detailed structure on written resolution procedure

Planning procedure for written resolutions for shareholders
GENERAL:
Appropriate for smaller business + private companies
Public companies = cannot use this method – s281(2)
Private companies can use this method except when = a director is being dismissed (s168(1) & 288(2)) when a company
auditor is being dismissed (s510(2) & s228(2)).
Can be used for ordinary & special resolutions

The procedure for circulating a written resolution is under s288-300 CA. It does not require a GM to be held or for
shareholders to be present.

WHO CAN ISSUE THE WRITTEN RESOLUTION:
The company under (s291(1) will circulate the written resolution, but by default this is done by the directors under MA 3.
OR under s292 a shareholder can propose a written resolution [but a shareholder must provide a written statement regarding the
resolution– s292(1) & (3) – and additionally, the shareholder issuing the resolution must own at least 5% of the voting shares in the
company – s292(4) & (5) - (unless special articles stipulate a different %)

The written resolution needs to be sent out and should: S292(2) & (6) If the resolution is to do with a change to
 Be in hard copy or electronic – s291(3) and s293(2). the articles or to do with a contract – must
 Be effective if passed
send the draft articles / contract
 Be signed by the person making it
 State the proposed transaction, arrangement or resolution needing to be taken.
 Not be defamatory, vexatious or frivolous.
 Include a statement which states (s291):
o How the shareholder should signify their agreement to the resolution – signing name next to resolution s296,
and
o the date by which the resolution has to be passed if it is not to lapse
 Check articles to see if there is a time period for written resolutions – otherwise under s297 it will
lapse 28 days beginning with the circulation date (day resolution is circulated)
NOTE: If the requirements are not complied with – the resolution can still be valid – s291 / s293.
Who is / will issue the resolution – State who it is on the facts.
Was this validly done? NOTE: If a shareholder requested the WR, then the directors must circulate it within 21 days – s293.


NOTICE:
A written resolution will not require any notice to be issued.

WHO WILL RECEIVE THE WRITTEN RESOLUTION?
Company must circulate the written resolution to all ‘eligible members’ – s291(2) & s293(1)
 Any shareholders who are entitled to vote on the day the resolution is shared - s289. Anything on the facts regarding
this?
 Must also go to auditors – s502(1).
Who is entitled to it? – state the names.


HOW IS THE RESOLUTION VALIDLY PASSED -VOTING:
To pass a written resolution = shareholders will have to agree to the resolution by a certain deadline. Either this will be at the
end of the period stated in the company’s articles or after 28 days have expired beginning on the day of circulation – s297(1).
What is the time period / has it been passed?

Shareholders will show agreement to the resolution by returning to the company a signed document which identifies the
resolution and the shareholders agreement to it – s296(1). The resolution has passed as soon the resolution has been
returned and the requisite votes has been achieved s296(4).
Signing agreement after lapse = invalid. (s297(2)).
The written resolution is passed when the required majority of shareholders vote in favour of the resolution – s296(4).
o (If the resolution has required an ordinary resolution) passed when – there is a majority over 50%– s282(2).
o (If the resolution required a Special resolution) passed when – there is a majority of 75% or more of all
shareholders - s283(2).
o Under the written resolution procedure  one vote per share – s284(1)(a)– unless articles state otherwise
s284(4).
NOTE: If a shareholder does not vote this is regarded as a vote against.
Who will vote in favour?
Will it be passed / has it been passed? Does there now need to be another BM / reconvene the BM to enter into the contract