Business, Legal & Accounting Glossary
A Special Resolution is required to enable companies to do certain things, for example:
There are additional special resolutions set out in the Companies Act 2006.
A Special Resolution assures that certain scenarios which affect the company on a fundamental level cannot happen without a large majority of the members of the company agreeing. It is effectively to protect a member/shareholder rights and position within the company.
If you have concerns about how a company is to be run or you are a minority shareholder and want to ensure the protection of your rights within the company and ensure that the company will not undertake certain actions without your approval and you consider that the protections contained within the Companies Act 2006, and special resolutions are not enough you could consider amending the Articles to ensure that they are minority shareholding protections placed within these or to put in place a shareholders agreement which governs how the company will be run on day to day basis and will contain a list of minority shareholder protection.
This is often done when parties invest in a company and have a small percentage of shares which would not allow them enough to vote on how the company is going to be run on a day to day basis. For example, you could have a minority shareholding protection that the company will not take out any borrowings in excess of a certain figure without your approval or that the company will not factor any of its debts, lend any money through any third party, shareholder or director, appoint any directors etc.
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This glossary post was last updated: 25th February, 2020