Elective resolutions (private companies)

(Note: this guidance page is being re-written in view of recent law changes. Some provisions referred to may have been repealed. UKcorporator's incorporation process however remains perfectly valid and effectual.)

Under various sections in the Companies Act 1985, private companies may elect (by passing what is called an 'elective resolution') to dispense with certain procedural formalities. It is suggested that the members/shareholders of all private companies should consider passing elective resolutions so as to reduce various formalities which would otherwise have to be complied with.

The relevant sections of the Act are:



(a)
section 80A (election as to duration of authority to allot shares);


(b)
section 252 (election to dispense with laying of accounts and reports before general meeting);


(c)
section 366A (election to dispense with holding of annual general meeting);


(d)
section 369(4) and section 378(3) (election as to majority required to authorise short notice of meeting); and


(e)
section 386 (election to dispense with appointment of auditors annually).

An election of the above type is made by a resolution passed at a general meeting of the company's members/shareholders and, as mentioned above, is known as an 'elective resolution' - 379A of the Companies Act 1985. An elective resolution requires at least 21 days' notice in writing unless all members (entitled to attend and vote) agree to a shorter period - section 379A(2) and (2A) of the Companies Act 1985. An elective resolution must be passed unanimously by all members entitled to attend and vote at the meeting - section 379A(2)(b) of the Companies Act 1985. After an elective resolution is passed, a copy of it is required to be entered in the company's minute book (section 382 of the Companies Act 1985) and also lodged at Companies House within 15 days (section 380(1) of the Companies Act 1985). If the written resolution procedure (available for private companies under section 381A of the Companies Act 1985) is used and the company has auditors, they must be sent copies - or otherwise notified of the contents - of the proposed written resolution - section 381B of the Companies Act 1985.

A specimen set of minutes for the passing of certain elective resolutions appears below. Note that this is only a sample form and may not necessarily be suitable for your proposed company's specific circumstances.

[                    ] Limited
Company number:___________

Minutes of shareholders' meeting, held at [place                    ] on [date          ] commencing at [     ] pm.

Shareholders present:[Peter Smith and Mary Smith being all of the company's shareholders]
Others present: [Brian Williams, company secretary]



(1)
Quorum
It was noted that a quorum of [2] shareholders was present in accordance with the articles of association.



(2)
Consent to short notice
The shareholders agreed unanimously to the holding of the meeting on less than 21 days' notice.



(3)
Laying of accounts
It was resolved to dispense with laying accounts and reports before the company in general meeting.



(4)
Annual general meeting
It was resolved to dispense with the holding of annual general meetings.



(5)
Duration of directors' authority to allot shares
It was resolved that:


(a)
that the provisions of section 80A of the Companies Act 1985 shall apply instead of sections 80(4) and (5) of that Act; and


(b)
the directors have authority for an indefinite period to allot shares in the capital of the company up to a maximum sum of [£20,000].



(6)
Auditors
It was resolved to dispense with the obligation to appoint auditors annually.

(It was noted that in light of this resolution the company's auditors, if any, are deemed to be re-appointed for each succeeding financial year on the expiry of the time for the appointment of auditors for that year - section 386(2) of the Companies Act 1985.)



(7)
Lodgment at Companies House
The company secretary was requested to file a copy of these resolutions at Companies House within 14 days.

_________________
Shareholder
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