Requisition of Resolutions
A resolution is only deemed received when all documentation, necessary to evidence the legal requirements, is received validly by the Company. A resolution to remove a director using the powers contained in the Companies Act only requires an ordinary resolution and most listed company articles of association allow shareholders, provided advance notice is given to the company, to put forward a director and appoint him to the board by ordinary resolution. They are ordinary resolution, special resolution, and extraordinary resolution.
Requisition of Resolutions is the act of formally requiring or calling upon someone to perform an action. A formalized requisition process improves efficiency and accountability across all points of contact. The subject matter of the resolution should be as it was recorded in the meeting.
The requirements of a good resolution are;
- It should be in writing in a separate book called Minute Book.
- The language of the resolution should be lucid, easy, and precise and convey the desired meaning.
- The requisitioned resolution must be of a nature that may properly be moved at the AGM, and be clear and unambiguous in its effect.
- The subject matter of the resolution should be as it was recorded in the meeting. Any distortion of facts and figures should be avoided.
- The resolution may be accompanied by a statement not exceeding 1,000 words (including headers, footnotes, and references).
- The resolution may be formal or informal.
- A resolution cannot be changed unless a further resolution is passed.
- This specifies that, unless a requisition is validly received before the end of the financial year preceding the meeting, a company’s costs in complying with a requisition are to be met by requisitionists.
- A resolution cannot be passed unless a motion is formally moved, observed, and put to the vote.
- It should be affirmative in form.
- It might begin with the word “Resolved that” only not with other words.
- The first part of the resolution should explain the background of the resolution.
- The main part of the resolution should state the decision of the meeting.
Shareholders can require the directors of a company subject to the Companies Act to call a general meeting of its shareholders if they together represent at least 5 percent of the paid-up voting share capital of the company (excluding any voting rights attached to treasury shares). If the requisition identified a resolution intended to be moved at the meeting, the directors must include notice of that resolution in the notice convening the meeting.