Shareholders’ Ordinary Resolution to Approve a Substantial Property Transaction

PLEASE BE AWARE THAT THE ECONOMIC CRIME & CORPORATE TRANSPARENCY ACT 2023 IS BEING IMPLEMENTED IN PHASES AND MAY CHANGE THIS TEMPLATE. 

This Shareholders’ Ordinary Resolution to Approve a Substantial Property Transaction is for use when a director (or one of his connected persons) sells or buys a substantial non-cash asset to or from the company.

When shareholder approval is required for a substantial property transaction

The Companies Act 2006 restricts transfers of substantial assets unless the transfer is approved by an ordinary resolution of the shareholders (unless the company’s articles require a higher level of approval, in which case a special resolution may be required).

Shareholder approval is required where the value of the asset being transferred is either:

• more than £100,000; or
• more than 10% of the company’s net assets (by reference to the last set of company accounts), and the value is more than £5,000.

Transactions beneath these limits do not require shareholders’ approval.

Passing the resolution at a general meeting

Shareholders’ Ordinary Resolutions require the votes of over 50% of members present in person or by proxy, who are entitled to vote and do vote at the meeting. The meeting at which the resolution is proposed must have had at least 14 days notice, unless a shorter period was agreed by a majority in number of members holding at least 90% of the shares (95% in the case of public companies).

Passing the resolution as a written resolution

Alternatively, the written resolution procedure can be used. The resolution will be passed if approved by shareholders representing not less than 50% of the total voting rights of the shareholders entitled to vote on the written resolution on the day it is circulated.

Related formats to use alongside this resolution

This document sets out the required wording of the ordinary resolution.

If it is to be passed at a general meeting, it should be used in conjunction with Shareholders’ resolutions – General Meeting Format.

If it is to be passed as a written resolution, it should be used in conjunction with Shareholders’ Written Ordinary Resolution.

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