What are Corporate Resolutions?

What are Corporate Resolutions?

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A corporate resolution is a formal decision made on behalf of a company at meetings with the board of directors, or the company shareholders. In this article, we will touch on the different types of company resolutions and who can make them, as well as how to successfully pass a company resolution.

Who Can Make Company Resolutions?

Board directors and shareholders are the only members of the company that can make company resolutions. When the board of directors make a formal decision, it is referred to as a board resolution, whereas when the company shareholders make a formal decision, it is referred to as a shareholder resolution. Shareholders can make two types of resolutions, this is inclusive of special resolutions, and ordinary resolutions (more on this later).

Types of Company Resolutions

There are three separate types of company resolutions, the type of resolution selected by the company greatly depends on the Companies Act and company constitution.

Board Resolutions

Section 157A of the Companies Act states that directors make all decisions for the company, except those the Companies Act or the memorandum and article of association of the company require the shareholders to make. In cases where board directors are required to engage in formal decision making, a board resolution will be made. Examples of decisions where the company can pass a board resolution, in accordance with the Companies Act include:

  • Opening a corporate bank account and authorising employees for transactions
  • To appoint an audit committee
  • Change of registered address
  • Appointment and resignation of directors and company secretaries

Special Resolutions

A special resolution is a formal decision passed by at least 75% of the shareholder votes cast at a meeting. Special resolutions are required when the decision to be made is especially important. Examples of situations where special resolutions can take place include the following:

  • Change in any provision in company constitution
  • Change in company name
  • Allotment of shares

To prepare for special resolutions, public companies must ensure that they have given 21 days of written notice must for the meeting. For private companies, 14 days of written notice must be given. After the special resolution has been made, the company must also lodge a copy of all special resolutions at ACRA.

Ordinary Resolutions

Unlike special resolutions, an ordinary resolution is a formal decision passed by more than 50% of the votes cast at a meeting. For both public and private companies, 14 days of written notice must be given to shareholders for the meeting. Examples of situations where an ordinary resolution is required include the following:

  • Removal of a director before the expiration of his period of office
  • Appointing or re-appointing a director who is above 70 years of age

How to Pass a Company Resolution

There are two ways to pass a company resolution, at physical meetings or by written means. Traditionally, resolutions are passed at physical meetings of the company’s shareholders or board of directors. Although, in situations where it is not convenient to hold physical meetings (for example: during a pandemic) with the relevant parties physically present, a company can choose to pass a resolution by written means.  

However, in some cases there is still a possibility that in the event that a significant number of voters disagree with passing a resolution through written means, section 184D of the Companies Act states that holders of 5% of the voting rights can request that a physical meeting be resumed instead of proceeding with the written resolution.

Sprout with Us!

Sprout Asia offers budget-friendly corporate secretarial services where our experts can ensure the right type of resolutions are passed for the respective transaction and ensure that these resolutions are lodged correctly on ACRA. Feel free to reach out to Sprout if you have any questions about our services, we’ll respond within 24 hours.