A Shareholders' Resolution is a formal decision made by the members (shareholders) of a company incorporated in England and Wales in accordance with the Companies Act 2006. Shareholders are the owners of the company, and certain significant decisions affecting the company's constitution, capital structure, or management can only be made by the shareholders rather than the directors. A shareholders' resolution is the mechanism by which those decisions are formally recorded and given legal effect.

Under English company law, shareholders can pass resolutions in two ways. The first is at a general meeting — either an Annual General Meeting (AGM) required under section 336 of the Companies Act 2006 for public companies (private companies are not required to hold AGMs unless their articles require it), or an Extraordinary General Meeting (EGM) convened at any time to deal with urgent or specific business. The second method, available only to private companies, is the written resolution procedure under sections 288 to 300 of the Companies Act 2006, which allows the shareholders to pass a resolution by signing a written document without the need to convene a meeting.

The Companies Act 2006 distinguishes between two principal types of shareholders' resolution. An ordinary resolution is passed by a simple majority of more than 50% of the votes cast (section 282). It is used for routine corporate decisions. A special resolution requires a higher threshold of at least 75% of the votes cast (section 283) and is required for more fundamental decisions such as altering the articles of association or changing the company's name.

Once passed, a shareholders' resolution is binding on the company and all its shareholders, including those who voted against it (subject to any separate rights they may have under the Companies Act or the shareholders' agreement). Certain resolutions must be delivered to Companies House within 15 days of being passed under sections 29 and 30 of the Companies Act 2006, failing which the company and its officers commit a criminal offence.

A shareholders' resolution is required whenever the Companies Act 2006 or the company's articles of association stipulates that a particular decision must be approved by the shareholders rather than the directors.

An ordinary resolution is required to: authorise the directors to allot shares under section 551 of the Companies Act 2006 (where this power is not contained in the articles); ratify transactions entered into by directors in breach of their duties (section 239); approve a director's service contract with a guaranteed term of more than two years (section 188); approve a substantial property transaction between the company and a director (section 190); approve a loan, quasi-loan, or credit transaction to a director (sections 197 to 214); and remove a director from office (section 168).

A special resolution is required to: alter the articles of association (section 21); change the company's name (section 77); re-register the company as a different type of company (section 89); disapply pre-emption rights on the allotment of new shares (section 569); reduce the company's share capital (section 641); approve an off-market purchase of the company's own shares (section 694); and pass a resolution for voluntary winding up (section 84 of the Insolvency Act 1986).

Written resolutions are particularly useful for private companies where the shareholders are small in number and do not wish to incur the administrative cost and time of convening a general meeting. They are commonly used for routine authorisations such as approving the allotment of new shares, ratifying transactions, and approving changes to the articles when the shareholders are in agreement and a meeting is unnecessary.

A well-drafted Shareholders' Resolution for a UK private company should contain several key elements to ensure it is valid and enforceable under the Companies Act 2006.

The company information section identifies the company by its full registered name, Companies House registration number, and registered office address. This information is important to identify the specific legal entity passing the resolution and to ensure the resolution corresponds to the correct company record at Companies House.

The type of resolution specifies whether this is an ordinary resolution (majority of more than 50%) or a special resolution (majority of at least 75%). This is fundamental because the wrong type of resolution may be invalid if the Companies Act or the articles require a specific type for the decision in question.

The passing method records whether the resolution is being passed at a general meeting or as a written resolution. For a general meeting, the date, time, and location of the meeting should be recorded. For a written resolution, the date of circulation is important because it starts the 28-day lapsing period under section 296 of the Companies Act 2006.

The resolution wording is the operative part of the document — the precise text of the decision being made. The wording should be clear and unambiguous, and should begin with 'IT IS RESOLVED THAT' or 'THAT'. For special resolutions, the words 'as a special resolution' should appear before the resolution text.

The shareholders' details record the names of the shareholders voting in favour, their shareholdings, and the total percentage of the voting share capital represented by those in favour. This is essential to verify that the required majority has been achieved.

The Companies House filing note reminds the company of any obligation to deliver a copy of the resolution to Companies House within 15 days of passing under sections 29 and 30 of the Companies Act 2006.