Company decision-making & resolutions (board, members, meetings, written resolutions)

BLP.04 — Company Decision-Making & Resolutions

Identify who must decide

• Under the private-company Model Articles (MA art. 3), the board manages the business and exercises the company's powers, subject to the articles. Members take decisions reserved to them by statute or the articles.
• Members may also direct the directors to take or refrain from specified action by special resolution under MA art. 4. This does not invalidate something the directors have already done.
• Disclosure, a board decision and members' approval are different steps. Long service contracts, substantial property transactions, directors' loans and loss-of-office payments have separate member-approval requirements and exceptions: see BLP.05.

Board decisions

• Under MA art. 7, the normal routes are a majority decision at a meeting or a unanimous decision under art. 8. Directors normally have one vote each. A show of hands is not prescribed as the board's voting method.
• If votes are equal, the chair has a casting vote, except where the chair is excluded from quorum or voting participation on that matter (MA art. 13). An excluded interested chair cannot break the tie.
• Under MA art. 11, directors can fix a meeting quorum of at least two; the default is two. Without a quorum, no proposal can be voted on except one to call another meeting. If the total number of directors is below the required quorum, they may only appoint further directors or call a general meeting to enable members to do so. Sole-director exception: a sole director can decide alone where the articles do not require more than one director (MA art. 7(2)). Read the actual articles before applying the quorum rule.
• Unanimous decisions (MA art. 8): all eligible directors must indicate to each other, by any means, a common view. Writing is permitted but not compulsory. Eligible directors are those who could vote on the matter at a meeting, and they must have been sufficient to form a quorum.
• Notice (MA art. 9): any director can call a meeting, or authorise the secretary to call it. Give each director notice stating the date, time and place and, if needed, how they will communicate from different places. Notice need not be written. A director can waive entitlement by notifying the company no later than seven days after the meeting. There is no statutory minimum notice period: reasonable notice is required on the circumstances; fourteen days was sufficient on the facts in Clarke v Lakha [2024] EWHC 51 (Ch), [213]. The Model Articles do not require an agenda. Failure to notify a director entitled to notice can make the meeting invalid (Mohamed v Abdelmamoud [2018] EWCA Civ 879, [30]).
• Directors must declare the nature and extent of direct or indirect interests to the other directors: s.177 concerns a proposed transaction or arrangement and requires declaration before the company enters it; s.182 concerns one already entered into and requires declaration as soon as reasonably practicable, except to the extent already declared under s.177. The awareness rules and other statutory exceptions apply (ss.177(5)–(6), 182(5)–(6)). Under the private-company model articles (MA art. 14), an interested director is not counted in the quorum and cannot vote on the decision unless art. 14(3) applies: the members disapply the rule by ordinary resolution, the interest cannot reasonably be regarded as likely to give rise to a conflict, or the conflict arises from a permitted cause listed in art. 14(4).
• A declaration under s.182 must be at a meeting, by written notice or by general notice; failure can be a criminal offence (s.183). Section 177 permits those methods but does not require them. Declaration alone does not authorise voting or satisfy a separate members' approval requirement.

Members' resolutions

• An ordinary resolution (OR) needs a simple majority; a special resolution (SR) needs at least 75% (ss.282–283). At a meeting, count the votes cast by those entitled to vote, not all the company's shares or members; abstentions are not votes against.
• If the Act requires a resolution without specifying the type, it normally means an OR, unless the articles demand a higher majority or unanimity (s.281(3)). Something that can be done by OR can also be done by SR (s.282(5)).
• Examples requiring an SR include amendment of articles and a resolution for voluntary winding up. A change of name can instead use another route allowed by the articles; pre-emption disapplication also has specific alternative routes. Do not assume the voting majority is the only requirement for the transaction.
• At a meeting an SR requires notice giving its text and the intention to propose it as special. If so advertised, it can only be passed as an SR. A written resolution must itself state that it is proposed as special (s.283(3), (6)).
• Removal of a director under s.168, or an auditor under s.510, uses an OR at a meeting, not a written resolution. Special notice is a separate notice requirement, not a special-resolution majority (ss.168, 288, 312, 511).

