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Company Resolutions

COMPANY RESOLUTION

A Company Resolution Agreement is a formal way in which a company can note decisions that are made at a meeting of company members.

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CHANGE OF COMPANY NAME

A resolution agreement to change a name.

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RESOLUTION FOR A LOAN

resolution is a formal way in which a company can note decisions that are made at a meeting of company members

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SPECIAL COMPANY RESOLUTION

Special Company Resolution means a resolution passed by a majority of not less than two-thirds of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution.

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    Company resolutions

    Commentary

     

    Overview

    A resolution is the formal means by which decisions are made by a meeting of company members. There are two types of resolutions: ordinary and special. The Corporations Act 2001 (the Corporations Act) requires many decisions that affect a company to be made by resolution, some of which must be by special resolution. In addition, the constitution of a company may also require that other decisions be made by either an ordinary resolution or a special resolution.

    General requirements for passing resolutions

    The general requirements under the Corporations Act for the passing of any resolution are:

    The resolution—

    is passed at a meeting, which is properly convened and satisfies the quorum requirements, and

    is entered in the books kept by the company for that purpose within one month after the meeting is held.

    The minutes must be signed by the chair of the meeting at which the resolution was passed or by the chair of the next meeting. Non-compliance with these requirements could invalidate the outcome of the resolution.

    Voting on resolutions

    Where a company has share capital, a member has one vote for each share held subject to any rights or restrictions attached to any class of shares.  For a company without share capital, every member is entitled to one vote. The chair has a casting vote, and if a member, also a member’s vote.

    Ordinary resolutions

    Ordinary resolutions are not specifically defined in the Corporations Act and require only a simple majority to pass (i.e. more than 50% of the members present at the meeting, either in person, or by proxies, if allowed by the constitution).

    Some of the matters on which an ordinary resolution is sufficient are:

    • election/re-election of directors
    • appointment of an auditor
    • acceptance of reports at the annual general meeting
    • strategic, commercial decisions
    • increase or reduction in the number of directors
    • passing a board limit resolution (for public companies).

    Special resolutions

    The notice of meeting sent to members advising them of the meeting must set out an intention to propose the special resolution and state the special resolution. This is in addition to the other information required to be provided in a notice of a meeting including the place, date and time of the meeting, the general nature of the meeting’s business and information about proxy votes where applicable.

    Generally, notice of a meeting to members of a company must be given 21 days before the meeting is to be held. A listed company must give a least 28 days notice. Shorter notice can be given where members with at least 95% of the votes that may be cast at the meeting agree beforehand. However, the provision for shorter notice does not apply to a resolution to remove or appoint a director or to remove an auditor.

    Notice of a meeting to members of a registered scheme must be given at least 21 days before the meeting is to be held. Registered schemes can’t give shorter notice.

     

    This information is not legal advice by Precedents Online or its Authors.

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