If you are wondering what is an ordinary resolution, you are in the right place. This guide explains the concept in straightforward UK terms, with practical examples, clear steps, and useful tips for both company directors and shareholders. From the mechanics of voting to the difference between ordinary and special resolutions, we cover what matters so you can navigate meetings, notices, and decisions with confidence.
What is an Ordinary Resolution? A simple definition
What is an ordinary resolution? In essence, it is a decision of a company that is approved by a simple majority of votes cast by those entitled to vote at a general meeting or by written resolution. Abstentions are generally disregarded when calculating the result, so the key number is the proportion of votes cast in favour versus against. In practical terms, ordinary resolutions are the bread-and-butter decisions that guide everyday corporate governance, such as approving accounts, declaring dividends, or appointing directors.
To answer what is an ordinary resolution in plain language: it requires more votes in favour than against, but not an overwhelming consensus. This is distinct from a special resolution, which demands a higher threshold (commonly a 75% majority) for matters that are more fundamental or permanent in nature. Understanding what is an ordinary resolution helps organisations distinguish routine governance from momentous changes.
When does an ordinary resolution apply?
What is an ordinary resolution used for in practice? Ordinary resolutions cover a wide range of routine and procedural matters that do not alter the basic structure of the company. Typical examples include:
- Adoption of annual accounts and directors’ report
- Declaration and payment of dividends
- Appointment or removal of directors (subject to the articles and any contractual arrangements)
- Approving the remuneration policy for directors (where appropriate)
- Re-appointment of auditors or refusal to re-appoint, depending on the company’s articles and statutory rules
- Approval of share option schemes or bonus arrangements that fall within the permitted powers of the board
- Ordinary changes to constitutional documents that are not considered fundamental alterations
In answering what is an ordinary resolution, it is important to recognise that the exact scope depends on a company’s articles of association and the applicable law. Some matters typically set out in the articles as ordinary resolutions may be treated differently in a particular organisation. Always cross-check with the company’s articles and the statutory framework to confirm the correct treatment.
How to pass an ordinary resolution: the practical steps
What is an ordinary resolution’s path from proposal to approval? While the precise steps can vary by company and by the form of resolution (meeting versus written), the general process follows a familiar pattern under UK practice.
Step 1: Decide the form of the resolution
Ordinary resolutions can be proposed at a general meeting or via a written resolution where permitted by the articles and the Companies Act. If the company uses a physical meeting, the resolution appears on the agenda as a discrete item for voting. If a written resolution is used, all eligible members must sign or consent in the manner specified by the articles.
Step 2: Prepare and give notice
Notice must be given to those entitled to vote, specifying the resolution and the date of the meeting or the deadline for signatures on a written resolution. The notice period is governed by law and by the company’s articles. Clear wording helps prevent confusion about what is being approved when asked what is an ordinary resolution.
Step 3: Ensure a proper quorum
Quorum requirements are typically laid out in the articles. If not stated, ensure that a sufficient number of members are present or represented for the vote to be valid. A valid quorum is essential for the resolution to be considered legally and practically enforceable. Without a quorum, any vote on what is an ordinary resolution would not count.
Step 4: Present the resolution and discuss
During a meeting, the chair or proposer explains what the resolution aims to achieve, followed by any necessary debate. This is the time to address questions about what is an ordinary resolution in practice and to clarify implications, such as effects on future governance or financial planning.
Step 5: Vote and count
Votes can be cast as a show of hands or by a poll, depending on the company’s preferences and the meeting’s rules. If it is a written resolution, signatures (or electronic consent) count as votes in favour. In all cases, abstentions are generally ignored when calculating the majority for what is an ordinary resolution.
Step 6: Declare the result and effect
Once votes are tallied, the result is declared. If the majority is in favour, the ordinary resolution is passed and becomes binding under the company’s constitution. If not, the resolution is rejected, and the status quo remains unless an alternative action is taken.
Voting mechanics: show of hands, poll, and written resolutions
The method of voting can influence the voting dynamics around what is an ordinary resolution. Three main mechanisms are common in UK practice.
Show of hands
A show of hands is a quick, informal way to conduct a vote during a meeting. Each member present (or a representative) indicates their support, and the chair tallies the in-favour and against votes. While efficient, show of hands is not a precise count of the total voting power, which can be important for large, complex organisations.
Poll vote
A poll provides a formal, verifiable count of votes cast for and against. It is especially useful when minority protection or precise vote tallies are important. In many cases, a poll is the default method for significant decisions where the exact numbers matter for what is an ordinary resolution.
Written resolutions
Written resolutions can be used for ordinary resolutions when the articles permit. All eligible members sign (or provide electronic consent) to approve the resolution without convening a meeting. This approach can expedite decisions and reduce the administrative burden, particularly for private companies with a dispersed shareholder base. It is a practical alternative that still honours the core concept of what is an ordinary resolution.
Written resolutions: a closer look
What is an ordinary resolution when it is passed by written resolution? In many private companies, a unanimous written resolution can suffice to approve an ordinary resolution without convening a general meeting. The exact requirements depend on the articles, but the general principle remains: the majority of those eligible to vote must agree. Written resolutions are convenient for straightforward matters and can save time in response to shareholder feedback or urgent governance needs.
Private companies and written resolutions
For private companies, unanimous written resolutions are common. This means every member entitled to vote must sign the resolution for it to pass as the equivalent of an ordinary resolution. If any member with voting rights withholds consent, the resolution may need to be considered at a meeting or postponed until consensus is reached. Always consult the articles for the precise rules on what is an ordinary resolution by written resolution in your company’s context.
Public companies and written resolutions
Public companies have additional corporate governance considerations. While written resolutions may be permitted, the processes are typically more formal, with clear records, statutory requirements, and potentially different thresholds. If your organisation is public, verify the applicable provisions in the articles and the Companies Act to determine how to apply what is an ordinary resolution in a written format.
Ordinary resolution vs special resolution: key differences
Understanding what is an ordinary resolution also requires a quick comparison with the special resolution. A special resolution is usually required for fundamental changes—such as altering the company’s articles, changing the company name, or approving certain types of major transactions. The crucial difference is the threshold: ordinary resolutions rely on a simple majority of votes cast, whereas special resolutions require a higher level of consensus, typically a 75% majority. In practical terms, consider the following:
- What is an ordinary resolution? A simple majority of votes cast.
- What is a special resolution? A higher threshold—often 75% of votes cast or another specified proportion.
- Impact: Ordinary resolutions enable routine governance, while special resolutions protect against significant structural changes.
Practical examples of ordinary resolutions in the real world
To illustrate what is an ordinary resolution in action, consider these scenarios commonly encountered in UK companies:
- A small private company deciding to declare a dividend to shareholders.
- The appointment of a new director following a routine election at the annual general meeting.
- Approving the company’s annual accounts and filing the annual return with Companies House.
- Authorising a share repurchase within the limits set by the articles and applicable law.
- Re-appointing an auditor or approving an auditor’s remuneration (where required by the articles).
In each case, the decision is made by a simple majority of those voting, and the result becomes effective once the ordinary resolution is passed. This distinguishes it from matters that demand a higher degree of unity (special resolutions) or more procedural steps.
What matters are especially associated with ordinary resolutions?
While ordinary resolutions cover many routine matters, some items in a company’s governance framework are specifically linked to ordinary decisions. Typical examples include routine financial approvals, governance updates that do not alter the company’s fundamental structure, and the appointment or dismissal of directors when allowed by the articles. Knowing what is an ordinary resolution in your context helps in planning annual cycles, shareholder communications, and meeting agendas.
The role of the articles of association
Every company’s articles of association provide the framework within which what is an ordinary resolution operates. The articles may set out:
- Whether a matter is dealt with by ordinary or special resolution
- Notice periods for meetings and the required form of written resolutions
- Quorum rules for general meetings and the method of voting
When planning or proposing what is an ordinary resolution, always consult the articles first. They may impose additional requirements or restrictions, such as minimum voting thresholds, absolute majority rules, or restrictions on directors proposing certain resolutions without shareholder approval.
Common pitfalls and best practices
Even with a clear understanding of what is an ordinary resolution, practical pitfalls can arise. Here are some tips to help ensure smooth processes and effective outcomes:
- Prepare clear, concise wording for the resolution to avoid ambiguity and disputes about what is being approved.
- Disclose material information during the notice period so voters can make informed decisions.
- Check the voting method in advance—whether by show of hands, poll, or written resolution—and align with the articles and legal requirements.
- Verify the presence of a valid quorum before proceeding with the vote.
- Record the result accurately and retain documentation for audit and regulatory purposes.
Frequently asked questions about what is an ordinary resolution
Is an ordinary resolution always passed by a simple majority?
Yes, in most circumstances what is an ordinary resolution is decided by a simple majority of votes cast. Abstentions are typically not counted in the tally. However, always confirm with the company’s articles, as they may specify different practicalities for particular matters.
Can ordinary resolutions be passed without a meeting?
Yes. If the articles permit, an ordinary resolution may be passed by written resolution. This can be advantageous for routine matters that do not necessitate a full meeting, saving time and administrative effort.
What happens if the vote is tied?
A tied vote on what is an ordinary resolution usually means the resolution is not passed, unless the company’s articles or chair’s casting vote provisions provide a mechanism to resolve the tie. Always review the governance documents to confirm.
Do all companies use the same thresholds for ordinary resolutions?
Most UK companies use the standard simple-majority rule for ordinary resolutions, but the exact thresholds can vary by articles and by the type of company (private vs. public). Always refer to the specific constitutional documents for precise requirements.
Best practices for communicating what is an ordinary resolution to stakeholders
Clear communication helps ensure that shareholders and directors understand what is being decided and why. Consider these practices:
- Provide straightforward explanations in notices and accompanying documents about the implications of the resolution.
- Offer a plain-language summary of what is being voted on, including potential financial or governance impacts.
- Highlight the voting deadline and how to vote (in person, by proxy, or electronically).
- Encourage questions before the meeting or within the written resolution process to address concerns about what is an ordinary resolution.
Conclusion: mastering what is an ordinary resolution
What is an ordinary resolution? It is a practical, essential tool for everyday governance, enabling organisations to progress with routine decisions through a straightforward voting mechanism. By understanding the simple majority principle, the role of the articles, and the differences from special resolutions, boards and shareholders can manage their duties efficiently and with confidence. Whether conducted at a meeting or by written consent, ordinary resolutions keep corporate life moving forward, while safeguarding governance structures and ensuring transparency in decision-making.
In summary, what is an ordinary resolution? It is a decision of the company approved by a simple majority of those voting, applied to matters that are routine rather than fundamental. With careful preparation, clear communication, and compliance with the articles and the law, ordinary resolutions support good governance, promote accountability, and maintain the smooth operation of the entity.