ACCA F4 - Corp and Business Law (ENG)

Part F Management, administration and regulation of companies  20: Company meetings and resolutions 307

3.2 Special resolutions

A special resolution is required for major changes in the company such as the following.

 A change of name

 Restriction of the objects or other alteration of the articles

 Reduction of share capital

 Winding up the company

 Presenting a petition by the company for an order for a compulsory winding up

3.3 Written resolutions

A private company can pass any decision needed by a written resolution, except for removing a director

or auditor before their term of office has expired.

As we saw earlier, a private company is not required to hold an AGM. Therefore the Act provides a

mechanism for directors and members to conduct business solely by written resolution.

3.3.1 Written resolutions proposed by directors

Copies of the resolution proposed by directors must be sent to each member eligible to vote by hard

copy, electronically or by a website. Alternatively, the same copy may be sent to each member in turn.

The resolution should be accompanied by a statement informing the member:

 How to signify their agreement to the resolution

 The date the resolution must be passed by

3.3.2 Written resolutions proposed by members

Members holding 5% (or lower if authorised by the articles) of the voting rights may request a written

resolution providing it:

 Would be effective (not prevented by the articles or law)

 Is not defamatory, frivolous or vexatious

A statement containing no more than 1,000 words on the subject of the resolution may accompany it.

Copies of the resolution, and statements containing information on the subject matter, how to agree to it

and the date of the resolution must be sent to each member within 21 days of the request for resolution.

Expenses for circulating the resolution should be met by the members who requested it unless the

company resolves otherwise.

The company may appeal to the court not to circulate the 1,000 word statement by the members if the

rights provided to the members are being abused by them.

3.3.3 Agreement

The members may indicate their agreement to the resolution in hard copy or electronically.

If no period for agreement is specified by the articles, then the default period is 28 days from the date the

resolution was circulated. Agreement after this period is ineffective. Once agreed, a member may not

revoke their decision. Either a simple (50% plus one) or 75% majority is required to pass a written

resolution depending on the nature of the business being decided. Three further points should be noted

concerning written resolutions.

(a) Written resolutions can be used notwithstanding any provisions in the company's articles.

(b) A written resolution cannot be used to remove a director or auditor from office, since such

persons have a right to speak at a meeting.

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