Written resolution procedure

Passing a shareholder resolution using the written resolution procedure is a convenient alternative to calling a shareholder meeting. We take you through the process.

Written resolution or meeting?

In many cases, obtaining shareholder approval using a written resolution offers a simpler, cheaper and more efficient alternative to calling a meeting. It is popular for obtaining approval and for routine decisions that do not need to be discussed. However, the downside to using written resolutions is that shareholders can feel deprived of the opportunity to discuss the matter and question the directors before making a decision. Also, for a written resolution to be passed, enough shareholders have to respond to it. So, for companies whose shareholders are either very actively involved or at the other extreme and likely to ignore communication from the company, a meeting would be more appropriate. Many companies strike a balance by holding regular shareholder meetings (akin to AGMs), and use written resolutions as necessary at other times.

Our model follows the statutory procedure, which all private companies can use. If your articles also set out a written resolution procedure, you can choose which one to follow.

Limitations

The only restriction for private companies is that the procedure cannot be used for a resolution to remove a director from office, or to remove/replace an auditor, because there is an extra stage to passing these resolutions (called “special notice”) to give the director/auditor concerned the chance to respond.

Public companies cannot use the statutory procedure, but can use one set out in their articles.