Recording format for resolutions passed by directors of a company

Recording format for resolutions passed by directors of a company

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This document is a template recording format for resolutions passed by directors of a company.

A company has a "strict liability" to keep a minute book in which it records resolutions passed by the directors of the company (section 251A of the Corporations Act 2001 (Cth)).

When a company is acting as trustee of a trust, it is important from an evidentiary point of view to establish that this has occurred in law. It is for this reason that this precedent in the trusts section of the Australian Encyclopaedia of Forms and Precedents with respect to the passing of resolutions by directors of a company have been prepared so they can be used in any one of the following circumstances:

·            where there is a sole director of the company;

·            where the resolutions are to be passed by way of a "circulating resolutions document". Not all directors can sign a circulating resolution. Ford in Principles of Corporations Law in paragraph 7.350 states “It is to be noted that s 248A(1) refers to the circulating resolution being signed by all directors "entitled to vote on the resolution". This recognises that some directors may not be entitled to vote on a resolution because, for example, they may have a conflict of interest. Absent the exclusion of ineligible directors, there can be no circulating resolution if, for example, a director has an interest disqualifying him or her from voting: Re Southern Resources Ltd (1989) 15 ACLR 770 pursuant to the replaceable rule in section 248A of the Corporations Act 2001 (Cth);

·            where the resolutions are to be passed by way of a "circulating resolutions document" pursuant to an article in the constitution of the company. If there is no specific article in the constitution of the company authorising circulating resolutions and the replaceable rule in section 248A does not apply, the circulating resolution format to record resolutions of the directors must not be used. Ford in Principles of Corporations Law in paragraph 7.350 states “In any event unless the company's constitution allows it or the company elects to have the replaceable rule contained in section 248A apply to it, approvals to proposed decisions given by directors separately without opportunity for exchange of views, even if all the directors approve, cannot constitute an effective substitute for a resolution at a meeting: R v Byrnes (1996) 20 ACSR 260 at 270; 14 ACLC 1356; BC9602037”; or

·            where they are to be passed at a meeting of directors. For example, regulation 77 in Table A of Schedule 1 of the 1995 version of the Corporations Law stated:

77.1 If all the directors have signed a document containing a statement that they are in favour of a resolution of the directors in terms set out in the document, a resolution in those terms shall be deemed to have been passed at a meeting of the directors held on the day on which the document was signed and at the time at which the document was last signed by a director or, if the directors signed the document on different days, on the day on which, and at the time at which, the document was last signed by a director.

77.2 For the purposes of subregulation (1), 2 or more separate documents containing statements in identical terms each of which is signed by one or more directors shall together be deemed to constitute one document containing a statement in those terms signed by those directors on the respective days on which they signed the separate documents.

77.3 A reference in subregulation (1) to all the directors does not include a reference to a director who, at a meeting of directors, would not be entitled to vote on the resolution.

When resolutions take effect

Note that:

(a)        section 248A(2) provides that separate copies of this document may be used for signing by directors if the wording of the resolutions and statement is identical in each copy; and

(b)        section 248A(3) states that the resolutions are passed when the last director signs.

Related precedents

This precedent should be used in association with each of the following precedents:

·            “Resolutions of directors of new trustee (a company) to execute deed of appointment of new trustee of trust”;

·            “Resolutions of directors of retiring trustee (a company) to execute deed of appointment of new trustee of trust”;

·            “Resolutions of directors of trustee (a company) to establish discretionary trust”;

·            “Resolutions of directors of trustee (a company) to establish a unit trust”;

·            “Resolutions of directors of initial unit holder (a company) to execute unit trust deed”;

·            “Resolutions of directors of company applying for units in unit trust”; and

“Resolutions of directors of trustee company distributing income of discretionary trust”.

This document has been authored for Lexis Nexis by Selwyn L Black Peter D Carroll, Carroll & O’Dea and updated by Jane Garber-Rosenzweig, Gable Lawyers.

This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.