What is a special resolution in a limited company?

Most company decisions are made by the directors. Some decisions are so important that the law reserves them for the shareholders (also called members). Shareholders decide by passing resolutions, and the most demanding type is the special resolution.

Ordinary and special resolutions

• An ordinary resolution needs a simple majority: more than 50% of the votes.
• A special resolution needs a majority of at least 75% of the votes.

Your articles may ask for a higher majority for some decisions, but cannot make a special resolution easier to pass.

When you need a special resolution

Under the Companies Act 2006, a special resolution is needed to, for example:

• change the articles of association;
• change the company name (unless the articles allow another method);
• re-register a private company as a public company, or the other way round;
• reduce share capital (for a private company, with a solvency statement);
• disapply statutory pre-emption rights when issuing new shares;
• approve the company buying back its own shares out of capital;
• put the company into members' voluntary winding up.

If you are unsure which type of resolution you need, check the Act or ask an adviser.

How to pass a special resolution

A private company can pass a special resolution in two ways.

1. By written resolution

1. The directors (or members) circulate the resolution to every eligible shareholder, stating that it is a special resolution.
2. Shareholders holding at least 75% of the total voting rights sign and return it.
3. It passes when the 75% is reached. If the articles do not set a deadline, it lapses if not passed within 28 days of circulation.

Written resolutions suit small companies where shareholders agree.

2. At a general meeting

1. The directors give notice of the meeting, normally at least 14 clear days for a private company. The notice must include the exact wording and say it is a special resolution.
2. At the meeting, at least 75% of the votes cast must be in favour.
3. Shorter notice is possible if enough shareholders agree.

Filing with Companies House

A copy of most special resolutions must reach Companies House within 15 days of being passed. Some changes also need a form or fee. For example, a change of name is filed with form NM01, and the Companies House fee is £20 online (or £85 for same-day). If you change your articles, you also file a copy of the amended articles.

You must also keep a copy of every resolution with your company records for at least 10 years.

A simple example

Imagine a company with 100 shares, each with one vote. Anna holds 60, Ben holds 20 and Chloe holds 20. The directors want to adopt new articles.

• By written resolution, the resolution passes only when members holding at least 75 votes sign. Anna alone (60) is not enough; she needs Ben or Chloe as well.
• At a meeting where only Anna and Ben attend and vote, 75% of the votes cast is enough. If both vote in favour (80 of 80 votes), it passes, even though Chloe was absent.

This is why shareholders' agreements sometimes give minority holders extra protection.

Common mistakes

• Using an ordinary resolution where a special resolution is needed.
• Changing the wording of the resolution at the meeting. A special resolution must be passed in the form set out in the notice.
• Forgetting to file the resolution within 15 days.
• Not sending the written resolution to every eligible member.

How Form My Company can help

Our Resolutions and Minutes service costs £100. We draft the special resolution, the notice or written resolution and the minutes, and file it with Companies House for you. For a name change, our Company Name Change service costs £100, and for new articles see Bespoke Articles.

Frequently asked questions