Company resolutions are usually created in meetings such as annual general meetings and extraordinary general meetings. They provide much information with regard to the course of action to be taken by the company. Thus, all companies in Malaysia can make use of company resolutions.
Companies across Malaysia are often required to make company resolutions. The Articles of Association and memorandum usually combine to form the constitution of most companies. They specify the rules by which the company is to be run and administered. However, in order to make certain decisions or change the constitution itself, certain resolutions are to be passed. Such a course of action is to be taken by a person who is among the company’s directors or shareholders. These can be made at general meetings or board meetings. Company resolutions may either be ordinary or special resolutions. A company resolution is a corporate action, sometimes in the form of a legal document, that will be voted on or has been voted on at a meeting of the board of directors of a corporation. A company resolution may be related to any topic which is related to the company. Among the most common company resolutions are those which specify the identities of those who have been granted the authority to take actions in the name of the company. This is because such information is often required by banks and other financial institutions. The form and structure of a company resolution will differ from company to company; every company in Malaysia has its own methods of creating company resolutions.
Definition of a Company Resolution
A company resolution is a written statement created by the board of directors of a company. It provides information on a corporate action to be taken. A company resolution is usually made during the annual general meeting of a company. The form and structure of every company resolution is determined by the company which makes it.
A company resolution can be about almost any matter which affects the inner workings of a company. Company resolutions provide the specific details of the action which will be taken by the company. They also specify the date of the meeting during which the resolution was created. Company resolutions may be related to important matters such as acquisitions, loans, purchases of property, identities of new board members, share sales, and filing for patents, among other important topics. If a vote leads to approval of the company resolution, the company resolution will begin to serve as a form of official documentation. Company resolutions do not usually need to be submitted to any government body.
Types of Company Resolutions in Malaysia
In Malaysia, company resolutions are made in relation to any formal decision made by a company. Company resolutions may either be ordinary or special. They may either be made by members of the board of directors or shareholders. Other details related to company resolutions are determined by the Companies Act and the company constitution.
Company resolutions may be made by the shareholders or board of directors of a Malaysian company. When shareholders make a formal decision, the resolution is known as a shareholder resolution. When the board of directors does so, the resolution is known as a board resolution.
The board of directors of a company manage the business of the company, and Malaysia’s Companies Act specifies that the members of the board directors are to make all decisions for the company except for those to be made by shareholders as specified in either the Companies Act or the memorandum and Articles of Association of the company. The members of the board of directors are to make these formal decisions through the passing of board resolutions. Board resolutions are needed whenever the Companies Act, company constitution, or any external parties require that they be used by the company which is making an important corporate decision. In most cases, board resolutions are passed when they are approved by a simple majority; however, if the company constitution stipulates otherwise, such is not the case.
A special resolution is a formal decision which has been passed through the approval of a majority voters in a meeting. Although ample written notice must be given before the meeting may be held, it could be held at shorter notice through an agreement by members who hold a significant portion of the company’s voting rights. Special resolutions are usually needed for the most important of a company’s decisions to be made.
An ordinary resolution is a formal decision made by a company passed through the approval of a simple majority of voters during a meeting.
Methods Through Which a Company Resolution Could Be Passed
In a Malaysian company, the majority of all company resolutions are passed at physical meetings during which the company’s shareholders or board of directors meet. Board resolutions may be made at a meeting of the board of directors, while shareholders’ resolutions may be made at a general meeting of shareholders.
It may not always be possible to hold physical meetings because the relevant parties might not necessarily be able to be physically present. When such is the case, a company may choose to pass a resolution through written means. A written resolution serves as an alternative to a resolution passed during a physical meeting.
Requirements for the Passing of a Resolution
There are several general requirements which must be fulfilled before the passing of a company resolution may be made. Company resolutions are only allowed to be passed during a meeting which has been properly convened and fulfills all other requirements. The company resolution must be saved in the records kept by the company after the meeting has been held. The minutes of the meeting are also required to be signed by the chairperson of the meeting. A company which fails to follow these requirements might find that the outcome of the company resolution may become void.
Why Company Resolutions Are Important
Company resolutions are important to every company in Malaysia because they document the decisions made and actions taken by a corporation’s board of directors. Every significant action of the corporate board must be stated in the form of a company resolution. These company resolutions serve as documents that hold the board accountable and prove to licensing boards and government regulators that the board is acting in a proper manner. Corporations are generally intended to be separate entities from their owners; thus, they are to have separate liability from the owners. Company resolutions assist in upholding this separation.
Members of a board of directors do not need to make resolutions for the daily activities of the business. These activities include hiring of employees, paying of debts, and engaging with customers, among others. Such activities are directed by the company’s corporate officers who are allowed to do so by the board of directors. On the other hand, most decisions which do not have to do with the normal day-to-day running of a business will require a resolution to be passed. Company resolutions are also to be passed with regard to any decision which affects the constitution or rules of a company. Such decisions include the appointing of company directors, the changing of directors’ powers, the changing of the company’s name, and the changing of the company’s share structure. The company’s Articles of Association typically state if a resolution is required for a certain decision to be made. Occasionally, they may also determine the type of resolution needed, whether they be ordinary or special.
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Company Resolutions in Malaysia FAQs
In many businesses in Malaysia, the same people often serve as the shareholders, directors, and employees of the company at the same time. These frequent instances of overlap often lead to confusion regarding the decisions to be made by shareholders and directors make. For this reason, almost all business entities in Malaysia will require company resolutions to be passed at some point.
According to the Companies Act, shareholders are provided with the privilege to request the holding of a general meeting. During this general meeting, they submit their proposals for resolutions. Usually, general meetings are requested by shareholders to consider matters which are within the directors’ exclusive powers or functions. Proposed resolutions are not constitutional amendments and cannot be legally changed by the company during any general meeting
The extent to which a company resolution can be amended depends on the type of resolution which is involved. Special and ordinary resolutions are to be changed in different ways. A special resolution is not allowed to be amended except with regard to minor details such as the correction of grammatical or spelling errors.
Ordinary resolutions can be amended regardless of whether either the text of the resolution or merely the general nature of the business is involved. Any amendments made to company resolutions of a Malaysian company are to be related to the content of the resolution itself, not result in additional burdens to become imposed on the company, and not undo the effects of any related resolutions.