Corporate governance and compliance - Written resolutions

Learning Outcomes

This article explains written resolutions in private companies under the Companies Act 2006, including:

• The statutory framework, scope, and purpose of the written resolution procedure as an alternative to general meetings
• Which decisions may be taken by written resolution, which are statutorily excluded, and how articles can supplement (but not disapply) the regime
• How directors and qualifying members validly propose a written resolution, including member requisition rights, cost consequences, and the 21‑day circulation duty
• Permitted methods of circulation and communication, and the role of the circulation date in fixing eligibility and calculating the statutory lapse period
• Voting mechanics based on one‑vote‑per‑share, how to calculate ordinary and special majorities across all eligible voting rights, and the immediate‑effect rule once thresholds are met
• The steps by which members signify agreement, the irrevocability of consent, and the impact of voting restrictions in conflict‑of‑interest situations
• Documentation that must accompany particular written resolutions (such as director loans, long‑term service contracts, and payments for loss of office) and the consequences of omission
• Record‑keeping obligations, required Companies House filings, and the need to update statutory registers when resolutions are passed in writing
• How to apply the written resolution rules to SQE1‑style problem questions, identify common traps, and distinguish valid from invalid shareholder approvals.

SQE1 Syllabus

For SQE1, you are required to understand written resolutions as a method of decision-making in private companies, with a focus on the following syllabus points:

• The statutory requirements for written resolutions under the Companies Act 2006
• The types of resolutions that may be passed in writing and those that are excluded
• The procedural steps for proposing, circulating, and passing written resolutions
• The voting thresholds and time limits for agreement
• The legal effect and record-keeping obligations for written resolutions
• The practical advantages and limitations of using written resolutions in corporate governance
• How shareholder requests to circulate written resolutions operate, including cost and timing
• The interaction between written resolutions and transactions requiring shareholder approval (e.g. loans to directors, substantial property transactions, long-term service contracts)

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which companies may use the written resolution procedure under the Companies Act 2006?
2. What is the minimum percentage of voting rights required for members to propose a written resolution?
3. Name two types of decisions that cannot be made by written resolution.
4. How long do members have to signify agreement to a written resolution, unless the articles specify otherwise?
5. What happens if a written resolution does not receive the required majority within the specified period?

Introduction

Written resolutions are a statutory mechanism for private companies to make decisions without holding a general meeting. This procedure allows eligible members to signify their agreement to a proposed resolution in writing, offering a flexible and efficient alternative to in-person meetings. However, strict statutory requirements must be followed to ensure validity, and certain key decisions remain excluded from this process. For most shareholder decisions, the written resolution route is available and cannot be disapplied by the articles, but the voting mechanics differ from those at a general meeting and deadlines are strict.

Written Resolutions: Statutory Framework

The written resolution procedure is governed by sections 288–300 of the Companies Act 2006. It is available only to private companies. Public companies must hold general meetings for shareholder decisions. The procedure is statutory and cannot be excluded by the company’s articles.

Key Term: written resolution
A formal decision of the members of a private company, passed in writing rather than at a general meeting, in accordance with statutory requirements.

Written resolutions are simply ordinary or special resolutions, passed other than at a meeting. The statutory majorities are the same as if the resolution were voted on at a general meeting, but the basis of counting differs: for written resolutions, voting is calculated on a one‑vote‑per‑share basis across all eligible members.

Key Term: circulation date
The date on which copies of the written resolution are sent to eligible members. The statutory lapse period runs from and includes this date.

Who Can Propose a Written Resolution?

A written resolution may be proposed by:

• The board of directors
• Members holding at least 5% of the total voting rights (or a lower percentage if specified in the articles)

Where members require circulation, the request must identify the resolution, be authenticated, and may be in hard copy or electronic form. The requisitioning members can also require a statement (up to 1,000 words) to be circulated with the resolution. The company must circulate the requested written resolution and any statement to all eligible members within 21 days of the request. The requesting members are liable for the company’s reasonable expenses of circulation. The company is not obliged to circulate a member‑proposed written resolution if it would be ineffective, defamatory, frivolous or vexatious; a court application can be made to prevent improper circulation.

Key Term: eligible member
A person entitled to vote on the written resolution as at the circulation date, usually a registered shareholder with voting rights recorded on the register as at that date.

The concept of eligibility is fixed at the circulation date. A person who becomes a member after the circulation date is not an eligible member for that written resolution.

