who are authorised to be present in the meeting and vote.
- An elective resolution will also remain effective if despite the fact that the notice of the meeting is not shared within the time limit of a minimum of 21 days, if all the members at the meeting who are authorised to show presence in the meeting and vote, agree to it.
- An elective resolution may be revoked or annulled by the company via the passage of ordinary resolution.
- Any elective resolution may not remain effective if the company that had passed it reregisters as a public company.
- A company is allowed to pass or cancel any elective resolution under this section and this section’s first clause will remain effective, despite any provision given by the articles of association of the company contradicting this section.
Registering the Resolutions and Agreements of the Company
It is required to keep a record of the agreements and resolutions of a company that’s register with companies house UK. Companies Act 1985 Section 380 has been dedicated for the provisions related to the registration of resolutions and agreements. It states that:
- The registrar that handles companies registration office UK should be sent a resolution or agreement’s copy within the 15 days of the passage of resolution or signing of the agreement. This copy should be in the printed version or any other form that is authorised by the registrar.
- If the company has registered its articles with companies registration office UK, then with every copy of the articles that is issued, there should be attached a copy of every resolution or agreement that has been implemented, after the passage of the resolution or signing of the contract.
- If the company has not registered its articles, a copy of resolution may be shared with any member who requests for it and pays an amount of 5 pence or less as specified by the company.
- This section may be applicable to the following:
- Special resolutions.
- Extra-ordinary resolutions.
- An elective resolution or a resolution that cancels an elective resolution.
- Resolutions or agreements upon which all the members have agreed, and if they would not have been agreed upon they would have remained ineffective except in the case if they were passed as special or extra-ordinary resolutions.
- Resolution or agreements, about whom all the members belonging to certain class of shareholders agree and they would remain ineffective if they were not agreed upon except in the case where it is passed by some majority specified or in some specific manner. Also, all the resolutions or agreements that are responsible for binding every member of some shareholders’ class even when not every member of that class assented to it.
- When a director passes a resolution following Section 31(2) of Companies Act 1985.
- A resolution that gives, changes, renews or cancels any power bestowed upon the director under Section 80 of Companies Act 1985.
- A directors’ resolution passed following the Section 147(2) of Companies Act 1985.
- Any resolution that cancels, renews, allots or varies powers given under Section 166 of Companies Act 1985.
- A resolution related to windup the company voluntarily, passed in accordance with Section 84(1)(a) of the Insolvency Act.
- When the directors of a company that was formerly public, pass a resolution under Section 2(1) of the Consequential Provisions Act for re-registering it as public.
- When directors pass a resolution under Regulation 16(2) of the Uncertified Securities Regulations 1995.
- A company’s resolution that has been passed under the Regulation 16(6) of the Uncertified Securities Regulations 1995.
- If the first clause of this section is not complied with then the company and every officer responsible will have to pay fine, and if it the breach is continued, then they will be fined on a daily basis.
- If the second and third clauses are not followed, the company and its officers responsible for the breach are liable to fine.
- For the purpose of last two clauses, the liquidator of a company is considered as its officer.