Active company boards usually make their decisions at regular board meetings, but sometimes resolutions need to be passed outside of board meetings. In this case, it is common to pass a written resolution rather than finding a time convenient for all directors to attend a formal meeting.
The default rule in the Companies Act for a resolution at a board meeting is that it passes if the majority of directors vote in favour of it (but check that your constitution doesn’t override this default rule and require, e.g., a unanimous vote). Given this rule, it would seem logical to assume that the same default applies for written resolutions, i.e. the resolution is valid if the majority of directors have signed or assented to it. But is that right?
Often, it’s not. The default rule for written resolutions in the Companies Act is that they must be signed or assented to by all directors, not just the majority. While your constitution may water down the default (e.g. to a majority decision), in our experience, most constitutions usually just repeat the default position. Also, some constitutions are stricter than the default, e.g. requiring all directors to sign (and not assent to) the resolution, thus excluding a resolution by exchange of email.
So, if you’re reading this wondering what the resolution requirements for your company are, we suggest you double check your constitution to make sure you’re following the right process. If you don’t have a constitution, the default rules (discussed above) will apply.
We’re planning a regular The Simple Stuff blog on day to day questions that a lot of clients ask. Let us know if there’s something you’d like us to cover.