What are the different types of Company resolutions

Resolutions are the formal means by which decisions are made at a meeting of company members.

There are two types of resolutions ordinary and special resolutions.

Ordinary resolutions are the resolutions that require only a simple majority to pass i.e  more than 50% of the members present at the meeting, either in person, or by proxies, if allowed by the constitution. Ordinary Resolutions have not been specifically defined in the Corporations Act.

Some of the scenarios in which an ordinary resolution can suffice are:

·         Acceptance of reports at the annual general meeting

·         Commercial and Strategic decisions

·         Election and re election of directors

·         Appointment of an auditor

·         Increase or reduction in the number of directors

·         Passing a board limit resolution( applicable for public companies)

Special Resolutions

For passing a special resolution a notice of the meeting of members must be sent out to the members stating the special resolution and the intention to propose a special resolution. The notice as required should also provide the time date and place of the meeting and the general nature of the meeting's business and the information about proxy votes. Notice of the meeting of a company must be given 21 days before the meeting and for a listed company at least 28 days before the meeting. Where members with at least 95% of the votes that may be cast at the meeting agree beforehand, shorter notice can be given. Where the purpose of the meeting is to remove or appoint a director shorter notice cannot be given. Shorter notice provision is also not applicable for registered schemes.

To pass a special resolution at least 75% of the votes cast by the members who are entitled to vote on the special resolution must be in favour of the resolution.

A special resolution can also be passed sometimes without holding a meeting. A Proprietary company with more than one member can pass a circulating resolution by circulating a document which members sign to affirm that they are in favour of the resolution. When there is a joint ownership of shares each joint member should sign. The resolution is passed when the last member signs the document. However all the members entitled to vote must agree for a circulating resolution to be signed i.e. 100% of the members entitled to vote should agree. A circulating resolution cannot be applied to remove an auditor.

In case of a proprietary company with only one director who is also the member a resolution can be passed by simply signing a document setting out the resolution.

ASIC can be advised of the passing of a special resolution by lodging Form 205 Notification of Resolution or Form 2205 Notification of resolutions regarding shares