Reading time: 3 minutes

Companies need to make certain decisions in a prescribed manner to be effective. It’s important then that you are familiar with the terms of your company constitution, shareholders agreement and the relevant provisions of the Corporations Act 2001 to know which matters are decided in what manner. Your documents may refer to the board of directors or shareholders making decisions by passing one of three different types of resolutions. Below, we look at three shareholder resolutions, namely:

  1.   Ordinary Resolutions;
  2.   Special Resolutions; and
  3.   Unanimous Resolutions.

Shareholders typically have one vote for each share they hold (depending on the conditions of the class of shares).

Ordinary Resolution

An ordinary resolution is one that a shareholder or relevant shareholders holding at least 50% of shares pass. Shareholder resolutions are typically decided by an ordinary resolution to enable a smooth decision-making process.

For example, a company with five shareholders each holding 20% of the shares in the company needs three shareholders to agree to pass an ordinary resolution. If one shareholder was holding 60% of the shares, then this shareholder on its own (depending of course on its class of share) could pass a matter.

Special Resolution

A special resolution requires shareholders with at least 75% of the shares in a company to agree. Shareholders can negotiate the percentage which is usually set out in the shareholders agreement.

For example, if five shareholders each held 20% of the shares, to pass a special resolution (using 75% as the pass percentage), you would require four of the five to agree. If you have one shareholder holding 75% of the shares in a company, then that shareholder alone can pass a special shareholders resolution even if the shareholders holding the remaining 25% do not agree. Special shareholders resolutions are harder to pass than ordinary shareholders resolutions as, depending on the company’s share structuring, they can require more shareholders to be in agreement.

Unanimous Resolution

A unanimous shareholders resolution is a decision of all of the shareholders or members – that is, it requires 100% of the shareholders to agree. The use of a unanimous resolution is limited and less common. 

Key Takeaways

Although the board of directors are responsible for the day-to-day affairs and management of a company, there are some matters which directly affect the shareholders (including issuing new shares).

Where a company has more than one shareholder, it is strongly advised that the shareholders adopt a shareholders agreement which will govern the relationship between members including, among other things, what matters the directors or shareholders must decide. Ordinary resolutions are more common, however, in limited circumstances, shareholders may use a special resolution. Unanimous resolutions are even less common simply because they are difficult to pass.

If you have any questions or need assistance drafting a shareholders agreement, get in touch with our team of commercial lawyers on 1300 544 755.


New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
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

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Learn how venture debt can help take your startup to the next level. Register for our free webinar 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 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer