What is a directors’ resolution?
A directors’ resolution is a formal document which accounts for the decisions, implementation of new terms and intentions of the board members of the company.
The Companies Act states that the running of a company is the responsibility of the directors. In most cases, this management, direction and supervision require the board of directors to make important decisions. This is where resolutions come into play. A resolution records these decisions and they serve as a reference point for the directors to go about running the company with the mandate from the board.
When is a directors’ resolution required?
A directors’ resolution is usually required for, but not limited to, the following issues:
- Appointment of officers to the company (e.g. Company Secretary)
- Opening of bank account for the company
- Sale of company assets
- Mergers and acquisitions
- Issuing new stock
How do I pass a directors’ resolution?
Section 179 (1) (a) of the Companies Act (Chapter 50) states that at least 2 members will form the quorum of a meeting in the company. However, the number of board members required to form this quorum differs between companies due to differences in their Constitution or Memorandum and Articles of Association. Therefore, different companies will have different quorums and different attendance requirements for board meetings.
However, a director’s resolution can be passed without the actual meeting of members and directors if the constitution of the company has indicated that
- resolution voting by postal ballot is allowed
- resolution in writing and signed by all members or directors shall be deemed as effective as a resolution passed at a meeting which was convened and held
How do I write a directors’ resolution?
You can either write a resolution for an individual issue or have a general resolution addressing a number of issues.
The main gist of the resolution should state the issue which is to be discussed and which the director or directors are seeking approval, for example, the appointment of a new company secretary or the opening of a bank account. It should look something like this:
“Directors’ Resolution of ABC Pte Ltd seeking the approval to appoint Mr XXX as company secretary, passed on 12th July 2017”
If the issue has been resolved at the meeting, then it should state somewhere below in the resolution. It should look something like this:
“The issue is RESOLVED. the new company secretary will be Mr XXX and his appointment will be effective from 12th July 2017”
Do I need to submit board resolutions to any legal body in Singapore?
It is not a requirement to do so. However, these resolutions should be documented and filed, preferably by the company secretary. These resolutions can show whether the directors are fulfilling their fiduciary duties to the company.
Are there any other responsibilities that I as a director of a company should take note of?
According to the Companies Act, directors are required to disclose their interest in transactions with the company at a directors’ meeting. This disclosure can be made verbally or in writing. The minutes of the meeting will document these disclosures. If there was approval for a director to partake in certain dealings which may be of conflict of interest to the company and its shareholders, a resolution should be drafted. Through meeting minutes and directors’ resolutions, shareholders can see if directors have fulfilled their responsibilities as fiduciaries to the company.