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Meetings and Resolutions

Limited companies

There are two types of meetings that can be held by private limited companies: a board meeting of the directors and a general meeting of the members (shareholders or guarantors). There is no statutory requirement in the Companies Act 2006 to hold either type of meeting, with the exception of the First Board Meeting of the Directors; however, the need to hold one or both types of meetings will arise on a number of occasions, when decisions have to be made.

If a board meeting or general meeting does take place, there are a number of statutory requirements to which a company must adhere. Minutes must be taken to record the proceedings of the meetings and note the names of those in attendance. During both types of meetings, it is common for resolutions to be passed. A resolution is simply a majority or unanimous decision taken by the directors or members on a particular matter pertaining to the business. Any resolutions that are passed must be recorded and stored at the company’s registered office or SAIL address. In many cases, copies of these resolutions will also have to be filed with Companies House.

Limited Liability Partnerships

There are no provisions in the Limited Liability Partnerships Act 2000 or the Limited Liability Regulations 2001 requiring LLPs to hold any official type of meeting of their members - the reason being that LLP legislation is intended to provide freedom and flexibility to LLP members with regard their internal affairs and management.

As such, LLP members should draft their own regulations in a Partnership Agreement to outline the required procedures for decision-making. Most LLPs will specify that ordinary matters may be decided by a majority of members, and that all members must consent to any significant changes to the nature of the business. However, it is entirely up to the members of an LLP to arrange such particulars between themselves when the business is formed.

Board meetings

Company directors collectively form a board. A board meeting is, therefore, any official meeting of the directors of a limited company. There is no legal requirement to hold any board meetings in a private limited company, but it is common practice to hold such meetings at regular intervals if a company has more than one director. Furthermore, it is beneficial to hold a meeting of the directors within one month of company formation. This enables the directors to clarify the objectives of the new business and determine their individual duties and responsibilities.

Board meeting agenda

Directors will usually convene at a board meeting to discuss business matters that need to be addressed. During the first board meeting, such matters may include:

  • Appointing a chairman
  • Confirmation of company formation details
  • Consulting the articles of association
  • Issuing share certificates to shareholders
  • Determining the rights and powers of the directors
  • Assigning various duties and responsibilities to directors
  • Verifying the company’s accounting reference date (ARD)
  • Confirming the statutory filing deadline for the first annual return and annual accounts
  • HMRC registration for Corporation Tax, VAT and PAYE.
  • Company insurance and licence requirements
  • Appointing a company secretary
  • Record-keeping and accounting requirements
  • Appointing an accountant
  • Opening a business bank account
  • Raising capital
  • Recruitment
  • Marketing and advertising
  • Suppliers and service providers
  • Suggestions and recommendation for the business

Decision-making

Directors normally have an equal say in matters pertaining to company business and policy. When a decision is put to a vote at a board meeting, each director is usually entitled to one vote, unless the articles states otherwise. When a consensus - a majority agreement for or against a proposed resolution - is obtained, a decision has been reached. If no consensus is reached, the chairman of the board is usually given a second or casting vote in order to reach a decision. Many companies adopt a manual outlining the rules and procedures of board meetings.

Calling a board meeting

Board meetings can be called at any time by the chairman of the board or an individual director. Reasonable notice of the meeting must be provided to all directors, but there is no provision in the Companies Act regarding a minimum notice period for board meetings. This is one of the points that can be set out in the board meeting manual. One week is usually sufficient.

The notice should state the following details:

  • Time, date and location of the meeting
  • Purpose of the meeting
  • Any proposed resolutions
  • Schedule of proceedings

Minutes of board meetings

It is a legal requirement that minutes be taken of all board meetings. This is usually the responsibility of the company secretary. Minutes are simply a record of the proceedings of the meeting, and they will usually include:

  • Company name
  • Names of those present
  • Chairman of the meeting
  • Apologies for any absences
  • Time, date and location of meeting
  • Details of proposed resolutions
  • Result of any votes
  • Objections raised
  • Record of those for and against any proposed resolution
  • Summary of other items of business discussed
  • Chairman’s signature

Board meeting minutes are usually kept at the back of the company registers (a bound book or loose-leaf binder) at the company’s registered office or principal place of business, but they may also be kept in electronic form. They can be inspected at any time by directors and auditors; however, members, creditors and the general public are not permitted to inspect the minutes of directors’ meetings.

