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Jurisdiction: Australia Wide
What is a circulating resolution?
A circulating resolution allows a resolution to be passed without the need for convening a meeting. When the last director signs the resolution, it is passed.
What is the purpose of this resolution?
This resolution allows a board of directors to formally constitute a committee.
In what situation would I use this resolution?
Let’s say you have 10 company directors, your constitution states that you need 6 directors to constitute a quorum. This means at every director’s meeting you need 6 people. If you establish a committee then you can state how many people are involved. You may stipulate that 4 people are appointed as committee members and a quorum if only 3 people.
This resolution is useful if some directors had specific skills. For example, let’s say you had 3 directors who are accountants. The rest of the directors lack accounting knowledge. You could form a committee of the 3 directors to analyse a possible takeover target. They then come to the board with a recommendation. This allows the other directors to concentrate on other matters.
Why do I need to document this resolution?
The Corporations Act 2001, Section 251A and Best Practice Guidelines require a Corporation to keep records and minutes of all meetings held. Adhering to Best Practice guidelines ensures good corporate governance. Good Corporate Governance is the term used when the company is managed well. That is, the Directors act transparently in the best interests of shareholders and all stakeholders are protected.
WARNING: The Directors are ultimately liable for the company’s compliance with the Corporations Act 2001. If the Directors fail to keep minutes and properly record resolutions they may be charged with a civil offence under the Corporations Act 2001.
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This Circulating Resolution allows a Board of Directors to formally appoint a Committee.
Let’s say you have 10 company directors, your constitution states that you need 6 directors to constitute a quorum. This means at every director’s meeting you need 6 people. If you establish a committee then you can state how many people are involved. You may stipulate that 4 people are appointed as committee members and a quorum if only 3 people.
This resolution is useful if some directors had specific skills. For example, let’s say you had 3 directors who are accountants. The rest of the directors lack accounting knowledge. You could form a committee of the 3 directors to analyse a possible takeover target. They then come to the board with a recommendation. This allows the other directors to concentrate on other matters.
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The Corporations Act 2001, Section 251A and Best Practice Guidelines require a Corporation to keep records and minutes of all meetings held. Adhering to Best Practice ensures that Directors act transparently in the best interests of shareholders and all stakeholders are protected.
WARNING: The Directors are ultimately liable for the company’s compliance with the Corporations Act 2001. If the Directors fail to keep minutes and properly record resolutions they may be charged with a civil offence under the Corporations Act 2001.
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Please provide your full company name
For example,
Smith Corporation Pty Ltd
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An ACN is an "Australian Company Number". This is a special unique number issued by the Australian Securities and Investment Commission.
An ACN must be displayed on all official company documents.
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A Circulating Resolution is an official company document.
An ACN needs to be shown on all official company documents.
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All Company Directors must sign the Circulating Resolution for it to be passed.
All you need to provide is the full names of all Company Directors as they will be signing the Circulating Resolution.
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You need to press "add" and keep adding every director that the company has. This includes not just the directors on the sub-committee - it includes every director.
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Don't worry. To keep it flexible and allow you to change the sub-committee from time to time you are able to tick the names of those directors which are currently on the sub-committee.
This is Best Practice.
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The Board may have many Committees.
For example, the board may have a Committee for Director's remuneration and an Audit Committee.
We need to know the purpose of the Committee to properly define the Committee's powers and functions.
It is no use appointing a Committee if they do not have a purpose!
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This document has been prepared by the law practice Law Central Legal
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