How do shareholder resolutions work?

A shareholder resolution is a non-binding recommendation to the board of directors of a public corporation regulated by the U.S. Securities and Exchange Commission. Proposed by shareholders, resolutions are presented and voted upon at the corporation’s annual meeting and through the annual proxy vote.

What is the purpose of a shareholder resolution?

With respect to public companies in the United States, a shareholder resolution is a proposal submitted by shareholders for a vote at the company’s annual meeting. Typically, resolutions are opposed by the corporation’s management, hence the insistence for a vote.

How do you pass a shareholder resolution?

Shareholder resolutions can be passed either by way of a written resolution, or at a meeting of the shareholders (known as a ‘general meeting’). As a general rule, written resolutions are quicker and easier to pass than general meetings, which require a very prescribed process to be followed.

Is a shareholder resolution binding?

However, the courts define a shareholder resolution as a ‘decision’ of the company. Therefore, such resolutions are considered to be a binding decision of the company.

Can shareholders propose a resolution?

Shareholders cannot propose resolutions that seek to ‘usurp the powers’ of directors, nor can shareholders propose advisory resolutions. … This means directors may advise the general meeting that the proposed resolution is not in the best interests of the company.

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What are the three types of resolutions?

The three types of resolutions are joint resolutions, simple resolutions and concurrent resolutions.

What does a shareholder agreement do?

A shareholders’ agreement is an agreement entered into between all or some of the shareholders in a company. It regulates the relationship between the shareholders, the management of the company, ownership of the shares and the protection of the shareholders. They also govern the way in which the company is run.

Can a shareholder sell his shares to anyone?

A shareholder can sell or give away shares to anyone unless the company’s articles impose an effective restriction, or the shareholder has agreed not to transfer them or to deal with them in some other way in a binding contract.

What decisions do shareholders make?

What decisions can the shareholders make?

  • amending the companies articles by special resolution;
  • changing the name of the company by ordinary resolution;
  • approving a substantial property transaction by ordinary resolution;

What needs a special resolution?

Special resolutions – also known as ‘extraordinary resolutions’ – are needed for more important decisions or those decisions affecting the constitution of a company. These require at least 75% of the shareholders or directors to agree – and in some situations as much as 95%.

What are the types of resolution?

Resolutions are passed both by the company’s members and by its directors. In either case, resolutions may be passed at meetings or by written resolution. There are now just two types of resolution, ordinary resolutions (passed by a simple majority) and special resolutions (passed by a 75% majority).

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How is a resolution passed?

Ordinary resolution is a resolution passed by simple majority of votes. As provided in sub-section (1) of section 114, a resolution shall be an ordinary resolution if notice of such resolution is duly given and the votes cast in favour of the resolution exceed the votes cast against the resolution, if any.