Circulation and Communication

Once proposed, the company must circulate the written resolution to every eligible member. Circulation may be by:

• Hard copy (post or hand delivery)
• Electronic means (such as email), if agreed by the member
• Making the resolution available on a website, if permitted and the member has consented to this method

The company must also provide a statement explaining how to signify agreement and the deadline (lapse date) for doing so. The text of the resolution must be clear; for special resolutions, the full wording is essential. If members have requested circulation, the company must include any permitted explanatory statement and comply with the 21‑day circulation deadline.

Certain resolutions require specific documents to be made available to members before they vote. Where a resolution would normally require a memorandum or other material to be available at a general meeting (for example, a memorandum detailing the terms of a director’s loan, particulars of a long‑term service contract, or details of a payment for loss of office), equivalent material must be sent or submitted with the written resolution at or before the time of circulation. Failure to accompany the written resolution with required documentation risks invalidity.

Voting Thresholds and Time Limits

There are two types of written resolution:

• Ordinary resolution: Passed by a simple majority (more than 50%) of total voting rights of eligible members.
• Special resolution: Passed by not less than 75% of total voting rights of eligible members.

Voting is assessed across all eligible members on a one‑vote‑per‑share basis. Non‑responses count as not agreeing, and the threshold is measured against the total eligible voting rights, not just those who reply.

Key Term: lapse date
The deadline by which eligible members must signify agreement to a written resolution. The default is the 28th day from and including the circulation date, unless the articles specify otherwise.

Members have 28 days from the circulation date to signify agreement, unless the articles specify a different period. The 28 days are calculated inclusively; the circulation date counts as day one, and the resolution lapses at midnight on day 28. The articles can set a shorter or longer period. If the required majority is not achieved within this period, the resolution lapses and is not passed.

The resolution takes effect immediately when the required majority is reached. There is no need to wait until the lapse date if the threshold is reached earlier.

How to Agree to a Written Resolution

Members signify agreement by:

• Signing and returning the resolution (in hard copy or electronic form, if permitted)
• Following any alternative method set out in the articles, provided it evidences the member’s agreement

Agreement, once given, is irrevocable. A member cannot withdraw or change their vote after signifying agreement. If a poll‑based restriction applies to a particular resolution (for example, ratification of a director’s breach of duty under section 239, where votes of the interested director and certain connected persons are excluded), the company should ensure that only eligible, non‑excluded votes are counted toward the threshold on the written resolution.

Excluded Decisions

Certain decisions cannot be made by written resolution. These include:

• Removal of a director before the end of their term (section 168)
• Removal of an auditor before the end of their term (section 510)

These exclusions ensure that members have the opportunity for discussion and debate at a general meeting before such significant decisions are made. They also engage special notice requirements and rights of representation (e.g. the director or auditor’s right to make written representations and be heard), which cannot be accommodated by the written resolution procedure.

Key Term: excluded resolution
A decision that cannot be passed by written resolution and must be made at a general meeting, such as removal of a director or auditor.

Procedure for Written Resolutions

The process for passing a written resolution involves several key steps:

• Proposal: The directors or qualifying members propose the resolution.
• Circulation: The company circulates the resolution and explanatory statement to all eligible members, using a permitted method, and includes instructions on signifying agreement and the lapse date. If requested by qualifying members, any accompanying statement must be included and circulation must occur within 21 days of the request.
• Agreement: Members signify agreement within the lapse period (28 days by default, counted from and including the circulation date), in hard copy or electronic form.
• Passing: The resolution is passed and takes effect when the required majority of eligible voting rights is reached; non‑responses are treated as not agreeing.
• Record‑keeping and filings: The company must keep a copy of the resolution and evidence of agreements for at least 10 years at its registered office or SAIL. A signed copy of every special resolution and certain ordinary resolutions (e.g. authorising directors to allot shares) must be filed at Companies House within 15 days. Where the resolution alters the articles, the amended articles must also be filed. Statutory registers and books should be updated, and any required forms filed.

Worked Example 1.1

A private company with 10 shareholders wishes to approve a new share allotment. The directors propose an ordinary written resolution and circulate it to all shareholders by email. Within 10 days, shareholders holding 7,000 out of 10,000 voting shares return signed agreements. Is the resolution passed?

Answer:
Yes. The ordinary written resolution is passed as soon as more than 50% of the total voting rights (here, 70%) have agreed in writing. The directors may proceed with the share allotment.

