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Resolution of a Company/Board of Directors

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Last revision 01/10/2018
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Last revision: 01/10/2018

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Resolution of a Company/Board of Directors

A Resolution of a Company/Board of Directors is a formal way in which a company or the board of directors can note decisions made by the company.

A resolution of a company is the decision made by the members of the company at any general meeting. A resolution of the board of directors is the decision made by the directors of the company at any board meeting.

Another type of resolution is a written resolution. This demands that members of the company may make a decision without having any meeting. They can simply make a collective written resolution. This written resolution can only be used to pass a resolution of members of a private company. Note that the law does not state that directors of a private company can use this written resolution.

There are two categories of resolution, namely:

  • Special Resolution: This is the decision of at least 75% of the members of the company. This means that for a special resolution to be passed, it requires the vote of at least 75% of the members of the company. There are some statutory changes that requires a special resolution, such as change/alteration of any provision in the memorandum and articles of association of a company, changing the name of a company, the voluntary winding of a company etc.
  • Ordinary Resolution: This is the decision/vote of at least 51% (majority vote) of the members/board of directors of the company. Some decisions that may require an ordinary resolution include: election/re-election of directors, appointment of auditors, acceptance of financial and directors report at the general meeting, appointment and removal of directors etc.

For a resolution to pass, it must meet the following criteria:

  • the resolution must be passed at a meeting (except it is a written resolution which does not require a meeting to be convened) which is properly convened and satisfied any quorum (this is the minimum number of members/directors that must be present in a meeting as stipulated in the Articles of Association. Where this number is not present, the decisions made in the meeting may be invalid);
  • this resolution must be drafted and put in the company's records; and
  • the minutes of meeting where the resolution was passed must be signed by the chairman and company secretary (if applicable).

How to use this document

This document can be used when the directors or the members of the company have made decisions relating to the running, organization, structure etc. of the company.

When the document is completely filled, 2 (two) directors or 1 (one) director and 1 (one) secretary of the company must sign this document. The company seal must also be affixed on the document.

Common decisions at company meetings include:

  • Change of Name of the Company: For a company to change its name, the company must pass a special resolution. That is, the vote of 75% of the members of the company must be obtained before the name of the company can be changed. After filling this form, the document must be filed at the Corporate Affairs Commission along with the amended memorandum and articles of association reflecting the change of name and a copy of the old memorandum of association.
  • Increase of Share Capital: The share capital is the part of the capital of the company that comes from the issue of shares. For a company to change its share capital, the members of the company must pass an ordinary resolution approving the increase or reduction of its share capital. Note that this is not applicable to companies limited by guarantee as they do not have a share capital. After filling this form, the form filler is required to file the document and the form CAC 2.4 (Notice of Change of Authorized Share Capital) to the CAC. This must be done within 15 (fifteen) days after the passing of the resolution, otherwise CAC will charge monetary penalty for late filing.

  • Reduction of Share Capital: If a company intends to reduce its share capital, the members of the company must pass a special resolution approving the reduction. After filling this form, the company must apply and obtain a Court (Federal High Court) order confirming the reduction. After this is done, the company must file this document, the order of the Court and a duly completed form CAC 2.4 (Notice of Change of Authorized Share Capital) at the CAC.
  • Allotment of Shares: When a company intends to allot new shares to the new shareholders, the board of directors may pass an ordinary resolution approving the allotment. After filling the form, this document together with a duly completed form form CAC 2A (Return of Allotment) must be filed at the CAC.

  • Transfer of Shares: This occurs when one or more members of the company decide to transfer part or all of their shareholding to either existing shareholders or new shareholders. After filling this form, this document together with a duly completed form CAC 2A (Return of Allotment) must be filed at the CAC.

  • Change of Directors: When the company intends to remove, appoint or re-elect directors of the company, it must do so by an ordinary resolution. After filling this form, this document together with a duly completed form CAC 7A (Notice of Change of Directors) must be filed at the CAC. This must be filed within 14 days after the passing of the resolution.

  • Change of Registered Office: When a company intends to change its registered address, an ordinary resolution must be passed. After filling this form, the form filler must file this document together with a duly completed CAC 3 (Notice of Change of Registered Address) at the CAC.

  • Any other decision: The board of directors or the company may, during their board meetings or general meetings, make decisions relating to certain transactions such as an acquisition of another company, financing of the company, structural development of the company etc. and these resolutions must be documented. Hence the importance of this document.

 

Applicable law

The Companies and Allied Matters Act is the applicable law.

 

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