Written resolution of Private Company

Decisions of a private company can be made by resolution, which is a document that describes a company decision made by Shareholders or Board of Directors. There are two types of resolutions – those passed at a meeting and those passed in writing. This article focuses on the written resolution of a private company operating under AIFC legislation. The relevance of this topic is that lawyers practicing under a continental law system may have difficulties understanding the common law concept of a written resolution.

According to section 100(1) of the AIFC Companies Regulations: “anything that may be done by a resolution of the company passed at a shareholders’ meeting may be done either by a resolution in writing”. However, there are two exceptions that cannot be done by written resolution – removal of a director and removal of a person who is registered as an auditor.

A written resolution can be used instead of Resolution passed at the General Meeting of Shareholders or a Meeting of the Board of Directors. The written resolution has the following advantages: firstly, it is time-efficient, as it removes the administrative costs and time involved in calling and organizing meetings; secondly, it is the best option when Company needs to make a decision quickly by a simple majority; thirdly, if Company has Shareholders from a different parts of the world, using an electronic written resolution is the easiest way to make a decision when there is no upcoming meetings.

The written resolution must include:

  1. Indication of the type of the resolution;
  2. The text of the resolution;
  3. A description of the method used to signify the resolution;
  4. The circulation date;
  5. The date by which the resolution must be passed, else it will lapse.

There are two types of written resolution:

  1. Ordinary Resolution – resolution passed by a simple majority of the total voting rights of Shareholders;
  2. Special Resolution – resolution stated that it was proposed as a Special Resolution and passed by 75% of the total voting rights of Shareholders.

A written resolution can be circulated as a hard copy or electronic form. It is possible to combine different ways of circulation. A hard copy can be made as one document that can be sent to each Shareholder in turn, or it can be a separate documents for each Shareholder. A soft copy can be made in the form of an email or other applicable method of communication for circulation and sending the scan of signed document to the Company if it is stipulated in Articles of Association. It is also possible in AIFC to use electronic signing systems, such as DocuSign, for circulation and signing of written resolution.

The circulation date – the date on which copies of the resolution are sent or submitted to the Shareholders.

A written resolution is passed when the required majority signs the resolution and it is not passed if the required majority has not signed it by expiry date. The Resolution is taken to be passed on the day the instrument or the last of several instruments, is last signed or, if the Resolution specified a later date, on that date.

AIFC Companies Regulations do not have a provision about period in which written resolution must be passed or it will lapse. In my opinion, the best way is to set out this period in the resolution itself or to set it out in company’s Articles of Association. For instance, you can use the following formulation: “Ensure that the signed document is received by the Company no later than [date]. If the Resolution is not passed by this date, it will lapse”.

The passed written resolution must be recorded by the Company’s Director or Secretary. The record of written resolution, signed by the Director or Secretary, is evidence of the passing of the resolution. I recommend using a Certificate of Secretary for this purpose by adding the following section at the end of the resolution: “The Secretary of the Company hereby certifies that he is duly elected and qualifed secretary of [name of the company] and certifies the above is a true and correct record of the resolution that was duly adopted on [date]”.

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