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This Directors' Resolution document is for use when the director(s) of a company intend to pass a resolution without having a meeting. It is often referred to as a "Circular Resolution". If the resolution is being passed at a meeting, use our Minutes of Meeting document instead.
This document may be used by companies with a single director ("single-director" companies), or those with multiple directors ("multi-director" companies). In the document, it is possible to select from a range of common resolutions, or to enter the details of one or more other resolutions (which are not covered by our common options).
Under the Corporations Act 2001 (Commonwealth), (the "Act") most of the decisions that affect a company need to be made by a resolution. A company's constitution and/or Shareholders' Agreement (if the company has a shareholders' agreement) might also set out what sorts of decisions need to be made by resolution.
It is also important to note that under the Act, some kinds of decisions must be made by a members' resolution (ie shareholders' resolution), rather than a directors' resolution.
Generally speaking, directors' resolutions relate to the day to day running of a company. For example, a decision to enter a particular contract, or to grant or revoke somebody's signing authority, may be made by directors' resolution.
On the other hand, members' resolutions may be required for decisions that relate to the fundamental details of the company, rather than day to day business matters. For example, decisions relating to the following matters generally require a members' resolution rather than a directors' resolution:
However, different rules may apply to different types of company. In addition, the company constitution and shareholders agreement (if there is a shareholders agreement) might also say something about how certain decisions must be made (ie whether they should be made by directors or members, and by ordinary resolution or special resolution). Therefore, if in doubt, seek legal advice.
This document is only intended for use in the case of directors' resolutions. It is not appropriate for the types of matters that require a members' resolution.
In the event that the particular matter(s) with which the company is dealing can be handled by way of a directors' resolution, section 248A of the Act permits resolutions to be passed by multi-director companies without a meeting, if all the directors entitled to vote on the resolution sign a document containing a statement that they are in favour of the resolution set out in the document. Section 248B of the Act permits resolutions to be passed by single-director companies by recording the resolution and signing the record.
However, even though these sections 248A and 248B of the Act say that the company may pass a resolution in either of these ways, it is possible that the company's constitution and/or shareholders' agreement might actually state that for this particular company, some other procedure must apply. For example, for a multi-director company, the constitution might state that the directors must actually hold a meeting. Therefore, it is important that the person preparing this document first consults the company's constitution and shareholders' agreement (if applicable), to confirm whether either document sets any additional procedural requirements for the passing of resolutions.
It is also worth noting that for multi-director companies, there are several different types of resolution which may be passed by the company (at directors' meetings):
However, section 248A of the Act clarifies that for a resolution to be passed without a meeting, all of the directors entitled to vote on the resolution must sign the document. Therefore, even for the types of decisions that could normally be passed at a meeting by a special resolution (75%) or an ordinary resolution (more than 50%), if the resolution is going to be passed without a meeting, all of the directors (ie 100%) must sign the document.
As a result, these circular resolutions (without a meeting) can provide a convenient option when 100% of the directors are likely to agree. However, if any directors are likely to disagree with the resolution, or if the resolution is somewhat complicated and needs to be discussed in person, these circular resolutions may not be appropriate. Instead, a directors' meeting (with the outcome recorded in our Minutes of Meeting document) might be preferable.
Further information is available from the Australian Securities and Exchange Commission.
How to use this document
This document provides a basic template for the recording of various kinds of directors' resolutions. However, to ensure that the document is legally effective, it may be necessary to consider relevant rules which apply to the company.
Consider any legal requirements which may apply, depending on the nature of the company or the types of resolution(s) that are being passed. These requirements may be set out in the Act and further information may be provided by the Australian Securities and Exchange Commission. Some kinds of decisions must be made by a members' resolution (ie a shareholders' resolution). Therefore, as a first step, it is important to make sure that the matter(s) with which the company is dealing, can actually be handled by way of a directors' resolution.
Also consider the company constitution and shareholders' agreement (if the company has a shareholders' agreement) to check for any particular rules or procedural requirements that relate to the passing of directors' resolutions. Check whether the proposed resolutions can be decided by directors' resolution, and whether both documents permit directors' resolutions to be passed without a meeting.
The document will need to be signed by all directors entitled to vote on the resolution(s). Unless the constitution and/or shareholders' agreement state otherwise, the directors may all sign and date the same copy of the document, or the document may be signed in counterparts (meaning each director signs and dates a different but identical copy).
The resolution is passed when the last director signs it.
Section 251A of the Act requires that a record of the resolution be recorded in the company's minute books within one month of the resolution having been passed.
In addition, for many types of resolution, the Australian Securities and Investments Commission requires specific forms to be lodged. Further information, as well as links to the relevant forms, are available on the webpage of the Australian Securities and Investments Commission under the heading "Once a special resolution has been passed, what forms need to be lodged?"
If there are any concerns, seek legal advice.
The Corporations Act 2001 (Commonwealth) applies to many company matters, including directors' meetings.
In some cases, the Income Tax Assessment Act 1936 (Commonwealth) may also apply, for example when dealing with a public officer.
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