An overview of Minutes and Resolutions

This article provides an overview of minutes, resolutions (including circulating resolutions) and the decision-making process for sole member/director companies.

What are minutes? 

Minutes are a formal record of the proceedings and resolutions of meetings. 

Under s 251A of the Corporations Act 2001 (Cth) a company must keep minute books and record within one month:

  • proceedings and resolutions of meetings of the company's members
  • proceedings and resolutions of directors' meetings (including meetings of a committee)
  • resolutions passed by members without a meeting 
  • resolutions passed by directors without a meeting, and 
  • if the company is a proprietary company with only one director, the making of declarations by the director (see The decision-making process for Sole Member/ Director companies)  

Minutes of a meeting must be signed within a reasonable time after the meeting, by the chair of the meeting or the chair of the next meeting. 

The legislation doesn't specify the level of detail that is required of minutes. However, the "best practice" approach that is generally observed, is minutes should not be overly-detailed like a "transcript". Minutes should be clear and succinct yet contain sufficient detail that an absent attendee could understand what decisions were made and how. 

What are company resolutions, and how are they passed? 

To approve or make decisions a company will formally pass a written resolution. The minutes will refer to these decisions made as the attendees "resolving" the relevant action/s will be taken. 

Resolutions may be required by:

  • The Corporations Act, or other legislation
  • ASX requirements, or other listing rules
  • the company's Constitution
  • board or committee charters (or other internal requirements)
  • regulatory requirements
  • relevant third parties

Ordinary resolutions, which are not specifically defined in the Corporations Act, need only a simple majority (i.e. more than 50%, unless otherwise provided) of votes to pass. Decisions that may only require an ordinary resolution include:

  • election/re-election of directors
  • appointment of an auditor
  • acceptance of reports at the general meeting
  • strategic or commercial decisions
  • increasing or reducing number of directors
  • passing a board limit resolution (for public companies)

The board of directors, who are responsible for directing the company's affairs, will make formal decisions in relation to leading and directing the company such as its future direction, business ventures, budgets etc. These formal resolutions, otherwise known as board or director resolutions, would generally pass if the majority (i.e. greater than 50%) of directors vote in favour. 

Special resolutions, on the other hand, are needed for certain changes which are provided for in the Act (or by the company's Constitution etc. as above). These types of resolutions require at least 75% of votes (unless otherwise provided) cast in its favour to pass. Such changes include:

  • the company changing its name (s 157)
  • changing company type (s 162) 
  • changing the constitution (s 136(2))
  • decisions about the company's future, like winding up voluntarily (s 491)

Outside of these "major" company decisions, some items of a general nature can simply be recorded rather than having to be passed via a resolution. For example, the board may simply ratify internal decisions that have already been made or note a change in circumstances like a change of address. 

For further information, refer to ASIC: Passing a company resolution.

What about circulating resolutions?

To reiterate, minutes are a recording of a meeting and (general or special) resolutions are the decisions  passed in a meeting. Meetings are held physically, in the sense that all attendees must be present at the same time. A meeting can be conducted by electronic means i.e. where attendants may not be present at the same place. 

However, where a physical meeting cannot be held (or the company prefers not to hold one) resolutions may be passed via a circulating resolution. 

Circulating resolutions are written down and circulated to everyone who is entitled to vote on it. It requires every director or every member (entitled to vote) to sign the document, establishing they unanimously agree to the resolution. When the last person signs, the resolution is passed. (See s 248A, 249A Corporations Act for further details)

Note 1: There may be some circumstances where a circulating resolution cannot be used, e.g. to remove/replace an auditor. 

Note 2: Section 248A (in relation to directors' resolutions) is a replaceable rule. As such, companies may amend it or remove it from their Constitution. Section 249A (in relation to members' resolutions), on the other hand, is not a replaceable rule. 

As for all resolutions, circulating resolutions must also be entered into the company's records/minute books within one month of the resolution being passed. 

The decision-making process for Sole Member/ Director companies 

Sole member/director companies do not need to hold a meeting. 

They can pass a resolution simply by recording it and then signing the record (see s 248B and 249B of the Corporations Act). 

 

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