Reading time: 4 minutes

When running a company, you will need to make choices about the business’s operations and management. Your members will likely need to pass resolutions to decide certain matters – particularly if required under the Corporations Act 2001. Shareholders must comply with procedural requirements for the decision to be effective. Below, we set out the process involved in passing a shareholders resolution and the requirements for an ordinary, special and unanimous resolution.

What Is the Process?

A company’s shareholders agreement should contain the procedure for holding a general meeting. Unlike directors who meet regularly, there is no need for shareholders to meet frequently. Any director may call a meeting of shareholders by giving reasonable notice of the meeting to the company’s relevant shareholders. There are different classes of shares, and each class has different rights and restrictions attached to them. Directors may call a meeting of a particular class of shareholders only.

It is standard for the director calling a meeting to set out the agenda so the relevant shareholders can prepare for the meeting. A shareholders agreement may allow a shareholders meeting to be held in person or using technology (i.e. telephone, video or audiovisual communication such as Skype). 

For a valid shareholders meeting, a minimum number of shareholders will need to be present (quorum). The directors of a company may elect an individual to chair meetings of shareholders. Additionally, the chair of a shareholders meeting may or may not have a casting vote, depending on the terms of each shareholders agreement. The shareholder’s agreement will also set out the procedural matters required for an effective and valid board meeting.

Furthermore, there are generally a few requirements to satisfy to pass a shareholders resolution:

  • the resolution must pass at a meeting which satisfies any specific quorum;
  • you must convene the meeting according to the shareholders agreement; and
  • you must record the meeting for the company’s records within one month of the meeting.

You must also record the meeting’s minutes and have the meeting’s chair sign these minutes. It is also essential to determine what type of resolution you are looking to pass. You must satisfy different requirements to pass special resolutions.

How Is a Members Resolution Decided?

Each shareholder typically has one vote for each share they hold. There are three different types of shareholders resolutions:

1. Ordinary Resolution

Some of the decisions that require an ordinary resolution include the election of directors, commercial decisions, and acceptance of reports at the general meeting.

An ordinary resolution will require shareholders with over 50% of the company’s shares to vote in favour of the particular matter. For example, there are two shareholders – one holding 60% of the shares and the other holding 40%. Provided the member holding 60% of the shares votes in favour of the resolution, it will pass.

2. Special Resolution

A special resolution is needed when you make certain changes in the company. The Corporations Act outlines certain situations requiring a special resolution. Decisions such as winding up a company or changing the company name need to be made by passing a special resolution.

A special resolution generally requires 75% of shareholders vote in favour of the resolution. An exception is if your shareholders agreement states otherwise. For example, suppose there are two shareholders, one holding 60% of the shares and the other holding 40%. In that case, both shareholders will need to agree in favour of the matter before passing a special resolution.

A proprietary company can pass a special resolution without holding a general meeting; however, 100% of votes are needed to pass this resolution.

3. Unanimous Resolution

A unanimous resolution is when all shareholders present at a meeting agree (i.e. 100% of the shareholders are in favour of passing a particular matter).

Once you pass a shareholders resolution, you may need to notify the Australian Securities and Investments Commission. Depending on the decision made through the passing of a resolution, you may need to lodge specific forms with ASIC to notify them of these changes.

Key Takeaways

More commonly, shareholders vote on matters through an ordinary resolution. Your shareholders agreement should set out what issues require a special resolution or unanimous resolution. If you have any questions about shareholders’ meetings or your company’s corporate governance, contact LegalVision’s commercial lawyers on 1300 544 755.


How to Sponsor Professionals For Your Healthcare Organisation

Thursday 24 March | 11:00 - 11:45am

Plug skill shortages in your healthcare organisation by sponsoring professionals from overseas. Learn how in our free webinar.
Register Now

Everything You Need to Know about SaaS Agreements

Thursday 7 April | 11:00 - 11:45am

Understand which contracts will protect your SaaS contract from risk, and how. Register for free today.
Register Now

What to Consider When Buying a Tech or Online Business

Wednesday 13 April | 11:00 - 11:45am

Learn how to get the best deal when buying a tech or online business. Register for our free webinar today.
Register Now

Corporate Governance 101: Responsibilities for New Directors

Wednesday 27 April | 11:00 - 11:45am

If you are a new company director, join our free webinar to understand your legal compliance obligations. Register today.
Register Now

Rogue Directors and Business Divorces: How to Remove a Director

Thursday 28 April | 11:00 - 11:45am

Removing a board director is not simple. Join our free webinar to learn how to handle rogue directors. Register today.
Register Now

Employment Essentials for Tech Businesses

Thursday 5 May | 11:00 - 11:45am

Protect your tech business and your employees by understanding your employment legal obligations. Register for our free webinar today.
Register Now

How to Protect and Enforce Your Trade Mark

Wednesday 11 May | 11:00 - 11:45am

Protect your business’ brand from copycats and competitors. Register for this free webinar to learn how.
Register Now

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer