Certain decisions that affect a company must be made by resolution. A resolution is a formal way to make and note company decisions.
Resolutions are usually made at meetings of company shareholders
Companies must follow rules to ensure a resolution is valid. There are different rules for different types of resolutions.
Company meetings
Companies must run meetings according to certain rules. All companies must follow the Corporations Act 2001. You must also follow either the replaceable rules or your company's constitution rules about meetings. Find out more:
A resolution is a formal way that a company makes and notes company decisions. Resolutions are usually voted on by shareholders in a meeting of company members. Some resolutions are 'directors resolutions', which are decisions made by directors. Resolutions can be passed without a meeting in certain situations.
The resolution process
To pass and be valid, a resolution must be:
the right kind of resolution for the situation
voted on at a meeting that follows the rules described above
put into the company’s records within one month of the vote
put into minutes signed by the chair of the meeting that held the vote, or the chair of the next meeting.
There are 2 main types of resolutions: ordinary and special.
Ordinary resolutions need only a simple majority to pass. This means that more than 50% of votes agree with the resolution.
Companies may use ordinary resolutions to do things like:
elect directors
appoint auditors
accept reports
make strategic or commercial decisions
change the number of directors.
You do not need to tell ASIC if you pass an ordinary resolution.
Solvency resolutions
Solvency resolutions are a type of ordinary resolution. They must be made once a year by company directors. A solvency resolution states whether or not, in the directors’ opinion, the company will be able to pay its debts when they are due. The solvency resolution is part of the company annual review.
Companies must use special resolutions for decisions including:
changing a company's name
winding up a company
changing the company's type, for example from a proprietary company to a public company.
Special resolutions passed at meetings must meet certain criteria to be valid. For example, there must be:
details about the special resolution and the intent to vote on it in the meeting notice
at least 75% of votes in favour.
It is also possible to pass a special resolution without holding a meeting. In this case, 100% of members entitled to vote must sign a document stating they're in favour.
You must notify ASIC after you pass a special resolution for certain decisions.
Next steps
Notify ASIC of a special resolution using this form:
