Members’ meetings and resolutions

A company is required by the Companies Act 2006 to obtain the approval of its members by special or ordinary resolution in order to carry out certain changes, eg, to change its articles of association or to alter its status by re-registering as a public or private company.

The members of a private company can pass resolutions at general meetings (including annual general meetings) of the company or by way of written resolution.

The members of a public company can pass resolutions at general meetings (including annual general meetings) of the company only.

Annual general meetings

All public companies must hold an annual general meeting each year within the period of six months beginning with the date following its accounting reference date.

Private companies are not required to hold an annual general meeting each year (although it may choose to do so and its articles of association may contain provisions requiring the company to hold an annual general meeting each year).

Other general meetings

Other general meetings of the shareholders can be called and held at any point, and any number of times, throughout the year in order for shareholders to pass resolutions to carry out certain changes or approve certain actions. Unlike the Companies Act 1985, the Companies Act 2006 no longer refers to ‘extraordinary’ general meetings, but the company’s articles of association may still use this terminology.

Notice of general meeting or annual general meeting

Private company

A private company can hold any general meeting (including an annual general meeting) by giving notice of at least 14 days to its members.

Public company

A public company (that is not a traded company) can hold a general meeting by giving 14 days’ notice and an annual general meeting by giving 21 days’ notice.

Articles of association

The company’s articles of association may require a longer period of notice than that specified in the statute.

Short notice

It is possible to call a general meeting of a private company or a non-traded public company on shorter notice than that otherwise required if such shorter notice is agreed by the members:

• a private company can call a general meeting or an annual general meeting on short notice if a majority in number of members having, and together holding not less than 90% in nominal value of the shares giving, a right to attend and vote at the meeting (or such higher percentage not exceeding 95% as may be specified in the company’s articles) agree

• a public company (but not a traded public company) can call a general meeting on short notice if a majority in number of members having, and together holding not less than 95% in nominal value of the shares giving, a right to attend and vote at the meeting agree, and

• a public company (but not a traded public company) may only call an annual general meeting on short notice with the unanimous consent of all of its members entitled to attend and vote at the annual general meeting

Special notice

Special notice of a general meeting (including an annual general meeting) is required in relation to a proposed resolution to:

• remove a director by ordinary resolution or to appoint somebody in place of a director so removed at the same meeting

• remove an auditor from office, or

• appoint auditors where there has been a failure to re-appoint the existing auditors

Where special notice is required for a resolution, the resolution will not be effective unless notice of the intention to move it has been given to the company at least 28 clear days before the meeting at which it is moved.

Resolutions

An ordinary resolution of the members of a company is passed by a simple majority of over 50%.

A special resolution of the members of a company is passed by a majority of not less than 75%.

The phrase ‘extraordinary resolution’ is not used in the Companies Act 2006, which only refers to ‘ordinary’ and ‘special’ resolutions. The label ‘extraordinary’ should only be used if required by a company’s articles of association or by contract (such as a shareholders’ agreement).

A company is required to include the full text of each special resolution in the notice of general meeting and must specify the intention to propose the resolution as a special resolution.

Written resolutions

The Companies Act 2006 allows a private company to pass resolutions in writing rather than convening a general meeting. Public companies cannot pass written resolutions.

Written resolutions need to be drafted and circulated in accordance with the prescribed statutory procedure and must be accompanied by a statement informing the member:

• how to signify agreement to the proposed resolutions, and

• of the date by which the resolution must be passed if it is not to lapse

A written resolution is passed when the required majority of eligible members have signified their agreement to it.

There are certain limitations on the use of written resolutions. Written resolutions may not be used by a private company to:

• remove a director before the expiration of his term of office, or

• remove an auditor before the expiration of its term of office

Both of these decisions require actual meetings of the members to be held and trigger special notice provisions.