Worked Example 1.2

A group of members holding 6% of the voting rights wish to propose a special written resolution to amend the articles. The articles are silent on the required percentage for member proposals. Can they require the company to circulate the resolution?

Answer:
Yes. Members holding at least 5% of the voting rights may require the company to circulate a written resolution, unless the articles specify a lower threshold. The company must circulate the resolution (and any permitted statement) to all eligible members within 21 days.

Worked Example 1.3

A written resolution is circulated on 1 March by post to all eligible members. The articles do not specify a different period. One shareholder asks whether the deadline is extended to account for postal delivery times. What is the lapse date?

Answer:
The default lapse date is the 28th day from and including the circulation date, regardless of method of circulation. Counting 1 March as day one, the resolution lapses at midnight on 28 March. Deemed delivery rules for notices do not extend the statutory lapse period for written resolutions.

Worked Example 1.4

Four shareholders each hold 25% of the voting shares. A special written resolution to change the company’s name is circulated. Two shareholders signify agreement on day 5; the others do not respond. Is the resolution passed?

Answer:
No. For a special written resolution, at least 75% of the total voting rights of eligible members must agree. Here, only 50% have agreed. The resolution will lapse unless a third shareholder also signifies agreement before the lapse date.

Worked Example 1.5

The company proposes to approve a loan to a director by written resolution. No memorandum setting out the nature of the transaction, amount, purpose and any associated liability is sent with the resolution. The resolution receives the required majority. Is the approval valid?

Answer:
No. Where shareholder approval is required for a loan to a director, a memorandum with specified details must be made available to members. For a written resolution, this must be circulated with the resolution. Failure to provide the memorandum risks invalidating the approval.

Advantages and Limitations

Advantages

• Efficiency: Decisions can be made quickly without convening a meeting.
• Cost-saving: Avoids expenses associated with meetings.
• Accessibility: Enables participation by members unable to attend meetings in person.
• Certainty of timing: A fixed lapse date provides clear decision windows; the resolution takes effect immediately when the threshold is reached.

Limitations

• No discussion: Members cannot debate or amend the resolution during the process; the text must be drafted with precision.
• Excluded decisions: Certain important matters (e.g. removal of directors or auditors) require a meeting with special notice and rights of representation.
• Non-response: Members who do not respond are treated as not agreeing, which may make it harder to reach the required majority when there are passive shareholders.
• Articles may restrict: The articles may impose additional requirements, such as shorter or longer lapse periods or higher majorities than the statutory default (for ordinary resolutions).
• Documentation burden: Some approvals (e.g. loans to directors, long-term service contracts, payments for loss of office) require specific information to accompany the written resolution.

In practice, written resolutions are particularly useful for routine approvals and time-sensitive authorisations that do not require discussion, such as authority to allot shares or approval of substantial property transactions. They are less suitable where controversy or member engagement is expected.

Exam Warning

Written resolutions cannot be used to remove a director or auditor. Attempting to do so will result in an invalid decision. Always check the statutory exclusions before advising on the use of written resolutions. Also remember that voting on written resolutions is one vote per share across all eligible members, and the resolution passes as soon as the required threshold is reached within the lapse period.

Key Point Checklist

This article has covered the following key knowledge points:

• Written resolutions are available only to private companies under the Companies Act 2006 and cannot be excluded by the articles.
• Both directors and members holding at least 5% of voting rights may propose a written resolution; the articles may reduce (but not increase) the 5% threshold.
• If members requisition circulation, the company must circulate to all eligible members within 21 days, and the requesting members must pay the expenses; a court can prevent improper circulation.
• The company must circulate the resolution to all eligible members, with instructions on how to signify agreement and the lapse date; website or electronic circulation is permitted if agreed.
• Voting on written resolutions is one vote per share across all eligible members; non‑responses count as not agreeing.
• Ordinary written resolutions require more than 50% agreement; special written resolutions require at least 75%.
• The default lapse period is 28 days from and including the circulation date, unless the articles specify otherwise; the resolution takes immediate effect when the threshold is reached.
• Certain decisions, such as removal of directors or auditors, cannot be made by written resolution and require a general meeting with special notice.
• Where specific documentation must be available for members at a meeting (e.g. director loans, long-term service contracts, payments for loss of office), equivalent documentation must accompany a written resolution.
• The company must keep records of written resolutions and agreements for at least 10 years and file special resolutions (and certain ordinary resolutions) at Companies House within 15 days.

Key Terms and Concepts

• written resolution
• eligible member
• circulation date
• lapse date
• excluded resolution