Companies Act 2006 - unanimity no longer required for written resolutions

Procuring a written resolution allows private companies to avoid the formalities of holding general meetings.  However, the requirement in the 1985 Act of unanimous consent for the passing of a written resolution and confusion as to the appropriate procedures for the circulation of, and the passing of, written resolutions has prevented some private companies from using written resolutions in place of general meetings.

1st August 2007

Procuring a written resolution allows private companies to avoid the formalities of holding general meetings.  However, the requirement in the 1985 Act of unanimous consent for the passing of a written resolution and confusion as to the appropriate procedures for the circulation of, and the passing of, written resolutions has prevented some private companies from using written resolutions in place of general meetings.

The new provisions on written resolutions in the 2006 Act, effective on 1 October 2007, will make it easier for private companies to use written resolutions by removing the requirement of unanimous consent and introducing greater detail as to procedures for circulation and passing of written resolutions.

Under the new provisions on written resolutions, the main substantive changes are:

(a) Private companies will be able to pass written ordinary resolutions by a simple majority of those eligible to vote and written special resolutions with a 75% majority of those eligible to vote.
(b) Procedural details as to the circulation of, and timing for the passing of, written resolutions have been included in much greater detail than in the 1985 Act.

As under the 1985 Act, it will still be the case that only private companies may pass written resolutions under the Act.

The removal of the requirement of unanimous consent should mean that written resolutions will be more accessible to a wider group of private companies.  Whereas, in the past it has only been single member companies or companies with a few accessible shareholders that have been able to make use of the procedures.

Further, because written resolutions will effectively be placed on a similar footing to the passing of ordinary and special resolutions in a general meeting, in terms of the percentage vote in favour of the resolution that is required, it is expected that written resolutions (not requiring the convening of a general meeting) should ease further the administrative burden on private companies.

The introduction of greater procedural detail on written resolutions will mean:

§ written resolutions may be communicated in hard copy, electronically or via a company's website – but only if the members have agreed that the latter communications are permissible;
§ written resolutions do not have to be signed by the shareholder – it will be sufficient to send the company authenticated documents identifying the resolution and indicating agreement and the lapse date; and
§ written resolutions will lapse if not passed before the end of the period specified in the articles of association or, if the articles do not specify a period, 28 days from the date of circulation of the written resolution to shareholders.

This means there should be more clarity under the 2006 Act as to the procedures for the circulation of, and the passing of, written resolutions resulting in less confusion amongst members as to how and when they should indicate their agreement to a written resolution. 

Further, because the new provisions provide that written resolutions will lapse if not passed within a certain time frame, the circulation for signature of a written resolution for an unlimited period of time, as is currently the case, should be avoided.