Company Resolutions: Everything your Company Needs to Know

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The Companies Act of Singapore formally appoints directors with broad control and certain powers that are essential for running the company, dealing with organizational undertakings, and managing its overall business operations. The same goes for shareholders or members of the company as they also play a vital role in matters that can or may affect the company.  This is where company resolutions come to play.

What is a Company Resolution?

A ‘resolution’ is either an expression of intention, suggestion, or opinion that is presented, resolved, and decided upon by the company’s governing body.

Therefore, a company resolution refers to any formal decision, agreement, and executed mandate by either company directors and/or company shareholders during scheduled company meetings.

Who makes Company Resolutions?

There are two groups of people that can make company resolutions: the board of directors and the shareholders or members of the company.

The formal agreement or decision among shareholders or members of the company constitutes a shareholder resolution. If it involves the board of directors, it is called a board resolution.

Types of Company Resolutions

The Companies Act provides clear guidelines governing the nature of company resolutions. Its classification depends on the resolution type (ordinary or special) and the deciding body (the board of directors or shareholders /members).

  1. Board Resolutions – Board resolutions are essential for the efficient management of all business operations of the company. These are carried out by the company directors during a board meeting.Board resolutions are largely governed by the company’s M&AA (Memorandum and Article of Association). Therefore, exact details that dictate what board resolutions should be passed vary across companies.However, there are specifications within the Companies Act which require certain board resolutions to be common among different organisations, namely:
    • Appointment of company officers
    • Appointment of an audit committee
    • Opening a bank account for the company
    • Authorisation of company employees to make bank transactions
    • Sale of company assets
    • Mortgage of company property
    • Issue of stock
    • Approval of acquisitions and mergers
    • Borrowing of money or making loans from financial institutions

    If any one of the company directors requests for a board meeting, it is common practice to provide a written notification at least 7 days prior to the event. The company secretary is charged with this task, detailing the exact place, date, and time of the meeting.

  2. Shareholder Resolutions – Under the Companies Act, there are two types of shareholder resolution: ordinary and special resolution. Propositions by shareholders or members of the company are usually acted upon through the passing of an ordinary resolution unless CA specifically dictates the need for a special resolution.
    • Ordinary Resolutions – Routine organisational matters or ordinary business undertakings require the passing of an ordinary resolution.Shareholders or members must get a written notification 14 days before the meeting. However, if there is an agreement among shareholders or members with at least 95% of voting rights, the meeting can proceed at an earlier schedule.The formal decision must obtain at least 50% of majority votes during the meeting to be considered as an approved ordinary resolution. In accordance with the Companies Act, it can include the following:
      • Appointment and remuneration of auditors
      • Agreement to consider a general meeting as the company’s annual general meeting (AGM)
      • Dividend declaration
      • Removal of a director before the expiration of his/her office term
      • Election of a new director in the event of retirement, death, or other similar situations
      • Appointment or re-appointment of a director who is above 70 years of age
    • Special Resolutions – According to the Companies Act, a special resolution is a formal decision that obtained at least 75% of majority votes cast at a meeting.Shareholders or members of a private company must get a written notification 14 days before the meeting while public companies must provide the same notice at least 21 days in advance.Similar to the rules for an ordinary resolution, the meeting can proceed at an earlier schedule provided it is agreed upon by shareholders or members with at least 95% of voting rights.All special resolutions must be documented and submitted to ACRA.Company matters that require the passing of a special resolution are as follows:
      • Change of company name
      • Alterations to any provisions or clauses in the company constitution
      • Reduction of the company’s share capital

How to pass Company Resolutions

Submission of proposals and the subsequent passing of company resolutions are done at formal general meetings of company shareholders and/or formal board meetings company directors.

However, the Articles of Association of the Company can also allow the passing of company resolutions even without the convening of actual meetings under certain conditions:

  • Voting by the company directors and/or shareholders on a resolution through postal ballots
  • Written resolution containing the signatures of company directors and/or shareholders declaring the resolution approved
  • In the case of a single shareholder, a company resolution becomes effective by way of a recorded and signed document

Getting Help from Corporate Services Singapore

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You can be confident with the professional expertise of Corporate Services Singapore to keep you on top of your business. For all your company incorporation needs, secretarial and accounting functions, and even assistance regarding regulatory compliance, contact us today.

Posted in Company Incorporation.