What is a Board Resolution in the UK?

As a business with a board of directors, you must know how decision-making can occur within your company. A company’s board will often meet regularly to discuss matters such as: 

• company-wide policies;
• operations; 
• issuing of new shares; and 
• overall company strategy. 

A board resolution is a formal document that records the decisions of the board of directors. Usually, directors must meet specific requirements for the resolution to pass officially. This article explains a board resolution and some requirements for when directors may use it.

What is a Board Resolution?

A board resolution is a formal document containing the board of directors’ decisions during a board meeting. Typically, board meeting minutes will accompany a board resolution, which will contain the points that the directors discuss during the meeting. 

In practice, the term ‘board resolution’ can also encompass written resolutions that a company’s board makes. A written resolution is a decision made by a board in writing (instead of a decision made at a board meeting). These two types of decision-making are usually equal in validity and authority. Although, a company’s articles of association (i.e. the company’s constitution) can require certain decisions to occur in a specific way. 

Often, a board resolution, unlike a written resolution, identifies the votes made by corporate officers. Further, it is common for each director to sign the resolution before the chair of the meeting certifies it. The board secretary will usually keep copies of the resolution. Additionally, this document may also serve as evidence of a company’s actions.

How Do You Pass a Board Resolution? 

In most cases, your company’s constitution will generally outline how your company can pass board resolutions (alongside other corporate resolutions). Additionally, there are typically at least two requirements; a quorum and a set number of votes in favour of the motion. 

A quorum is the minimum number of directors that may hold a board meeting with binding decisions in the first place. Your company’s quorum requirement will depend on your business’s size and scale. Moreover, it may also depend on the size of your board of directors. 

Furthermore, your company constitution will also determine the number of votes necessary to pass a resolution. Often, this is a simple majority. This means there must be at least 50% in favour of the motion. For some significant decisions, however, you may need a special resolution with a more significant majority (such as 75%). Usually, a company will have to pass a special resolution for important decisions, such as changing the share structure of your the shares your company issues. 

In addition, you may also need to appoint a board member with a ‘casting vote’. A casting vote is a decisive vote if there is an equal split in votes on a proposal. 

Different Types of Board Resolution

Currently, in English company law, there are two types of resolutions: ordinary and special. An ordinary resolution requires only a simple majority of 50% and usually occurs in situations such as:

• a director election; 
• declaring dividends; or
• appointing an auditor.

A special resolution, however, requires a 75% majority. The Companies Act 2006 outlines some of the situations in which you may need to use a special resolution, including:

• changing the name of your company;
• changing your company’s articles of association; or
• becoming a public company. 

What to Include in a Board Resolution?

Often, you can find board resolution templates online. These templates will usually indicate that you should include the following points:

• the date of the meeting; 
• the signatories to the board resolution;
• the resolution that the meeting has come to; 
• the direction in which each director votes; 
• the chair’s signature at the end. 

Key Takeaways

As a business with a board of directors, you must understand how to use board resolutions to make certain important decisions. For example, a board resolution may be necessary o make certain decisions. Further, your company’s articles of association will outline the instances in which you will need to use this document. Moreover, board resolutions are a valuable way of keeping track of your company’s actions and decisions. 

To pass a board resolution, you will usually either need a simple majority or 75% of voting members to vote in favour of the resolution. This depends on whether the resolution is an ordinary resolution or a special resolution. 

If you need help constructing your board resolution, our experienced corporate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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