Company Resolutions Defined: Making Decisions Legally

Running a company means making decisions all the time - from appointing a new director to approving dividends or signing a big supply contract. In Australia, many of these decisions need to be made and recorded in a specific way to be legally effective. That’s where company resolutions come in.

In this guide, we’ll explain what resolutions are, the types you’ll use, how to pass them properly under the Corporations Act 2001 (Cth), and practical tips for recording and signing documents the right way. By the end, you’ll feel confident about the process and know when it’s worth getting tailored legal help.

What Is A Company Resolution In Australia?

A company resolution is a formal decision made by either the company’s directors (a board resolution) or its members/shareholders (a members’ resolution). Think of a resolution as the official record showing a decision was validly made under the company’s rules and Australian law.

Broadly, there are two levels of resolutions:

• Board (Directors) Resolutions - Decisions about managing the company’s day-to-day affairs, like approving contracts, opening bank accounts, issuing shares (where permitted), or appointing officers. These are usually passed at a board meeting or via a circulating written resolution.
• Members (Shareholders) Resolutions - Decisions reserved for the owners of the company, like changing the company’s name, adopting or replacing a Company Constitution, or approving certain share capital changes.

Within members’ resolutions, you’ll commonly see two voting thresholds:

• Ordinary Resolution - Passed by a simple majority (more than 50%).
• Special Resolution - Requires at least 75% of votes cast in favour (used for more significant changes, such as modifying the constitution or changing the company name).

Your company’s constitution and any Shareholders Agreement set the rules for when and how each resolution type can be used, notice requirements, and voting rights. If those documents are silent, the Corporations Act provides default rules.

Types Of Resolutions And When To Use Them

Board Resolutions (Directors)

Directors control the management of the company. A board resolution is the formal way directors approve decisions within their authority (for example, entering a contract, approving a budget, or appointing a company secretary).

For quick and clean record-keeping, many companies use a standard form or board minute template. If you need a reliable format, Sprintlaw’s Directors Resolution Template can help you capture the key details and wording correctly.

Members’ Resolutions (Shareholders)

Shareholders decide the “big ticket” matters. These often require an ordinary or special resolution. Common examples include:

• Changing the company’s name (special resolution)
• Adopting, amending or replacing the Company Constitution (special resolution)
• Approving certain share issues or variations (subject to the constitution and the Corporations Act)
• Appointing or removing directors (depending on your constitution)

If your company has multiple owners, your Shareholders Agreement may also set higher consent thresholds, veto rights, or “reserved matters” that can only proceed with specified shareholder approval. Always check these documents before finalising a decision.

Written (Circulating) Resolutions

Instead of holding a meeting, proprietary companies can usually pass resolutions in writing. For directors, a circulating board resolution is common and often requires all directors to sign. For members, a written resolution can be used where the law or your constitution allows - but check the rules around consent and voting thresholds first.

Sole Director Or Sole Shareholder Decisions

Many Australian proprietary companies have a single director or a single shareholder. If that’s you, passing resolutions is still important - it’s just faster. For example, a sole director resolution can authorise a contract, appoint an officer, or record other company actions without assembling a meeting.

How To Properly Pass And Record A Resolution (Step-By-Step)

1) Identify What You’re Approving And Who Must Decide

Start by clarifying the decision. Is it a management action (board) or an ownership decision (members)? Your constitution and any shareholders’ arrangement will guide you.

2) Choose The Right Resolution Type And Threshold

Decide whether the decision needs an ordinary or special resolution, or if a standard board resolution is sufficient. If a special resolution is required, plan for the 75% approval threshold.

3) Convene A Meeting Or Use A Circulating Resolution

For meetings, check notice periods, agendas and quorum requirements in your constitution. Keep the notices and any board packs with your records. If using a circulating resolution, circulate the exact wording and track signatures and dates.

4) Draft Clear, Specific Wording

Good resolutions state the background and the precise authorisation (e.g. “that the company enter into the Supply Agreement with XYZ Pty Ltd on the terms circulated to the board”). If you authorise someone to sign on the company’s behalf, say so explicitly.

5) Check Authority For Signing And Execution

When a resolution authorises signing documents, make sure the execution method is valid. Companies can execute under section 127 (e.g. two directors, or a director and company secretary, or a sole director/secretary for a proprietary company), which gives counterparties statutory comfort.

Alternatively, an individual can bind the company under section 126 if they are authorised (by position or by resolution) to do so. The resolution should clearly grant that authority where needed.

6) Vote, Record The Outcome And Keep Minutes

At the meeting, confirm quorum, let people speak, then vote and record the outcome. For circulating resolutions, keep the signed copies together with the explanatory materials. Companies must keep minute books and written resolutions - best practice is to maintain complete records in an accessible, backed-up register.

7) Lodge Any ASIC Filings And Update Registers

Certain decisions trigger filings with the Australian Securities and Investments Commission (ASIC) - for example, changes to officeholders, share structure or company details. Update statutory registers (members/share register, option register, etc.) and keep copies of any lodged forms.

Electronic Signatures, Deeds And Practicalities

In modern practice, many resolutions and related documents are signed electronically. Australian law now supports flexible execution for companies in most cases, but it’s important to follow the rules.

