There is a distinction in Company Law between Resolutions made in a company on behalf of the company’s Members/Shareholders and the Company’s Directors.
Members of the company may own and control the company through their ownership of shares or may be members of a company without a share capital such as a Company Limited by Guarantee, and therefore all company decisions are made with their best interests of the Company.
Directors manage the business and its operations and make decisions for the company on behalf of the company’s members. Resolutions must be made in accordance with a company's provisions and relevant company laws as contained within the Companies Act 2014.
Members Resolutions
Members Resolutions are formal and legally binding decisions made by the company’s members and are either referred to as ‘Ordinary’ or ‘Special’ resolutions.
How are members resolutions passed?
Under Section 191(1) Companies Act 2014 an Ordinary resolution requires 50% + 1 members entitled to vote approval, whereas under Section 191(1)(3) Companies Act 2014 details a Special resolution as requiring at least 75% approval from those entitled to vote.
A resolution can be passed at an Annual General Meeting (AGM) or at an Extraordinary General Meeting (EGM)or in writing. It is important that you have reviewed the constitution and any shareholder's agreements for specific clauses relating to notices, voting, resolutions etc before passing any resolutions.
If passing a resolution at a General Meeting the relevant notice periods must be delivered for such.
- AGMs require 21 clear days’ notice.
- EGMs require 21 clear days’ notice if passing a Special Resolution – alternatively, 7 days’ notice is sufficient for an ordinary resolution.
Unless consent to short notice is obtained from all its members and auditor where applicable in which case a shorter period may be given as dictated by Section 181 of CA 2014.
At the meeting, assuming there is nothing to alter such, voting can be done by a show of hands or by a poll. A poll can be demanded by 3 shareholders present in person or by proxy, holding over 10% voting shares, or by the company Chairperson.
Please note there may be extended notice periods for certain ordinary resolutions e.g. resolution at a general meeting filing a casual vacancy in the office of an auditor requires 28 days.
An alternative to the General Meeting is to pass a written resolution. A written resolution can be passed by unanimous written resolution, signed by all the members of a company that are for the time being entitled to attend and vote.A unanimous resolution becomes effective becomes effective on the date of the last passing signature.
Alternatively, it can be passed by a majority-written ordinary resolution which takes effect seven days after the last signature or a majority-written special resolution takes effect 21 days after the final signature unless members waive that right under section 194(10) or the resolution specifies a certain date.
Majority Written Resolution cannot be used:
- To remove an auditor
- To remove a director
- In PLC/CLG/Unlimited companies
A written resolution may also be countersigned.
A single-member company is simply a company that has a sole member. All powers exercisable by a company in general meetings are exercisable by the sole member without the need to hold a general meeting. This does not apply however to the power to remove an auditor.
Are member’s resolutions required to be filed with the CRO?
All Special Resolutions must be filed with the CRO CORE system using a Form G1, which must be signed by a Director of the Company once passed by the company members and it must be submitted within 15 days.
Relevant Ordinary Resolutions must be filed with the CRO CORE system using a Form G2, which must be signed by a Director of the Company once passed by the company members.
Examples of some of the relevant ordinary resolutions to be filed with the CRO include:
- Amending the Authorised Share Capital
- Conferring authority to allot shares
- Varying rights of a share class
- Converting shares to a different class
- Winding up a voluntarily
- Increasing the number of Directors
Please note this is not an exhaustive list and a special resolution may also be required to be filed.
Failure to file a resolution with the CRO is deemed as a Category 4 offence and the Company and any officer may be fined an amount up to €5,000.00.
Directors Resolutions
Director's Resolutions can be passed at a Director's meeting. They are often utilised for the likes of signing financial statements, entering contracts, use of company seal etc.
The constitution or a shareholders agreement may outline the procedure for such if not if the quorum of directors required is present, or in writing if all directors agree to sign the resolution it is so passed. Each Director will represent one vote.
Items to remember when considering Director's resolution:
- There may be specific clauses in the company’s constitution relating to the quorum of directors, or which director may pass certain resolutions.
- Where a director has a conflict of interest in the proposed resolution, the director may abstain from voting.
- The Chairperson gets a casting vote in the event of equal votes.
- If there is documentation to be reviewed for the relevant resolution, sufficient time to review must be allowed.
- Minutes should be drafted documenting the passing of the relevant resolution, and annexing any relevant documents.
The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.
