We are due to hold an EGM to amend our constitution. What is the difference between an ordinary and special resolution?
Resolutions are decision taken by the members and directors and must be passed in accordance with the constitution and the Companies Act 2014.
The Act defines both ordinary and special resolutions of members (shareholders) and also the process for approving both types of resolutions at a general meeting or by written resolution. The passing of member resolutions is governed by Sections 191 to 199 of the Act.
The resolution to amend the company constitution is a special resolution and should be filed with a G1 form and new constitution with the CRO.
Types of Resolutions
An ordinary resolution” means a resolution passed by a simple majority of the votes cast by members of a company as, being entitled to do so, vote in person or by proxy at a general meeting of the company.
A “special resolution” means a resolution passed by not less than 75 per cent of the votes cast by such members of the company concerned as, being entitled to do so, vote in person or by proxy at a general meeting of it. 21 days notice must be given for the general meeting at which the resolution is proposed to be passed.
Unanimous written resolutions
A resolution in writing signed by all the members of a company entitled to attend and vote on such resolution at a general meeting (or being bodies corporate by their duly appointed representatives) shall be as valid and effective for all purposes as if the resolution had been passed at a general meeting of the company duly convened and held.
A resolution shall be deemed to have been passed at a meeting held on the date on which it was signed by the last member to sign the resolution.
Unanimous resolutions does not apply to—
(a) a resolution to remove a director;
(b) a resolution to effect the removal of a statutory auditor from office, or so as not to continue him or her in office, as mentioned in section 382(2), 383(2)(b) or 394.
Majority written resolutions
The Act introduces majority written resolutions for the first time. They can be used to pass both ordinary and special resolutions.
An ordinary or special resolution in writing signed by the requisite majority of members of the company concerned shall be as valid and effective for all purposes as if the resolution had been passed at a general meeting of the company duly convened and held.
The resolution shall be deemed to have been passed, at a meeting held 7 days for an ordinary resolution or 21 days for a special resolution after the date on which it was signed by the last member to sign.
The “requisite majority of members” means a member or members who alone or together, at the time of the signing of the resolution concerned, represent more than 50 per cent for an ordinary resolution or 75 per cent for a special resolution of the total voting rights of all the members who, at that time, would have the right to attend and vote at a general meeting of the company.
Single-member companies — absence of need to hold general meetings, etc.
All the powers exercisable by a company in general meeting under the Act or otherwise shall be exercisable, in the case of a single-member company, by the sole member without the need to hold a general meeting for that purpose.
Where the sole member of a single-member company takes any decision which has effect as if agreed by the company in general meeting, the member shall provide the company with a written record of that decision, unless the decision is taken by way of written resolution which the member has already forwarded to the company.
Filing Resolutions with CRO
A copy of every resolution or agreement to which section 198 applies shall, within 15 days after the date of passing or making of it, be forwarded on a G1 form by the company concerned to the Registrar of Companies. Section 198 of the Act sets out the resolutions that must be filed with CRO which includes all special resolutions and most resolutions that relate to shares.
Minutes of proceedings of meetings of a company
A company shall, as soon as may be after their holding or passing, cause minutes of all proceedings of general meetings of it, and the terms of all resolutions of it, to be entered in books kept for that purpose. The minute books should be kept by a company shall be kept at the registered office.
How Can CLS Help
We can draft the necessary resolutions to give effect to any change in the legal structure of a company and advise on the appropriate type of resolutions and the most appropriate way to approve the resolutions. For more information please contact one of our Co Sec Team on 059 9186776 or email@example.com
Our CLS Insights aims to bring you practical information and news on Company Law and Company Secretarial. We cover the topics that matter to your business and give practical tips and also the benefit our experiences. Please remember this article is a guide and legal advice should always be obtained. If you have any queries please contact one of the team and we would be happy to help.