Calling and giving notice of a general meeting

• Directors can call a meeting (s.302). Members can requisition one at the s.303 threshold: 5% of paid-up capital carrying general-meeting votes, or the relevant voting rights for a company without share capital. Directors must call it within 21 days, to be held no more than 28 days after the convening notice. If they default, the requesting members, or any of them representing more than half of the requestors' total voting rights, may call it for a date not more than three months after the directors became subject to the requirement; the company must reimburse their reasonable expenses (ss.304–305; see BLP.06).
• An ordinary private company has no statutory duty to hold an AGM. Public companies must hold one within six months following their accounting reference date; a private company that is a traded company has a nine-month rule (s.336).
• For meetings governed by s.307, a private-company GM and a public-company non-AGM need at least 14 clear days' notice; a public-company AGM needs 21 clear days. Articles may require longer. Traded-company meetings have additional rules.
• Clear days exclude the day notice is given and the meeting day (s.360). Account for delivery before counting. Unless the articles provide otherwise for members, properly addressed, prepaid UK post is deemed received 48 hours after posting, and properly addressed electronic delivery 48 hours after sending, ignoring parts of non-working days (s.1147). Website delivery has its own rule. These delivery rules and the clear-day rule must be applied together.
• A notice gives the meeting's time, date and place and general nature of business, subject to the articles' permitted variation for non-traded companies (s.311). It must prominently state proxy rights (s.325) and include the text and status of any SR. AGM notices must identify the meeting as an AGM (s.337).
• Short notice: for a private company with share capital, a majority in number of members entitled to attend and vote must agree and together hold at least 90% in nominal value of the shares giving that right, or the articles' higher figure up to 95%. For a company without share capital, use voting rights for the percentage limb. A public-company non-AGM under s.307 uses 95%. A non-traded public company's AGM requires agreement of all members entitled to attend and vote (s.337(2)).

General meeting quorum, voting and polls

• Quorum (s.318): generally two qualifying persons, subject to the articles; one qualifying person suffices for a company limited by shares or guarantee with a single member. A qualifying person can be an individual member, a corporate representative or a proxy. Two people whose sole qualification is proxy appointment by the same member do not suffice, nor two whose sole qualification is representing the same corporation.
• Under MA art. 38, an inquorate GM may only appoint its chair; art. 41 requires adjournment if no quorum is present within half an hour. Check the further adjournment rules in the articles.
• Under MA art. 42, vote on a show of hands unless a poll is duly demanded. Subject to the articles, each member attending personally and each duly appointed proxy present has one vote. A proxy appointed by several members with instructions both for and against has one vote each way (ss.284–285).
• On a poll, the default for a company with share capital is one vote per share (or per £10 of stock), subject to the articles. Duly appointed proxies can exercise the member's voting rights, but multiple proxies cannot together exercise more votes than the member could (ss.284–285).
• A member may appoint a proxy to attend, speak and vote; a proxy may also demand or join in demanding a poll (ss.324, 329).
• Poll threshold: s.321 protects demands by five entitled members, members with at least 10% of the voting rights on the resolution, or members holding voting shares paid up to at least 10% of the total amount paid up on those shares, excluding treasury shares. It invalidates contrary articles rather than itself granting a free-standing poll right; the statutory protection excepts electing the chair or adjournment.
• MA art. 44 allows a poll demand by the chair, directors, two or more persons entitled to vote, or person(s) representing at least one-tenth of the total voting rights on the resolution. A demand may be made in advance of the GM or, at the meeting, before the show of hands on that resolution or immediately after its result is declared (art. 44(1)). The Act's 5% rights for requisitioning meetings or circulating resolutions/statements concern different matters: see BLP.06.

Written resolutions: private companies

• Only private companies use this statutory procedure (ss.281, 288). Eligible members are those entitled to vote on the circulation date (s.289). The majority is of all eligible voting rights, not only replies: more than 50% for an OR and at least 75% for an SR.
• A written resolution proposed by the directors must go to every eligible member, with instructions for signifying agreement and the deadline (s.291). Failure can be an offence even though a resolution that passes is not invalidated by that failure. Members with 5% of the relevant voting rights, or the lower threshold in the articles, may require circulation (s.292).
• A member signifies agreement when the company receives from the member (or someone acting on their behalf) an authenticated hard-copy or electronic document identifying the resolution and indicating agreement; sending it is not enough. Once signified, agreement cannot be revoked; the resolution passes when the required majority has agreed (s.296).
• It lapses after the period specified in the articles, or 28 days beginning with the circulation date if none is specified. Late agreement is ineffective (s.297).
• Distinguish the statutory procedure from informal unanimous assent under Re Duomatic: informed assent can substitute for a formal members' resolution where the matter is within their powers. This is not permission to approve an unlawful return of capital or disregard creditors' protections. Beneficial-owner consent can qualify where that owner takes the relevant decisions (Satyam Enterprises Ltd v Burton [2021] EWCA Civ 287, [41]–[44], [75]). Mere awareness is not necessarily assent.

Records and filing

• Keep minutes of board meetings and records of members' resolutions, GM minutes and sole-member decisions for at least ten years (ss.248, 355). MA art. 15 also requires a written record of directors' unanimous and majority decisions for ten years. A sole member deciding outside a written resolution must supply the company with details (s.357).
• Send special resolutions and other resolutions or agreements within s.29 to Companies House within 15 days (s.30). An articles amendment has the additional filing requirement in s.26; see BLP.03.

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