Rapid Formations Blog

During the life of your company, you may have to hold general meetings and board meetings when important decisions need to be made by members and directors. At such times, certain rules and procedures must be followed to ensure the execution of these formal meetings complies with company law.

Any resolutions (decisions) that are taken during the course of a general or board meeting must be recorded accurately. In some circumstances, directors also have to report certain matters to Companies House.

If you are the sole director and shareholder of your company, you are still required to hold ‘meetings’ in some situations. Yes, meetings with just yourself. It seems bizarre but it is simply a matter of formality to satisfy corporate compliance regulations.

What is a general meeting in a limited company?

Any formal meeting of a limited company’s shareholders is called a general meeting. The conduct of these meetings is governed by the Companies Act 2006, the articles of association, and any shareholders’ agreement a that are in place. General meetings are usually called by directors to allow shareholders to discuss (among others) the following types of matters:

• Appointment and removal of a director.
• Changing directors’ powers.
• Altering the articles of association.
• Altering the shareholders’ agreement.
• Company finances.
• Changing the name of the company.
• Changing the structure of the company.
• Altering the objectives of the business.
• Issuing more company shares.
• Approving share transfers.
• Creating new share classes.
• Dissolving the company.
• Legal claims and proceedings.

Providing notice of a general meeting

If a general meeting is called, a notice period of at least 14 days is required. This notice must be provided to every shareholder and it should contain the following information:

• Date, time and location of the meeting.
• Type of general meeting.
• Nature of the meeting.
• Statement declaring that every shareholder has the right to appoint a proxy.
• Date the notice is issued.
• Name of the person calling the meeting.

In some instances, the company’s Members may give their consent to a notice shorter than the statutory minimum. Any formal decisions made by shareholders at a general meeting require ‘passing a resolution’. These decisions are legally binding. Copies of resolutions must be filed with Companies House within 15 days. The company should also keep copies at its registered office or SAIL address.

Minutes must be taken at all general meetings to officially record the proceedings, the names of all those present and any decisions taken.

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What is a limited company board meeting?

A board meeting is an official meeting of limited company directors. These individuals are appointed to manage a limited company on behalf of its shareholders or guarantors. Board meetings are held when directors need to collectively make decisions, present proposals, raise concerns, review the financial position of the business and discuss strategies.

First board meeting of directors

The purpose of this meeting is to provide an opportunity for directors to discuss the formalities of the new business, such as:

• Consult the articles of association.
• Determine the rights, duties and responsibilities of each director.
• Confirm the objectives, vision and values of the company.
• Allot shares.
• Issue share certificates.
• Appoint a strong leader as the chairperson of the board.
• Appoint a company secretary.
• Delegate duties and responsibilities to the company secretary.
• Confirming the company’s accounting reference date.
• Confirming statutory filing deadlines for annual accounts, annual returns and tax returns.
• Setting up a business bank account.
• Record-keeping and accounting requirements.
• Appointing an accountant and auditor.
• Discuss the hiring of staff.

Directors are legally required to document the proceedings of board meetings by taking minutes (even if there is just one director).

Taking minutes of meetings

It is extremely beneficial to keep an accurate record of everything that occurs in board meetings and general meetings in case any disagreements should arise at a later date. Minutes serve as evidence of the proceedings and they should contain details such as:

• Company name and registered office address.
• Time, date and location of meeting.
• Names of all persons in attendance.
• Apologies for absences.
• Proposals put forth for consideration.
• Proposed resolutions.
• Decisions that were taken – resolutions that were passed.
• Names of those who supported or opposed any proposed resolutions.
• Queries or objections that were raised.
• Any other matters raised or discussed during the course of the meeting.
• Signature of director or company secretary.

Limited companies must maintain copies of all minutes at their registered office or SAIL address for a minimum period of ten years.

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What are resolutions?

A resolution is a legally binding decision made by limited company directors or shareholders. If a majority vote is achieved in favour of the decision, a resolution is ‘passed’. Shareholders can pass ordinary resolutions or special resolutions at general meetings, or they can pass written resolutions. All types of collective decisions of directors are simply referred to as ‘resolutions’. These decisions can be made at board meetings or in writing.

Types of resolutions

There are 3 types of resolutions available to limited company shareholders:

• Ordinary resolutions – Passed by a simple majority of shareholders’ votes. Used for all matters, unless the Companies Act, the articles of association, and/or a shareholders’ agreement stipulates the need for a special resolution. The majority of ordinary resolutions must be filed with Companies House.
• Special resolutions – Passed by a 75% majority of shareholders’ votes at a general meeting. Used for extraordinary matters that cannot be passed by an ordinary resolution.
• Written resolutions – Used when a general meeting is not required to pass an ordinary resolution or special resolution. Any written ordinary resolution must be passed by a simple majority of shareholders’ votes; written special resolutions require a 75% majority vote. Shareholders must sign a written resolution to cast their votes.

What decisions require an ordinary resolution?

An ordinary resolution is passed if a simple majority (above 50%) of the votes cast are in favour of the resolution. This type of resolution can be used by shareholders and directors for all day-to-day matters, such as:

• Appointing and removing directors.
• Appointing and removing secretaries.
• Matters pertaining to directors’ employment contracts.
• Amending directors’ powers.
• Approving dividend payments.
• Authorising directors’ loans.
• Authorising the transfer of shares.

The types of decisions that company directors can make will depend on the powers they are granted by the shareholders. Their rights and powers will be outlined in the articles of association and shareholders’ agreement.

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What is a special resolution?

In the context of limited companies, a special resolution is a motion or proposal that requires the approval of at least 75% of shareholder votes. This kind of resolution is reserved for important and rare decisions, such as:

• Changing a company name.
• Reducing share capital.
• Allotting more shares.
• Issuing different share classes.
• Altering the articles of association.
• Removing pre-emption rights.
• Re-registering a company.
• Changing a private company to a public company, or vice versa.
• Winding up a company by members’ voluntary liquidation.

The Companies Act 2006 specifies the types of decisions requiring a special resolution. Where no type of resolution is specified, shareholders may pass an ordinary resolution with a simple majority of over 50% of the votes.

How to pass a special resolution

In order to pass a special resolution, 14 days’ notice must be given to all members about the proposed resolution and its intention, unless the Articles states otherwise. If a general meeting is held, a vote will be taken by a show of hands or using a poll. Alternatively, these decisions can be passed by written resolution. If 75% of the shareholders agree to pass a proposed resolution, the decision is legally binding in accordance with the Companies Act 2006.

Special resolutions must be delivered to Companies House by post within 15 days of being passed. A copy must also be given to all shareholders and the company auditor. Furthermore, a company must keep a copy of all resolutions at its registered office address or SAIL address for a minimum period of 10 years.