General meetings

A general meeting is a meeting of the members of a limited company. This type of meeting is more formal than a board meeting of directors, because the calling and conduct of general meetings is regulated by the Companies Act 2006. Private limited companies are no longer legally required to hold Annual General Meetings (AGM) unless a provision to the contrary is included in the articles. Most private companies will only call general meetings when extraordinary decisions have to be made by the members, though it is good practice to hold an AGM to review the company’s performance, annual accounts and plan ahead for the forthcoming year.

Purpose of a general meeting

Shareholders will convene at a general meeting in exceptional circumstances when they need to address an issue or pass a resolution on any matter that extends beyond the directors’ powers. It is possible to pass resolutions in writing, but it is often more beneficial to formally and collectively discuss a proposed resolution at a general meeting - particularly if a company has multiple shareholders who do not interact on a daily basis. If you are a sole director and shareholder of your own company, you will not need to hold any general meetings, because you are the sole decision-maker.

The types of matters discussed at a general meeting may include:

  • Appointing or removing a director
  • Altering the articles of association
  • Changing the shareholders’ agreement
  • Changing the company’s share structure by issuing more shares or creating different classes of shares
  • Approving directors’ loans
  • Approving directors’ service contracts
  • Adding or removing directors’ powers
  • Appointing or removing an auditor
  • Changing the company structure
  • Approving the transfer of shares as proposed by a director

Under the Companies Act 2006, all members’ decisions can be made by written resolution, with the exception of dismissing a director or removing an auditor before the end of their contractual period. It is possible to include provisions in the articles to further restrict decision-making by written resolution, if required.

Notice period

A general meeting can be called by the company directors or shareholders. A minimum notice period of 14 days is required for calling a general meeting in a private limited company. The notice must be sent to every member and director, and any persons entitled to a share on the death or bankruptcy of a shareholder. Notice can be given in hard copy form, electronic form or by posting it on the company website. The following information should be disclosed on the notice:

  • Time, date and location of the general meeting
  • Purpose of the meeting
  • Proposed resolutions to be agreed
  • Statement that every shareholder may appoint a proxy if they are unable to attend
  • Notice date
  • Name(s) of director(s) or shareholder(s) calling the meeting

Minutes of meetings

The company secretary (or director) must arrange for minutes to be taken to record the names of those present at the meeting, a summary of the proceedings and the outcome of any proposed resolution. A copy of the minutes should be kept in the company’s statutory register held at the registered office or principal place of business for a minimum of 10 years. Copies should also be issued to the company members.

Resolutions

A resolution is a legally binding agreement or decision made by company members or directors. The outcome of a resolution is determined by the votes cast for and against the decision. If the required majority is reached, the resolution is ‘passed’. If the necessary majority is not reached, the proposed resolution fails.

Different types of resolutions

Any decision made by the directors of a company is called a resolution, but there are two types of members’ resolutions: ordinary and special.

An ordinary resolution is passed when a simple majority vote is reached (above 50%). This type of resolution can be used for all decisions unless the Companies Act or articles of association specifies the need for a special resolution for any other matter.

A special resolution is passed when a 75% majority vote is reached.

Both types of resolutions can be passed at a general meeting or in writing (a written resolution), apart from a resolution to dismiss a director or remove an auditor before the expiration of his or her contract. If a member is unable to attend a general meeting, he or she can appoint a proxy.

Passing a resolution

Voting at general meetings is normally taken by a show of hands or a poll. If the vote is taken as a show of hands, the percentage is worked out as one vote per shareholder. If a poll is taken, the votes are worked out in proportion to the number of shares held by each shareholder - most shares carry one vote; therefore, shareholders with multiple shares can cast more votes.

The conditions of members’ voting rights are usually stated in the articles of association and shareholders’ agreement. Generally, however, a member will have the same number of votes whether passing a resolution at a general meeting or on a written resolution.

Resolutions must be proposed in the notice that is circulated prior to a board meeting or general meeting. Proposed members’ resolutions must be also be issued to the auditors, if a company has any. If the proposed resolution is for the removal of a director, the director in question must receive a copy.

Copies of all special resolutions should be filed with Companies House within 15 days and issued to all shareholders and the company auditor, if applicable. Copies should also be kept in the company’s statutory register at the registered office address or principal place of business for a minimum of 10 years.

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