Passing, registration of company special resolutions
Members or shareholders of companies hold annual general meetings (AGMs) or extraordinary general meetings (EGMs) at which ordinary or special resolutions affecting the company are passed.
I focus on special resolutions.
Special resolutions
These are regulated by section 175 of the Companies and Other Business Entities Act (Chapter 24:31), hereinafter the COBE Act or Act, read together with a company’s articles of association.
According to section 175(1) a resolution shall be a special resolution when it has been passed by a majority of not less than 75 percent of such members entitled to vote as are present in person or by proxy at a general meeting of which not less than 21 days’ notice has been given, specifying the intention to propose the resolution as a special resolution and the terms of the resolution and at which members holding in the aggregate not less than 25 percent of the total votes of the company are present in person or by proxy.
For simplicity the key points are summarised thus:
There should be 21 days’ notice to members that at the general meeting it is intended to pass a resolution as a special resolution and the terms thereof should be specified, At the meeting to pass the special resolution members holding at least 25 percent of total votes should be present in person or by proxy, Of those members present at least 75 percent should pass the special resolution.
According to section 178(3) the requirement for the 21 days’ notice can be dispensed with if so agreed by members holding at least 95 percent of the voting rights.
According to section 178(4) all other resolutions at a general meeting shall be called ordinary resolutions.
According to section 175(5) unless a poll is demanded in terms of section 175(6), a declaration by the chairperson that a special resolution is carried shall suffice.
In terms of section 175(7) a notice of a meeting shall be deemed to be duly given and the meeting shall be deemed to be duly held when the notice is given and meeting held in the manner provided by the articles subject always to the provisions of the Act.
Registration of special resolutions
This is regulated by section 178 of the COBE Act. Registration is by way of completing and lodging form CR8 with the Registrar, for registration by the latter.
According to section 178(1), within one month after the passing of any special resolution a copy of that resolution shall be transmitted to the Registrar who shall register that resolution and that resolution shall be of no force or effect until it is so registered.
Section 178(2) empowers the Registrar to decline registration of a special resolution, except upon order of the court, any special resolution so transmitted to him or her that appears to him or her to be contrary to the Act or of the memorandum or articles of association.
Written resolutions
These are regulated by section 176. According to section 176(1) in the case of a private company, a resolution in writing signed by all the members for the time being entitled to attend and vote on such resolution at a general meeting, or, being bodies corporate, by their duly authorised representatives, shall be as valid and effective for all purposes as if the same had been passed at a general meeting of the company duly convened and held, and if described as a special resolution shall be deemed to be a special resolution.
Such resolution shall be deemed to have been passed on the date on which the same was signed by the last member to sign, and where the resolution states a date as being the date of his or her signature thereof by any member such statement shall be prima facie, evidence that it was signed by that member on that date.
The above provisions on written resolutions do not apply to a resolution to remove an auditor or a director.
Conclusion
The risk of non- compliance in the passing and registration of special resolution is high due to lack of appreciation of the law.
Disclaimer
This simplified article is for general information purposes only and does not constitute thewriter’sprofessional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), CA(Z), MBA(EBS,UK) is a legal practitioner /
conveyancer, chartered accountant, corporate rescue practitioner, registered tax accountant and
consultant in deal structuring and is an experienced director of companies. He writes in his
personal capacity. He can be contacted on +263 772 246 900 or gohofisi@gmail.com-The Herald
