Special resolutions in a limited company\u00a0<\/span><\/h3>\nThe Companies Act 2006 sets out strict decision-making rules that all UK companies must follow. One of these is the requirement of members (shareholders or guarantors) to make certain company decisions by special resolution.<\/p>\n
A special resolution is a legally binding decision that is supported by at least 75% of eligible members\u2019 votes. This means that, for the decision to stand, a minimum of 75% of votes held by the members of a company must be cast in favour of the matter in question.<\/p>\n
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\r\n <\/a>\r\n <\/div>\r\n \nSpecial resolutions are generally required for corporate matters of great importance and consequence – the types of decisions that are made only in rare circumstances. More routine company decisions are dealt with by ordinary resolution (of the members) or board resolution (of the directors).<\/p>\n
Types of decisions made by special resolution\u00a0<\/span><\/h3>\nSpecial resolutions are reserved for extraordinary decisions affecting a company\u2019s constitution, structure, share capital, long-term direction, or the rights of shareholders or guarantors.\u00a0<\/span><\/p>\nIn accordance with the Companies Act 2006<\/a>, a special resolution is required in the following circumstances:\u00a0<\/span><\/p>\n\n- Amending the articles of association or adopting a new set of articles\u00a0<\/span><\/li>\n
- Changing the company name\u00a0<\/span><\/li>\n
- Disapplying pre-emption rights of shareholders\u00a0<\/span><\/li>\n
- Carrying out a reduction of share capital<\/a>\u00a0<\/span><\/li>\n
- Approving a share buyback, where the company buys back its own shares from shareholders \u00a0<\/span><\/li>\n
- Authorising company re-registration to change its legal status – e.g. converting a private company to a public limited company\u00a0<\/span><\/li>\n
- Changing the prescribed particulars of rights<\/a> attached to shares\u00a0<\/span><\/li>\n
- Selling the company\u00a0<\/span><\/li>\n
- Winding up the company by members\u2019 voluntary liquidation<\/li>\n<\/ul>\n
You can stipulate other types of decisions requiring a special resolution in your company\u2019s articles of association or shareholders\u2019 agreement. For example, those that would typically be passed by an ordinary resolution or a board resolution.\u00a0<\/span><\/p>\n
- \r\n Company resolutions – the different types explained<\/span><\/a>\r\n <\/li>\r\n
- \r\n How to amend a company\u2019s articles of association<\/span><\/a>\r\n <\/li>\r\n
- \r\n What is a shareholders\u2019 agreement and why do I need one?<\/span><\/a>\r\n <\/li>\r\n <\/p>\n
It is also possible to specify a higher majority vote for certain decisions (e.g. 80%, 90%, etc.), or even unanimous agreement. The members of a company have the power to impose such requirements, provided they are included within the articles or a shareholders\u2019 agreement.\u00a0<\/span><\/p>\nHow to pass a special resolution\u00a0<\/span><\/h3>\nTo pass a special resolution, you must follow the procedure set out in the Companies Act 2006 and the articles of association. The steps required are as follows:<\/p>\n
Step 1 – Issue notice of proposed special resolution<\/h4>\n
Where a special resolution is proposed, the directors must provide at least 14 days\u2019 notice to members (and the company auditor, if you have one). The notice must state:<\/p>\n
\n- details of the proposed resolution\u00a0<\/span><\/li>\n
- that it is a special resolution\u00a0<\/span><\/li>\n
- whether voting will take place on a show of hands or poll at a general meeting, or by written resolution\u00a0<\/span><\/li>\n
- the date, time, and location of the general meeting (if applicable)<\/li>\n
- instructions on how to signify agreement to the written resolution (if applicable)<\/li>\n
- the date by which the resolution must be passed<\/li>\n<\/ul>\n \r\n \r\n
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\r\n <\/a>\r\n <\/div>\r\n \nSome companies may specify longer notice periods, or prohibit the use of written resolutions for certain decisions. Therefore, you should always consult the articles and shareholders\u2019 agreement in the first instance.\u00a0<\/span><\/p>\nStep 2 – Vote on the resolution\u00a0<\/span><\/h4>\nEligible members (i.e. those with voting rights) must cast their votes for or against the proposed special resolution. This may be done in one of two ways: by voting in person, on a show of hands or poll at a general meeting; or by written resolution, whereby votes are cast in hard copy form or by electronic means.<\/p>\n
- \r\n General meeting rules and procedures for limited companies<\/span><\/a>\r\n <\/li>\r\n \n
If members representing at least 75% of the company\u2019s voting rights agree to the motion, the special resolution is passed and the decision is legally binding. However, if more than 25% of votes are cast in opposition to the motion, the proposed special resolution fails.\u00a0<\/span><\/p>\nAgain, check the articles and shareholders\u2019 agreement to confirm whether a higher majority or unanimous agreement is required for a special resolution to be passed.<\/p>\n
