Q: I am a director and shareholder of quite a large family business. Some of the shareholders are not involved in the business and when we need to make a decision it is often difficult to organise a mutually acceptable date for a shareholders’ meeting. Would it be legal if the shareholders were to vote in writing and we then passed a resolution in writing?
A: Provided you follow the procedure in the Companies Act 2006 it is possible for the shareholders of a private company to make decisions using a ‘written resolution’, unless the resolution is to remove a director or auditor from office. The reason for these exceptions is that, in accordance with the Companies Act, the said director or auditor must be given the right to state in person, at a meeting, why they object to the motion to remove them from office. There are also special rules concerning the length of notice required to be given of the meeting in such instances.
All shareholders have 28 days to confirm their agreement to the written resolution (unless the Articles of Association specify a different period of time). They can either confirm with a signed hard copy or by email if it is accompanied with a pre-agreed confirmation of identity. Written resolutions can also be sent to shareholders electronically.
One thing to be aware of is that the percentages required to pass resolutions in writing are percentages of the total voting rights, whereas for actual meetings they are percentages of the votes cast at the meeting. This means that unless a shareholder attends a meeting and votes, or alternatively submits a proxy vote, their vote will not be counted, which of course could change the outcome of the vote. Before making any amendments to your voting strategy it would be wise to seek legal advice
(Article published 20/03/2017)