Download a Company Resolution Template - FormFactory

Download a Company Resolution Template

What is a company resolution?

Decisions that affect a company must be made by means of a formal resolution. A company resolution, or corporate resolution, is a record of decisions made by the board members/directors or shareholders of a company.

A board of director’s resolution refers specifically to decisions made by the directors on behalf of the company. The directors are appointed by the shareholders and have the discretion to make decisions without the interference of the shareholders.

Board members are appointed to manage the funds of the company. They also have the authority to pass resolutions from the company’s memorandum of incorporation (MOI) – the rules of the company in terms of the Companies Act.

In South Africa, company resolutions are governed by the Companies Act 71 of 2008. According to the act, company resolutions:

  • must be sequentially numbered and dated; and
  • are effective from the date of the resolution – unless stated otherwise in the resolution.

For a resolution to pass, members of the board have to vote on the proposed resolution during a meeting. Under South African law, only voting rights exercised are counted to determine whether a resolution is passed. There are three types of company resolutions:

  • An ordinary resolution – a simple majority (more than 50%) of voting rights exercised;
  • A special resolution – at least 75% voting rights exercised; and
  • A unanimous resolution – 100% voting rights exercised.

Different percentages for different matters can be required in the company’s MOI. A company may increase the percentage requirement for an ordinary resolution, and increase or decrease the requirement for a special resolution. The difference between the highest requirement to pass an ordinary resolution and the lowest requirement to pass a special resolution on any matter must be at least 10%.

The Act sets out the type of resolution required for specific actions. Ordinary resolutions can be made at an annual general meeting (AGM). For example, to approve the budget requires an ordinary resolution. Electing trustees also requires an ordinary resolution.

Examples of decisions requiring a special resolution include non-luxurious improvements, while a unanimous resolution is necessary for decisions about luxurious improvements and amending the MOI.

Company name change resolution template

A special resolution by the shareholders is required to authorise changing the name of a company. To change a company name, the company must apply for a change to its MOI to the Companies and Intellectual Property Commission (CIPC).

Click here to download CIPC’s special company resolution template. Before applying for a company name change, the new company name must first be reserved with CIPC.

How to pass a company resolution

Ordinary resolutions simply work on a majority rules basis and are voted on at an AGM. There are two ways to pass special resolutions and unanimous resolutions:

1. At a meeting

All board members must receive at least 30 days’ notice (by hand or via prepaid registered post) of the meeting and the proposed resolution. If a board member is unable to physically attend the meeting, he/she can present his/her decision in a company resolution letter or nominate a representative to act on his/her behalf.

A quorum of members must be present (in person or by proxy) for a body corporate meeting to take place. At least two members must be present for the meeting to have a quorum. For a special resolution meeting, at least 75% of members must be present. The quorum requirement for a unanimous resolution meeting is 80% of members.

If a quorum is not present within the first 30 minutes of the meeting, the meeting is automatically postponed for a week. At the postponed meeting, the members present will constitute a quorum.

2. On a round robin basis

The proposed resolution can be presented in writing and circulated to all members by hand or via prepaid registered post. Members vote in favour of the resolution in writing with a company resolution letter.