There are three types of resolutions company directors or shareholders can make at either a board meeting or general meeting respectively:

  • Ordinary resolutions (a simple resolution of generally more than 50% of the directors/shareholders present at the meeting);
  • Special resolutions (at least 75% of the directors/shareholders present at the meeting); and
  • Unanimous resolutions (100% of the directors/shareholders present at the meeting).

In the case of a proprietary company that has only one director who is a shareholder of the company, they can pass the resolution just by signing a document that sets out the resolution. Below, we step through how to pass a resolution, including voting requirements and notifying ASIC.

What are the Requirements for Passing a Resolution?

The general requirements for passing a resolution include:

  • Passing the resolution at a meeting that has been properly convened and fulfils the quorum requirements; and
  • Entering the resolution in the books kept by the company for that purpose within one month of the meeting being held.

The chair must also sign the meeting’s minutes. The company’s minute book must be kept at the company’s registered office, principal place of business, or elsewhere as approved by ASIC.

If a company fails to follow these general requirements, the outcome of the resolution may be invalidated.

Voting on Resolutions

If a company has share capital, a shareholder has one vote for each share held. This is, of course, subject to exceptions or rights that may be attached to the particular class of shares. Alternatively, if the company does not have share capital, then every shareholder is entitled to one vote. The chairperson will also have a casting vote.

All companies must allow voting by proxy and a listed public company must send out proxy forms with the notice of the meeting. A notice of meeting for a listed public company must specify:

  • The location; and
  • A fax number; and
  • An electronic address for receipt of proxy appointments.

A listed company is required to record the total number of proxy votes which were validly exercised along with how such votes were exercised.

Meeting Provisions

Shareholders must receive at least 21 days notice before the meeting. A publicly listed company must give at least 28 days notice.

A proprietary company can also pass a resolution by circulating a document and having all shareholders entitled to vote sign the document, stating that they are in favour of the resolution. This is known as a circulating resolution.

Notifying ASIC

In certain circumstances, if a company passes a special resolution, it must notify ASIC by lodging either a Form 205 Notification of Resolution, or Form 2205 Notification of Resolutions Regarding Shares.   The resolutions which ASIC requires notification include:

  • Change from a public company to a proprietary company (and vice versa);
  • Change of the company name;
  • Change from a no-liability company to a company limited by shares;
  • Change from a limited company to an unlimited company (and vice versa);
  • Alteration to the company constitution;
  • Financial assistance for the company to acquire shares in the company itself;
  • Voluntary winding up by the shareholders or creditors;
  • Company resolution to be wound up by the court;
  • Company arrangement with a liquidator;
  • Alteration of rights of issues or unissued shares;
  • Conversion of shares into larger or smaller numbers; and
  • Reduction in share capital.

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It is important though that you take steps to ensure your company complies with its legal obligations and correctly passes its resolutions.

Questions? Get in touch with LegalVision’s commercial lawyers on 1300 544 755.

Lauren Moroney

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