Step 3 – Notify Companies House\u00a0<\/span><\/h4>\nWhen you pass a special resolution, you must inform Companies House within 15 days, either by post or electronically via the ‘Upload a document’ service<\/a>.<\/p>\nDepending on the changes you have made to the company, you may also have to include supporting documentation, e.g. a copy of the amended or new articles of association. \u00a0<\/span><\/p>\nFor convenience, Companies House provides a resolution template<\/a> that you can use to give notice of any type of resolution, whether ordinary, special, or written.\u00a0<\/span><\/p>\nStep 4 – Update company records\u00a0<\/span><\/h4>\nWhen a resolution is passed at a general meeting, it becomes part of the meeting minutes. These are normally circulated to members after the meeting.\u00a0<\/span><\/p>\n - \r\n What company registers do I need to maintain?<\/span><\/a>\r\n <\/li>\r\n \n
The directors are also required to keep meeting minutes or copies of any written resolutions for a minimum of 10 years. These documents should be made available for inspection at the company\u2019s registered office or Single Alternative Inspection Location (SAIL address).\u00a0<\/span><\/p>\n
\r\n \r\n <\/a>\r\n <\/div>\r\n \nSpecial resolutions are generally required for corporate matters of great importance and consequence – the types of decisions that are made only in rare circumstances. More routine company decisions are dealt with by ordinary resolution (of the members) or board resolution (of the directors).<\/p>\n
Types of decisions made by special resolution\u00a0<\/span><\/h3>\nSpecial resolutions are reserved for extraordinary decisions affecting a company\u2019s constitution, structure, share capital, long-term direction, or the rights of shareholders or guarantors.\u00a0<\/span><\/p>\nIn accordance with the Companies Act 2006<\/a>, a special resolution is required in the following circumstances:\u00a0<\/span><\/p>\n\n- Amending the articles of association or adopting a new set of articles\u00a0<\/span><\/li>\n
- Changing the company name\u00a0<\/span><\/li>\n
- Disapplying pre-emption rights of shareholders\u00a0<\/span><\/li>\n
- Carrying out a reduction of share capital<\/a>\u00a0<\/span><\/li>\n
- Approving a share buyback, where the company buys back its own shares from shareholders \u00a0<\/span><\/li>\n
- Authorising company re-registration to change its legal status – e.g. converting a private company to a public limited company\u00a0<\/span><\/li>\n
- Changing the prescribed particulars of rights<\/a> attached to shares\u00a0<\/span><\/li>\n
- Selling the company\u00a0<\/span><\/li>\n
- Winding up the company by members\u2019 voluntary liquidation<\/li>\n<\/ul>\n
You can stipulate other types of decisions requiring a special resolution in your company\u2019s articles of association or shareholders\u2019 agreement. For example, those that would typically be passed by an ordinary resolution or a board resolution.\u00a0<\/span><\/p>\n
- \r\n Company resolutions – the different types explained<\/span><\/a>\r\n <\/li>\r\n
- \r\n How to amend a company\u2019s articles of association<\/span><\/a>\r\n <\/li>\r\n
- \r\n What is a shareholders\u2019 agreement and why do I need one?<\/span><\/a>\r\n <\/li>\r\n <\/p>\n
It is also possible to specify a higher majority vote for certain decisions (e.g. 80%, 90%, etc.), or even unanimous agreement. The members of a company have the power to impose such requirements, provided they are included within the articles or a shareholders\u2019 agreement.\u00a0<\/span><\/p>\nHow to pass a special resolution\u00a0<\/span><\/h3>\nTo pass a special resolution, you must follow the procedure set out in the Companies Act 2006 and the articles of association. The steps required are as follows:<\/p>\n
Step 1 – Issue notice of proposed special resolution<\/h4>\n
Where a special resolution is proposed, the directors must provide at least 14 days\u2019 notice to members (and the company auditor, if you have one). The notice must state:<\/p>\n
\n- details of the proposed resolution\u00a0<\/span><\/li>\n
- that it is a special resolution\u00a0<\/span><\/li>\n
- whether voting will take place on a show of hands or poll at a general meeting, or by written resolution\u00a0<\/span><\/li>\n
- the date, time, and location of the general meeting (if applicable)<\/li>\n
- instructions on how to signify agreement to the written resolution (if applicable)<\/li>\n
- the date by which the resolution must be passed<\/li>\n<\/ul>\n \r\n \r\n \r\n \r\n <\/a>\r\n <\/div>\r\n \n
Some companies may specify longer notice periods, or prohibit the use of written resolutions for certain decisions. Therefore, you should always consult the articles and shareholders\u2019 agreement in the first instance.\u00a0<\/span><\/p>\nStep 2 – Vote on the resolution\u00a0<\/span><\/h4>\nEligible members (i.e. those with voting rights) must cast their votes for or against the proposed special resolution. This may be done in one of two ways: by voting in person, on a show of hands or poll at a general meeting; or by written resolution, whereby votes are cast in hard copy form or by electronic means.<\/p>\n
- \r\n General meeting rules and procedures for limited companies<\/span><\/a>\r\n <\/li>\r\n \n
If members representing at least 75% of the company\u2019s voting rights agree to the motion, the special resolution is passed and the decision is legally binding. However, if more than 25% of votes are cast in opposition to the motion, the proposed special resolution fails.\u00a0<\/span><\/p>\nAgain, check the articles and shareholders\u2019 agreement to confirm whether a higher majority or unanimous agreement is required for a special resolution to be passed.<\/p>\n
Step 3 – Notify Companies House\u00a0<\/span><\/h4>\nWhen you pass a special resolution, you must inform Companies House within 15 days, either by post or electronically via the ‘Upload a document’ service<\/a>.<\/p>\nDepending on the changes you have made to the company, you may also have to include supporting documentation, e.g. a copy of the amended or new articles of association. \u00a0<\/span><\/p>\nFor convenience, Companies House provides a resolution template<\/a> that you can use to give notice of any type of resolution, whether ordinary, special, or written.\u00a0<\/span><\/p>\nStep 4 – Update company records\u00a0<\/span><\/h4>\nWhen a resolution is passed at a general meeting, it becomes part of the meeting minutes. These are normally circulated to members after the meeting.\u00a0<\/span><\/p>\n - \r\n What company registers do I need to maintain?<\/span><\/a>\r\n <\/li>\r\n \n
The directors are also required to keep meeting minutes or copies of any written resolutions for a minimum of 10 years. These documents should be made available for inspection at the company\u2019s registered office or Single Alternative Inspection Location (SAIL address).\u00a0<\/span><\/p>\n
In accordance with the Companies Act 2006<\/a>, a special resolution is required in the following circumstances:\u00a0<\/span><\/p>\n You can stipulate other types of decisions requiring a special resolution in your company\u2019s articles of association or shareholders\u2019 agreement. For example, those that would typically be passed by an ordinary resolution or a board resolution.\u00a0<\/span><\/p>\n It is also possible to specify a higher majority vote for certain decisions (e.g. 80%, 90%, etc.), or even unanimous agreement. The members of a company have the power to impose such requirements, provided they are included within the articles or a shareholders\u2019 agreement.\u00a0<\/span><\/p>\n To pass a special resolution, you must follow the procedure set out in the Companies Act 2006 and the articles of association. The steps required are as follows:<\/p>\n Where a special resolution is proposed, the directors must provide at least 14 days\u2019 notice to members (and the company auditor, if you have one). The notice must state:<\/p>\n Some companies may specify longer notice periods, or prohibit the use of written resolutions for certain decisions. Therefore, you should always consult the articles and shareholders\u2019 agreement in the first instance.\u00a0<\/span><\/p>\n Eligible members (i.e. those with voting rights) must cast their votes for or against the proposed special resolution. This may be done in one of two ways: by voting in person, on a show of hands or poll at a general meeting; or by written resolution, whereby votes are cast in hard copy form or by electronic means.<\/p>\n If members representing at least 75% of the company\u2019s voting rights agree to the motion, the special resolution is passed and the decision is legally binding. However, if more than 25% of votes are cast in opposition to the motion, the proposed special resolution fails.\u00a0<\/span><\/p>\n Again, check the articles and shareholders\u2019 agreement to confirm whether a higher majority or unanimous agreement is required for a special resolution to be passed.<\/p>\n When you pass a special resolution, you must inform Companies House within 15 days, either by post or electronically via the ‘Upload a document’ service<\/a>.<\/p>\n Depending on the changes you have made to the company, you may also have to include supporting documentation, e.g. a copy of the amended or new articles of association. \u00a0<\/span><\/p>\n For convenience, Companies House provides a resolution template<\/a> that you can use to give notice of any type of resolution, whether ordinary, special, or written.\u00a0<\/span><\/p>\n When a resolution is passed at a general meeting, it becomes part of the meeting minutes. These are normally circulated to members after the meeting.\u00a0<\/span><\/p>\n The directors are also required to keep meeting minutes or copies of any written resolutions for a minimum of 10 years. These documents should be made available for inspection at the company\u2019s registered office or Single Alternative Inspection Location (SAIL address).\u00a0<\/span><\/p>\n \n
How to pass a special resolution\u00a0<\/span><\/h3>\n
Step 1 – Issue notice of proposed special resolution<\/h4>\n
\n
\r\n \r\n <\/a>\r\n <\/div>\r\n \nStep 2 – Vote on the resolution\u00a0<\/span><\/h4>\n
Step 3 – Notify Companies House\u00a0<\/span><\/h4>\n
Step 4 – Update company records\u00a0<\/span><\/h4>\n
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