What is a special resolution?

A special resolution is a formal decision made by a majority of no less than 75% of the members of a company. This type of resolution is reserved for extraordinary matters that have a significant impact on a company.

We discuss special resolutions in detail below, including the types of circumstances where they are typically required. We also outline the procedure for passing a special resolution in a UK company limited by shares or guarantee.  

Special resolutions in a limited company 

The Companies Act 2006 sets out strict decision-making rules that all UK companies must follow. One of these is the requirement of members (shareholders or guarantors) to make certain company decisions by special resolution.

A special resolution is a legally binding decision that is supported by at least 75% of eligible members’ votes. This means that, for the decision to stand, a minimum of 75% of votes held by the members of a company must be cast in favour of the matter in question.

Special resolutions are generally required for corporate matters of great importance and consequence – the types of decisions that are made only in rare circumstances. More routine company decisions are dealt with by ordinary resolution (of the members) or board resolution (of the directors).

Types of decisions made by special resolution 

Special resolutions are reserved for extraordinary decisions affecting a company’s constitution, structure, share capital, long-term direction, or the rights of shareholders or guarantors. 

In accordance with the Companies Act 2006, a special resolution is required in the following circumstances: 

• Amending the articles of association or adopting a new set of articles 
• Changing the company name 
• Disapplying pre-emption rights of shareholders 
• Carrying out a reduction of share capital 
• Approving a share buyback, where the company buys back its own shares from shareholders  
• Authorising company re-registration to change its legal status – for example, converting a private company to a public limited company 
• Changing the prescribed particulars of rights attached to shares 
• Selling the company 
• Winding up the company by members’ voluntary liquidation

You can stipulate other types of decisions requiring a special resolution in your company’s articles of association or shareholders’ agreement. For example, those that would typically be passed by an ordinary resolution or a board resolution. 

It is also possible to specify a higher majority vote for certain decisions (for example, 80%, 90%, etc.) or even unanimous agreement. The members of a company have the power to impose such requirements, provided they are set out in the articles or a shareholders’ agreement. 

How to pass a special resolution 

To pass a special resolution, you must follow the procedure set out in the Companies Act 2006 and the articles of association. The steps required are as follows:

Step 1: Issue notice of proposed special resolution

Where a special resolution is proposed, the directors must provide at least 14 days’ notice to members (and the company auditor, if you have one). The notice must state:

• Details of the proposed resolution 
• That it is a special resolution 
• Whether voting will take place on a show of hands or a poll at a general meeting, or by written resolution 
• The date, time, and location of the general meeting (if applicable)
• Instructions on how to signify agreement to the written resolution (if applicable)
• The date by which the resolution must be passed

Some companies may specify longer notice periods or prohibit the use of written resolutions for certain decisions. Therefore, always consult the articles and shareholders’ agreement in the first instance. 

Step 2: Vote on the resolution 

Eligible members (i.e. those with voting rights) must cast their votes for or against the proposed special resolution. This may be done in one of two ways: by voting in person, by a show of hands, or by poll at a general meeting; or by written resolution, whereby votes are cast in hard copy or electronically.

If members representing at least 75% of the company’s voting rights agree to the motion, the special resolution is passed, and the decision is legally binding. However, if more than 25% of the votes are cast against the motion, the proposed special resolution fails. 

Check the articles and the shareholders’ agreement to confirm whether a higher majority or unanimous agreement is required to pass a special resolution.

Step 3: Notify Companies House 

When you pass a special resolution, you must inform Companies House within 15 days, either by post or electronically via the ‘Upload a document’ service.

Depending on the changes you have made to the company, you may also have to include supporting documentation, e.g. a copy of the amended or new articles of association.  

For convenience, Companies House provides a resolution template that you can use to give notice of any type of resolution, whether ordinary, special, or written. 

Step 4: Update company records 

When a resolution is passed at a general meeting, it becomes part of the meeting minutes. These are normally circulated to members after the meeting. 

The directors are also required to keep meeting minutes or copies of any written resolutions for a minimum of 10 years. These documents should be made available for inspection at the company’s registered office or Single Alternative Inspection Location (SAIL address). 

If any changes have been made to share capital, the company’s statutory register of members and register of people with significant control (PSC register) must be updated immediately.

Where applicable, provide a copy of the amended articles to every member of the company following any alterations to this document. 

Get expert guidance

In summary, a special resolution for limited companies lets members make significant decisions that require a higher level of consensus. Understanding the process for proposing and passing such resolutions is crucial for ensuring compliance and effective governance within the company. If you have any questions or would like to explore this topic further, reach out to our expert team at Quality Company Formations.