What Is a Company Resolution? A Guide For Australian Businesses

Learn what a “company resolution” is, when you need one, and how to record decisions properly so your business stays compliant in Australia.

As your business grows, you’ll need a clear and legal way to make decisions and show who approved what. That’s where company resolutions come in.

If you’ve been asked for a “board resolution” or a “copy of the shareholders’ resolution,” it’s normal to wonder exactly what that means and how to create one that stands up legally.

In this guide, we’ll explain what a resolution is in an Australian company, the difference between board (director) decisions and shareholder resolutions, when each type is needed, and how to pass and record them properly. We’ll also share practical tips to avoid common mistakes that can cause delays with banks, regulators or future investors.

What Is a Company Resolution?

A company resolution is a formal record of a decision made by the company’s decision-makers. It captures the exact decision, who made it, when it was made, and the voting outcome.

There are two broad groups of decision-makers in a company:

• The board of directors (who manage the company’s day-to-day control and major operational decisions)
• The shareholders or members (who own the company and make fundamental ownership and structural decisions)

Both boards and shareholders can pass resolutions. What differs is who votes, the threshold needed to pass the decision, and whether the Corporations Act 2001 (Cth) requires special wording or filings.

Types Of Resolutions: Board Vs Shareholder Decisions

Board (Director) Resolutions

Board resolutions are decisions of the directors. They are usually passed by a simple majority of directors present and entitled to vote, unless your Company Constitution says otherwise.

Common board decisions include:

• Appointing a new director (or recommending a director to shareholders if the constitution requires member approval)
• Authorising entry into contracts, loans or leases
• Declaring and paying dividends (subject to legal requirements)
• Issuing shares within existing shareholder authorities
• Approving bank mandates and delegations of authority

Important note: the “ordinary vs special resolution” distinction does not apply to board decisions. That terminology is for member (shareholder) resolutions. For directors, the voting rules are set by the Corporations Act’s replaceable rules or your constitution (often a simple majority).

Shareholder (Member) Resolutions

Shareholder resolutions are decisions made by the company’s members. These fall into two key categories:

• Ordinary resolution (members): Passed by a simple majority of votes cast at a general meeting (or by the required majority if using a written resolution). This is used for general member decisions required under the Corporations Act or your constitution.
• Special resolution (members): Requires at least 75% of the votes cast to be in favour and specific notice requirements. Special resolutions are reserved for fundamental changes, such as changing the company name, altering or replacing the constitution, varying share rights, or winding up.

Examples of decisions typically requiring a member resolution include:

• Changing the company name (usually by special resolution)
• Adopting, replacing or amending the constitution (special resolution)
• Approving selective share buy-backs or capital reductions (often special resolution)
• Approving major changes in share capital or class rights (often special resolution)

Unlike public companies, many proprietary companies don’t hold member votes to “approve annual accounts” or “appoint auditors” as a matter of course. The specific requirements depend on your company type, size and constitution.

When Do You Need A Resolution In Australia?

You’ll generally need a formal resolution whenever the Corporations Act or your constitution says a decision must be made by the board or the shareholders, or when a bank, investor or regulator expects formal evidence of approval.

Typical Board (Director) Resolution Triggers

• Appointing or removing a director or company secretary
• Entering into significant contracts, loans or leases
• Opening or updating bank accounts and mandates
• Declaring dividends (subject to solvency and legal tests)
• Issuing shares within existing member authorities
• Approving the issue of a power of attorney or delegations of authority

If you’re the only director, you still document decisions through a written resolution. For more detail on how that works, see sole director resolutions.

Typical Shareholder (Member) Resolution Triggers

• Changing the company name (special resolution)
• Adopting, replacing or amending the constitution (special resolution)
• Altering share capital or class rights (often special resolution)
• Approving certain selective buy-backs or capital reductions
• Electing or removing a director where the constitution requires member approval

Some decisions also require notification to ASIC within strict timeframes (often 28 days), such as changes to company officers, registered office or share structure. The process commonly involves lodging the relevant ASIC forms, including changes that would otherwise sit within ASIC Form 484 for certain company detail changes.

Whenever shares are issued or transferred, make sure the board approval aligns with your constitution and any Shareholders Agreement, and that you follow the correct process for transferring shares or issuing new ones.

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

Whether it’s a board decision or a member vote, the process should be clear, consistent and well-documented. Here’s a practical sequence most companies follow.

