Written resolutions and electronic circulation and signing

Posted: 15/12/2020

This update follows on from our previous article on flexible governance arrangements that can be put in place in light of the Corporate Insolvency and Governance Act 2020.

At the moment, many organisations will be using written resolutions to pass shareholder/company member resolutions given the difficulties in being able to hold in-person meetings. These written resolutions are most likely being circulated electronically and shareholders/company members may also be indicating their agreement by using electronic signatures.

Companies can find the rules around the circulation of a written shareholder/company member resolution in electronic form in section 291(3) of the Companies Act 2006 (CA 2006). The rules for a community benefit society should also contain provisions; for example, rule C35 of the National Housing Federation Model Rules 2015 allows for written resolutions to be sent using electronic communication.

Although section 291(3) of CA 2006 permits circulation of written shareholder resolutions by a company in electronic form, a company will need to comply with the requirements of Schedules 4 and 5 of the CA 2006 in relation to electronic communications to and by a company. If a written resolution is to be signed by way of an electronic signature, it will need to be treated the same as if a written resolution were circulated by email to be printed off, signed, scanned and emailed back, which includes obtaining shareholders' consent to receiving documents or information in electronic form.

Your company's articles/society’s rules should be checked for provisions on electronic communications to ensure you are acting in accordance with your constitutional documents. The notes accompanying the form of written resolution should also be reviewed carefully to ensure that they appropriately reflect the intended method of signing and returning the electronically signed resolution (including if you intend to use an electronic platform such as DocuSign).

Please do get in touch if you have any questions about this update or if you’d like us to review your written resolution forms and procedures.

Extension of the Corporate Insolvency and Governance Act 2020

The Government has confirmed it is extending the flexibilities offered in the Corporate Insolvency and Governance Act 2020. Companies and other qualifying bodies, including community benefit societies, with obligations to hold AGMs will continue to have the flexibility to hold these meetings virtually until 31 March 2021 (even if your constitutions do not allow for this flexibility). The extension also reinstates the temporary suspension of the wrongful trading measures that ended on 6 November until 30 April 2021.  

Please note that this will temporarily override any provisions to the contrary within your organisation’s constitutional document. However, organisations should consider updating their constitutions to accommodate agile governance arrangements. Please do get in touch with any of our team if you’d like an initial conversation regarding this, free of charge.

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