• Electronic Signatures: Companies can generally execute documents electronically if the method identifies the signatory and indicates their intention to sign. Your counterpart may prefer a particular eSigning platform. For an overview of when e-signing is acceptable, see the guide on electronic signatures.
• Execution Under Section 127: When possible, use section 127 execution (correct officeholder combinations). It gives the other party a statutory assumption that the document is validly executed.
• Authority Under Section 126: If a single person (such as a CEO or director) is signing on behalf of the company outside s127, ensure they are properly authorised under section 126 - for example, by a fresh board resolution or a standing delegation.
• Deeds: Some documents are deeds rather than simple agreements (for example, a deed of release). Deeds have special execution and witnessing rules that you should follow carefully; if in doubt, confirm how your company must execute deeds under its constitution and the Corporations Act.
• Copies, Scans And Storage: Keep signed copies together with board papers, notices and any supporting documents. A clear paper trail reduces risk and makes future due diligence much smoother.

Tip: If your board regularly meets remotely, set up a standard process for distributing papers, verifying identities for signatures and centralising your minute books. A little admin hygiene goes a long way.

Common Resolutions You’ll Use (With Examples)

Not sure which resolutions you’ll encounter most? Here are typical scenarios and the kind of resolution each usually requires. Always check your constitution and shareholders’ arrangements before proceeding.

• Appointing or Removing Directors (Board or Members): Many constitutions allow the board to appoint a director to fill a casual vacancy until the next AGM (members then ratify). Removal of a director often requires a members’ resolution.
• Opening Bank Accounts or Granting Payment Authorities (Board): The board authorises specific officers to operate accounts and set transaction limits.
• Entering Major Contracts (Board): The board approves the company entering into significant contracts and authorises signatories under section 127 or section 126.
• Issuing or Transferring Shares (Board or Members): Depending on your constitution and pre-emptive rights, the board may approve a new issue (within authorisations), while certain share capital changes require members’ approval.
• Declaring/Paying Dividends (Board): Typically a board decision, subject to solvency requirements and any constraints in your constitution or agreements.
• Adopting or Replacing the Company Constitution (Members - Special): Requires at least 75% approval and careful drafting to suit how you want decisions made. Consider whether you need updates to reserved matters or director appointment/removal rules in your Shareholders Agreement at the same time.
• Calling A Members’ Meeting (Board): The board can call a general meeting to consider members’ resolutions. If you need something outside your ordinary meeting cycle, an Extraordinary General Meeting may be appropriate.
• Sole Director Companies (Board): If you’re the only director of a proprietary company, a formal sole director resolution will record your decision-making cleanly for future reference or due diligence.

For example, let’s say you want to enter a 3‑year supply agreement with a new distributor. The board would review and approve the contract terms, pass a resolution authorising the company to enter that agreement, and authorise named signatories to execute it under section 127 (or via delegated authority under section 126). The signed contract and the minutes then sit together in your records.

Good Governance: Practical Tips That Reduce Risk

• Use clear, consistent templates: Align your board minutes and resolution wording with your constitution and any shareholder arrangements. A well-structured Directors Resolution Template keeps your records tidy.
• Keep your constitution current: If decision-making often feels clunky, consider updating your Company Constitution so it reflects how you actually want to run the company (e.g. circulating resolutions, quorum, reserved matters).
• Align with your Shareholders Agreement: Make sure approvals match any consent rights or vetoes under your Shareholders Agreement. If they don’t align, fix the documents or the process before approving the action.
• Be methodical with e-signing: Adopt a standard approach to electronic signatures, tagging the right signatories and storing signed copies centrally.
• Check ASIC triggers early: If a resolution will change directors, share capital or company details, prepare the ASIC forms at the same time so nothing is missed.
• Plan for due diligence: Clean, complete minute books and resolution files save time and build trust if you raise capital, sell the business or enter major partnerships.

FAQs On Company Resolutions

Do I Have To Hold A Meeting To Pass Every Resolution?

No. Directors and (in many cases) members of proprietary companies can pass written (circulating) resolutions without a meeting. Always check your constitution for any limits or special procedures.

Can A Sole Director Pass Board Resolutions Alone?

Yes. Proprietary companies can have a single director who can pass decisions alone. It’s still good governance to document each decision, often via a simple sole director resolution.

Are Email Approvals Or Slack Votes Valid?

They can be, but make sure the resolution text is clear, everyone entitled to vote has the chance to vote, and you retain verifiable records. For important decisions, circulate a formal resolution for signature so there’s no ambiguity about what was approved and by whom.

How Long Must We Keep Minutes And Resolutions?

Companies must keep minute books and written resolutions for at least five years. Best practice is to store them securely for the life of the company, since investors, buyers and auditors may review them later.

Who Can Sign Documents For The Company After A Resolution?

Use section 127 where possible (e.g. two directors, or a sole director/secretary for proprietary companies). If a single officer or employee will sign, ensure they are expressly authorised under section 126 (usually by the same resolution).

Key Takeaways

• A company resolution is the formal way directors or shareholders make legally effective decisions under your constitution and the Corporations Act.
• Use board resolutions for management decisions and members’ resolutions (ordinary or special) for ownership-level changes like adopting a Company Constitution or changing share capital.
• Follow a clear process: identify the decision-maker, choose the right resolution type, meet notice/quorum rules, draft precise wording, record the vote and keep minutes.
• When authorising contracts, consider execution under section 127 or delegate authority properly under section 126, and put a consistent e-signing process in place.
• Keep your constitution and Shareholders Agreement aligned with how you approve decisions, and file any ASIC forms that resolutions trigger.
• Clean, consistent resolution records reduce risk today and make future investment, audits or exits far smoother.

If you’d like a consultation on setting up your board and shareholder decision-making - from drafting a Company Constitution to practical resolution templates - you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.