ACCA LW: ordinary, special and written resolutions
This outcome tests which resolution type a company needs and how members can pass it, at a meeting or in writing. The examiner likes it because the thresholds are exact and small details, such as the base the percentage is measured against, decide the answer.
The rule
An ordinary resolution needs more than 50% of the votes cast. A special resolution needs at least 75% of the votes cast, and it is normally required to alter the articles. The threshold is fixed by law and cannot be lowered, even if no member objects. A private company may pass most resolutions in writing without a meeting, using the same percentages but measured against all eligible votes, not just those cast. Written resolutions cannot be used to remove a director or an auditor. A special resolution must normally be filed with the registrar.
Worked example
Zed Ltd has 1,000 voting shares. At a general meeting, 800 shares are voted: 620 for and 180 against.
Votes cast test: 620 / 800 = 77.5%. This is above 50% and above 75%, so both an ordinary and a special resolution pass.
Now Zed uses a written resolution instead. Members holding 620 shares signify agreement. The base is all eligible votes: 620 / 1,000 = 62%.
An ordinary written resolution passes (62% is more than 50%). A special written resolution fails (62% is below 75%). The same support gives a different result because the base has changed.
Remember: the percentage is measured against votes cast at a meeting, but against all eligible votes for a written resolution, so silence counts against the proposal in writing.
Where candidates lose marks
Treating the 75% threshold as flexible, for example passing a special resolution by simple majority because no member objects.
Measuring a written resolution against votes cast rather than all eligible votes.
Using a written resolution to remove a director or auditor, which the law excludes.
Checking only the 90% shareholding test for short notice and ignoring the requirement for a majority in number of members.
Try it: 4 questions
Hop Craft Ltd, a private craft brewery company, wants to hold a general meeting (not an annual general meeting) at less than the required notice. It has 10 members and 100,000 voting shares. Four members, holding 91,000 shares between them, consent to short notice. The other six members, holding 9,000 shares, do not consent. Which of the following correctly states whether the meeting can validly be held at short notice?
Answer: B. Rule: a general meeting of a private company may be held at short notice if it is agreed by a majority in number of the members entitled to attend and vote, who together hold at least 90% of the nominal value of the voting shares. For a public company the figure is 95%. Short notice of a public company's AGM needs the agreement of all members. Both tests must be met.
Application: the shareholding test is met, because 91,000 / 100,000 = 91%, which is at least 90%. The headcount test fails, because 4 of 10 members is not a majority. A majority of 10 needs at least 6. So the meeting cannot validly be held at short notice.
Why the other options are wrong: - Option A applies only the shareholding test and ignores the headcount requirement. - Option C confuses this with the unanimity needed for short notice of a public company's AGM. It does not apply to a private company's general meeting. - Option D wrongly borrows the 75% special resolution majority, which has nothing to do with consent to short notice.
Sunarray Ltd, a solar panel installer, is a private company with five members. All of its members are overseas but contactable electronically, and none is expected to object. The company needs approval of an amendment to its articles within three days. Which procedure is most suitable?
Answer: C. Rule: a private company may pass any resolution that could be passed at a general meeting by written resolution, except those excluded by law (such as removing a director or auditor). A change to the articles needs a special resolution (75% or more), and the written procedure applies the same 75% threshold, measured against all eligible votes. It needs no meeting and no minimum notice period, and it works by electronic circulation, so it fits the three-day deadline. A is wrong because an ordinary majority is not enough for a change to the articles. B and D are wrong because holding a meeting needs notice of 14 days or more, which cannot be met in three days, and a written resolution is permitted here anyway. An AGM is also not needed for this business.
Roastwell Co, a coffee roaster, is proposing to alter its articles of association. The finance director makes four statements to the board about special resolutions under generic company law. Which statement is NOT true?
Answer: C. Rule: a special resolution needs a majority of at least 75% of the votes cast, whether on a show of hands, a poll or as a written resolution. The required majority is fixed by law and cannot be lowered because the matter is uncontroversial or because no member objects. Option C is therefore the false statement. Option A is true: 75% is the statutory threshold. Option B is true: altering the articles is a classic matter reserved for a special resolution. Option D is true: special resolutions must normally be filed with the registrar so that the public record shows the change. The trap is C, which treats the threshold as flexible. A simple majority (more than 50%) is only enough for an ordinary resolution.
Press Right Ltd, a printing firm, has 1,000,000 voting shares in issue. At a general meeting a poll is held on a special resolution, which needs at least 75% of the votes cast in favour. The votes are 440,000 for, 150,000 against and 60,000 abstaining. No other shares are represented. Which of the following correctly states the outcome?
Answer: A. A special resolution needs at least 75% of the votes cast. Abstentions are not votes cast, so they are left out of the calculation. Votes cast = 440,000 + 150,000 = 590,000. Percentage in favour = 440,000 / 590,000 = 74.6%. This is below 75%, so the resolution fails. Option B counts the 60,000 abstentions as votes cast (440/650 = 67.7%). Option C divides by all 1,000,000 issued shares (44%), but the test is based on votes cast, not issued shares. Option D confuses the special resolution threshold with the simple majority (over 50%) that an ordinary resolution needs.
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What is the difference between an ordinary and a special resolution?
An ordinary resolution needs more than 50% of the votes cast. A special resolution needs at least 75%, and it is required for matters such as altering the articles.
Can a private company pass a resolution without holding a meeting?
Yes. A private company can use the written resolution procedure for any resolution that could be passed at a general meeting, except removing a director or auditor. No minimum notice period applies, and the percentage is measured against all eligible votes.
Does a special resolution have to be filed with the registrar?
Yes. Special resolutions must normally be filed with the registrar of companies so the public record shows the change.