Overview
A Written Resolution refers to an official decision made by the shareholders of a company that is not passed at a traditional, formally convened meeting. Instead, this resolution is documented in written form and signed by a requisite majority of the company members. This method streamlines decision-making, circumventing the need for physical gatherings.
Legal Requirements and Process
Under the Companies Act 2006, the adoption of a written resolution is permissible for private companies if it garners the signatures of the correct proportion of members:
- Ordinary resolutions require a simple majority.
- Special resolutions necessitate the support of at least 75% of members.
Notably, the 2006 Act modernized the process by no longer mandating unanimous consent, which was a requirement under previous legislations. Each company’s ability to use written resolutions might also hinge on stipulations within their Articles of Association, which could provide additional powers or outline specific conditions.
Strategic Implications
Opting for written resolutions offers several strategic advantages:
- Efficiency: Reduces the logistical challenge of assembling all members in one location.
- Flexibility: Allows decisions to be made swiftly in response to pressing business needs.
- Documentation: Ensures a clear, formal record of decisions, aiding in regulatory compliance and governance.
Considerations
While convenient, the use of written resolutions demands meticulous attention to the legal thresholds for approval and proper documentation to avoid disputes. Companies must ensure that all members are afforded adequate time and information to make informed decisions.
Related Terms
- Ordinary Resolution: A resolution passed by a simple majority (over 50%) of the company’s members voting on the matter.
- Special Resolution: A significant resolution requiring at least 75% approval, usually reserved for more critical decisions, such as altering the articles of association.
- Articles of Association: A document that outlines the regulations for a company’s operations and defines the responsibilities of the directors, the kind of business to be undertaken, and the means by which the shareholders exert control over the board of directors.
Further Reading
- “Company Law” by Brenda Hannigan - Offers a comprehensive overview of the legal frameworks surrounding company operations, including the use of written resolutions.
- “The Annotated Guide to the Companies Act 2006” by Jordan Publishing - A detailed analysis of the statutes with practical insights into their implementation, including the facet of written resolutions.
Conclusion
Written resolutions, a facet of modern corporate governance under the UK Companies Act 2006, are pivotal in empowering companies with the flexibility to make decisive moves promptly. They epitomize how traditional bureaucratic procedures are evolving in step with the needs of contemporary business environments. When wielded judiciously, they can significantly enhance operational efficiency and shareholder engagement.