1) Confirm Who Must Decide

Check the Corporations Act, your Company Constitution, and any Shareholders Agreement to confirm whether the board or the shareholders need to decide, and whether a special resolution is required.

2) Prepare The Agenda And Draft Resolution

Write the proposed resolution clearly, in plain language. For example: “That Jane Citizen be appointed as a director of ACME Pty Ltd with effect from 1 July 2025.”

3) Give Proper Notice

For meetings, circulate notice and papers in accordance with your constitution and the Act. Special resolutions require specific notice periods and wording. For written (circular) resolutions, follow the signature and circulation rules for the relevant decision-maker group (directors or shareholders).

4) Hold The Vote Or Collect Signatures

At a board meeting, the chair conducts the vote and records the outcome in the minutes. For shareholder meetings, voting follows the constitution and Corporations Act rules (including proxies and poll votes, if used). For written resolutions, obtain the required signatures to reach the necessary threshold.

5) Record The Decision

Prepare and sign minutes or a written resolution promptly. Your minute books must be maintained accurately and kept for at least five years.

6) Implement And Notify

Carry out the decision and lodge any required ASIC filings within the relevant timeframe. For document execution, ensure you follow the correct rules for signing under section 127 of the Corporations Act or other valid methods of company execution. Also confirm that anyone signing contracts on the company’s behalf has proper authority consistent with section 126.

What To Include In Your Minutes Or Written Resolution

Good documentation is simple, consistent and complete. Include:

• Date and (if applicable) place of meeting or the date of the written resolution
• Type of decision (board or shareholder; ordinary or special resolution for members)
• Who was present and entitled to vote (or who signed)
• The exact wording of the resolution(s) proposed
• The voting outcome (for/against/abstentions) or the threshold met (e.g. 75% for a special resolution)
• Any relevant attachments (board papers, schedules, draft agreements)
• Signatures of the chair or company secretary (for minutes), and the signatories for written resolutions

Store signed minutes and resolutions securely and back them up. Keep a tidy sequence of board and member minute books so you can quickly provide copies to banks, auditors, investors or regulators when asked.

Legal Requirements And Common Pitfalls

Key Legal Requirements To Keep In Mind

• Maintain accurate minute books for board and member decisions for at least five years.
• Use member special resolutions (75% approval and proper notice) for major changes such as a new constitution or a company name change.
• Lodge ASIC notifications for changes to officers, addresses, share structure and certain special resolutions within the statutory deadlines (frequently 28 days).
• Make sure the company has properly executed documents under section 127 or via another valid authority pathway.
• Ensure consistency with your Company Constitution and any Shareholders Agreement when making decisions.

Pitfalls To Avoid

• Mixing up board vs member approvals: Don’t assume the board can authorise matters that require a shareholder vote (or vice versa). Check your constitution first.
• Using “ordinary vs special” for director decisions: Those thresholds apply to member resolutions, not board votes.
• Missing ASIC deadlines: Late lodgements can attract fees and cause delays with banks or due diligence.
• Poor wording or missing details: Vague resolutions create confusion. State the decision clearly, the dates, and who is authorised to act.
• No paper trail for written decisions: Circular resolutions must still be signed and kept with your minute books.

If you’re dealing with higher-stakes changes (share issues, restructures, capital returns or class rights), it’s wise to get tailored guidance. A short discussion with a lawyer can save time and prevent costly do-overs - book a quick chat with our corporate lawyers if you’re unsure what approval is required.

Key Takeaways

• A company resolution is a formal record of a decision by the board or the shareholders; it proves who decided what, and when.
• “Ordinary” and “special” resolution thresholds apply to member decisions, while board resolutions typically pass by a simple majority unless your constitution says otherwise.
• Use special resolutions (75% approval with proper notice) for fundamental changes like adopting or amending your constitution or changing the company name.
• Keep accurate minute books for at least five years and lodge ASIC notifications on time for officer, address and share changes (often using processes linked to Form 484 where applicable).
• When issuing or transferring shares, align board approvals with your constitution and any Shareholders Agreement, and follow the correct steps to transfer shares or issue new ones.
• For sole director companies, you still need written decisions - see how a sole director resolution works and ensure proper execution under section 127 where required.

If you’d like a consultation on preparing board or shareholder resolutions for your company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.