Company Resolutions

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Business is resolved in a company through its two main organs – (i) the shareholders; and (ii) the board of directors. The Companies Act prescribes two ways in which such decisions may be carried out by a Maltese Company – either at a meeting duly convened or by means of a resolution in writing.

Resolutions passed by the general meeting (shareholders) are broadly divided into two (extraordinary and ordinary).

Extraordinary resolutions

The Companies Act prescribes two (2) statutory criteria which have to be met for a resolution to be considered as an extraordinary resolution:

(i) it must be passed at a general meeting of which notice specifying the intention to propose the text of the resolution as an extraordinary resolution and the principal purpose thereof has been duly given; and

(ii) the resolution must have been passed by a number of members having the right to attend and vote at any such meeting holding in the aggregate not less than fifty-one percent (51%) of the nominal value of the shares conferring that right or suchother higher percentage as the memorandum or articles may prescribe.

The following are the decisions which, according to the Companies Act, always require an extraordinary resolution:

any alteration to the memorandum or articles of association, except for an alteration to the registered office of the company;
the granting of an authorisation to the board of directors to issue shares;
a restriction or withdrawal of pre-emption rights;
the granting of an authorisation to the board of directors to withdraw or restrict pre-emption rights;
an authorisation for the company to acquire its own shares;
the cancellation of own shares acquired by the company if these are not disposed of within thirty months of their acquisition;
change of currency of the company’s share capital;
voluntary winding up;
winding up by the court;
appointment of a liquidator in a members’ voluntary winding up;
removal of a liquidator in a members’ voluntary winding up;
filling of a casual vacancy in the office of liquidator in a members’ voluntary winding up;
nomination of the liquidator in a creditors’ voluntary winding up;
exercise of certain powers of the liquidator in a members’ voluntary winding up;
sanctioning of an arrangement in the course of a voluntary winding up;
filing of a company recovery application;
conversion of a company;
amalgamation of companies;
division of companies

Approval of the general meeting – Ordinary resolution sufficient

Ordinary resolutions are those passed by member or members having the right to attend and vote holding in the aggregate more than fifty percent (50%) of the voting rights attached to shares represented and entitled to vote at the meeting, or such other higher percentage as the memorandum and articles of association may prescribe.

Examples when oridnary resolutions shall suffice include:

removal of directors;
appointment of auditors;
remuneration of auditors; etc

Resolutions in writing

It is possible, in lieu of convening a general meeting, for the shareholders to resolve matters by written resolution, in which case the signature of all the shareholders is necessary. Where there is a logistic difficulty in obtaining all the signatures of shareholders on the same written document, it is possible to use separate counterparts, whereby the shareholders may each sign a copy of the resolution and each copy shall, when taken together, constitute one and the same instrument. The effect of a duly executed resolution in writing is identical to one in which the general meeting has been duly convened and notice thereof served to all shareholders.

Board Resolutions

Contrary to shareholder’s resolutions, resolutions of the board of directors are significantly less regulated, predominantly because the effective management of the company is entrusted to the directors, as part of their core function. The board of directors may convene board meeting at any point in time to resolve matters pertaining to the management of the company. In lieu of this, it is possible for directors to resolve business by means of a resolution in writing signed by all the directors being entitled to receive notice of the meeting. This resolution must be executed by all the directors for the Company. The use of written resolutions may provide a pragamtic way to resolve many matters, even if the disadvantage is that there may not be previous discussions amongst the directors.

Contact one of our officers for any further clarification regarding resolutions and to initiate the incorporation of a Maltese registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbsmalta.com or by calling at +356 2338 1500

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