Written special resolution: 75% of total voting rights of eligible members (CA 2006 ss.21, 283)
Larkspur Analytics Ltd is a private company limited by shares with unamended model articles. Its 100 issued ordinary shares each carry one vote and are held by Femi (40), Gwen (25), Hamid (20) and Ines (15). The directors circulate a written resolution, stated to be proposed as a special resolution, to amend the articles. Within the period for agreement, Femi and Gwen signify their agreement, Ines notifies the company that she opposes it, and Hamid does not respond at all.
What is the status of the written resolution?
Choose one answer to see the reasoning.
Worked answer
Correct answer D: It is not passed, because a written special resolution needs members with at least 75% of the total voting rights of eligible members; only 65% agreed.
THE RULE TO REMEMBER
A written special resolution passes only if members holding at least 75% of the total voting rights of all eligible members agree; non-responses count against it (CA 2006 s.283(2)).
Written special resolution: 75% of total voting rights of eligible members (CA 2006 ss.21, 283)
A company may amend its articles by special resolution (s.21(1) CA 2006), and a private company may pass that resolution as a written resolution. Under s.283(2), a written resolution is passed by a majority of not less than 75% only if it is passed by members representing not less than 75% of the total voting rights of eligible members. The base is therefore all 100 votes of the eligible members, not just the votes of those who respond. Femi and Gwen together hold 65 votes, which is 65% of the total. Hamid's silence counts in practice as a vote against, because his 20 votes remain in the total. The resolution has not reached 75% and so is not passed. The contrast is with a meeting: on a poll, the 75% is measured against the votes cast by members who vote (s.283(5)), so 65 of 80 votes would have been enough had Hamid stayed away.
Why A is wrong: Measuring against votes actually exercised is the test at a meeting; a written resolution is measured against the total voting rights of all eligible members.
Why B is wrong: Section 21(1) requires a special resolution to amend the articles; an ordinary resolution is not enough.
Why C is wrong: Unanimity is not required; members representing at least 75% of the total voting rights would suffice.
Why E is wrong: A private company may pass a special resolution, including one amending its articles, as a written resolution.
A little more practice done.
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