The decision-making rules and procedures that companies must follow are set out in the CA 2006 as well as in the company’s articles of association. Some companies also set out additional or clarify procedures in a shareholders’ agreement therefore, it is important to refer to all relevant documentation to ensure compliance. This article (the second in a series) will focus on Ordinary resolutions, of a company’s members.

Ordinary resolution of the members

An ordinary members resolution is a formal decision requiring approval by more than 50% of the voting shareholders and is usually used for more routine matters that require approval by company members.

The types of decisions that normally require an ordinary resolution of the members include:

• Appointing a director where required under the articles or ratifying a director appointment
• Approving the Annual Accounts
• Approving a final dividend declaration
• Increasing the authorised share capital (if one has been set)
• Allotting shares (depending on the authorisation in place).

Additionally, copies of the following ordinary resolutions should be filed at Companies House:

• Granting authority to the directors to allot shares
• Renewing, varying, or revoking directors’ authority to allot shares
• Authorising the company to purchase its own shares
• Renewing, varying, or revoking authority of the company to purchase its own shares
• The redenomination of shares

Ordinary resolutions are either voted on at general meetings such as an AGM (Annual General Meeting), at a General Meeting of the members or passed by written resolution. Where a resolution is proposed at a meeting of the members, they will conduct their votes on a show of hands, unless the articles state by proxy where each shareholder has one vote, or a proxy is called whereby the number of shares held will come into play. An ordinary resolution is passed when more than 50% of all votes are cast in favour of the motion, unless a higher majority is required pursuant to the company’s articles.

It is important to note that two decisions that can be made through an ordinary resolution, include additional requirements pursuant to the CA 2006:

• The removal of a director before the end of their term of appointment; and
• The removal of an auditor before the end of their term of appointment

For information relating to resolutions passed by way of written resolution – keep a lookout for our upcoming article. The next article will discuss the rules and requirements surrounding special resolutions.

Conducting Company Resolutions Correctly

> Part 1 – Director 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.