Conducting Company Resolutions Correctly: Part 1 – Director Resolutions

Conducting company resolutions correctly is an important part of a company’s governance. Company resolutions are legally binding decisions made by company directors or the members (shareholders or guarantors) of a limited company.
There are different types of resolutions which should be utilised in order to vote on various company matters and each type of resolution has different rules and requirements which must be met in order for these resolutions to be considered valid and therefore, legally binding. The requirements of each type of resolution will be explained throughout this series of articles.

Directors Resolutions

Board resolutions are formal decisions made by the board of directors of a company. It is important that any resolutions passed are clearly documented within any minutes with notify those present with the date, time, place and any director conflicts. Board resolutions are usually used for management decisions such as:

  • Changing the company’s registered office address
  • Changing the location of statutory registers
  • Appointing an accountant
  • Entering into important contracts with clients; or
  • Entering into contracts to which the company is a party but is outside its usual business contracts. For example, when the company enters into a lease or arranges facilities with a bank or enters into security documentation.

Typically, this type of resolution is passed by a simple majority at a board meeting, unless a higher majority or unanimous approval is specified in the articles or shareholders agreement. It should be noted that shareholder Agreements sometimes Impose additional requirements. Directors usually have one vote each, which they will cast on a show of hands (or by proxy).

Conducting Company Resolutions Correctly

> Part 2 – Ordinary Resolutions
> Part 3 – Special Resolutions
> Part 4 – Written Resolutions and Record Keeping

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to your own particular matter before action is taken.

Michelle Lamberth
Senior Paralegal, Corporate
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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