Can Shareholder Meetings be Dispensed with – what are Written Resolutions?

One of the Companies Act 2006’s stated aims was to reduce the regulatory burden on SME businesses. With this in mind and the fact that for many private companies the shareholders and the management are one and the same, shareholders of private companies can make decisions using written resolutions instead of holding shareholder meetings. The procedure for passing written resolutions is set out in the Companies Act 2006 and cannot be overridden by a company’s articles of association.

The exceptions to the written resolution procedure are resolutions to remove a director or an auditor from office. These must be passed at a meeting as the director or auditor has certain powers to state, at a meeting, why he should not be removed.

Where directors and shareholders are the same people, it makes sense to take advantage of the written resolution procedure, however, where the shareholders include investors or people not involved in the day to day management of the business; it may still be necessary and/or desirable to make shareholder decisions at formal meetings.