The answer first
A company makes decisions in two ways: the board of directors manages the business, and the shareholders (members) decide matters reserved to them by the Companies Ordinance or the articles. Knowing which body decides, and by what majority, is what makes a decision valid.
An ordinary resolution needs a simple majority; a special resolution needs at least 75%. Private companies can pass most members' resolutions in writing, measured against the total voting rights of eligible members.
At a glance
- Ordinary resolution
- Simple majority
- Special resolution
- At least 75%
- Written resolutions
- Measured against total voting rights of eligible members
- Filing special resolutions
- Within 15 days with the Companies Registry
Who decides what
| Usually the board | Usually the shareholders |
|---|---|
| Day-to-day management and strategy | Changing the articles of association (special resolution) |
| Opening bank accounts and setting signatories | Changing the company name (special resolution) |
| Approving contracts and expenditure | Reducing share capital (special resolution, with procedures) |
| Allotting shares, within authority given by members | Giving directors authority to allot shares |
| Approving financial statements for members | Appointing auditors; removing directors |
| Appointing officers | Voluntary winding up; certain transactions with directors |
The articles of association, and any shareholders' agreement, may reserve further matters to shareholders or require higher approvals.
Types of members' resolution
| Type | Majority needed | Common uses |
|---|---|---|
| Ordinary resolution | Simple majority of votes cast (or, in writing, of total voting rights) | Appointing directors and auditors, routine matters |
| Special resolution | At least 75% of votes cast (or, in writing, of total voting rights) | Changing articles or name, capital reduction |
| Written resolution | The same majorities, measured against total voting rights of eligible members | Private companies, instead of a meeting |
Key takeawayA written resolution is measured against all eligible members' voting rights, not just those who respond. A written special resolution therefore needs members holding at least 75% of the total voting rights to agree.
Board resolutions
- Passed at a properly convened board meeting with a quorum, or in writing as the articles allow.
- Directors must declare interests in proposed transactions and follow the articles on voting.
- Record every resolution in the minutes, with the date and the directors present or signing.
After the resolution
| Resolution | Filing |
|---|---|
| Special resolutions (and certain others) | Copy filed with the Companies Registry within 15 days |
| Change of name | Form NNC2 within 15 days, with the government fee |
| Amended articles | Copy of amended articles within 15 days |
| Appointment or removal of director | Form ND2A within 15 days |
Self-check: where do you stand?
| Question | If the answer is no |
|---|---|
| Do you know which decisions your articles reserve to shareholders? | Review the articles and any shareholders' agreement |
| Are board decisions recorded in minutes or written resolutions? | Start recording every significant decision |
| Do directors declare interests in transactions with the company? | Add declarations to board procedure |
| Are special resolutions filed within 15 days? | Diarise filings when resolutions are passed |
| Do written resolutions reach every eligible member? | Circulate to all and keep evidence of circulation |
How DBMS Global can help
- Drafting board and members' resolutions and minutes.
- Advising on the majority and procedure required under your articles.
- Filing resolutions and forms with the Companies Registry on time.
- Where a decision has legal complexity, for example a capital reduction or a transaction with a director, we coordinate with your lawyers.
In summary
- The board manages; shareholders approve fundamental matters.
- Ordinary: simple majority; special: 75%.
- File special resolutions within 15 days.
Official references
- Companies Ordinance (Cap. 622), Part 12: company administration and procedure, including written resolutions (section 548 onwards)
- Companies (Model Articles) Notice (Cap. 622H)