Overview of a Shareholders’ Resolution to Alter Constitution
What is a Shareholders Resolution to Alter Constitution?
A Shareholders’ Resolution to Alter Constitution is a resolution to amend the current constitution of a company.
A Shareholders’ Resolution to Alter Constitution is a special resolution (i.e., requires approval of more than 75% of shareholders attending and voting on the matter).
After using a Shareholders’ Resolution to Alter Constitution, remember to file the relevant form to update the relevant government department or registry within the statutory time limit.
There are two options when using a Shareholders’ Resolution to Alter Constitution:
-if a general meeting (i.e., a meeting of shareholders) is convened to change company name, use a Minutes of a General Meeting to Alter Constitution; or
-if the company has only one shareholder or the shareholders choose to pass the resolution by way of a written resolution (which must be signed by shareholders representing at least 75% of total voting rights, unless the company’s constitution provides otherwise), use a Written Resolution to Alter Constitution.
How do you amend a company’s constitution?
If a company has only one shareholder or the shareholders choose to alter the company constitution, it requires the approval of more than 75% of the shareholders, which can be termed as a Shareholders’ Resolution to Alter Constitution. There are various steps that need to be taken before altering a company constitution.
1. Reviewing Existing Constitution: Before making any changes, the first step is to review and analyze the existing constitution. There are guidelines in which a company constitution can be altered. So, it is always a best practice to review the existing constitution, find flaws, and rewrite it.
2. Issuing a Notice: After reviewing the existing constitutions and finding areas to improve or change the next step is to issue a notice of special resolution and general meeting.
3. Conducting a General meeting: It is very important to call a general meeting and pass a special resolution because amending a company constitution requires the approval of more than 75% of shareholders attending and voting on the matter.
4. Creating Proxy: sometimes it is not feasible for every shareholder to attend the general meeting so in such a situation a proxy voting is created which enables a third person to vote on the general meeting on the behalf of shareholders.
What right do all common shareholders have over a company?
The main rights that all common shareholders have over a company are:
Voting Rights: Every shareholder has a voting right to elect the directors in the company annual meeting. If they are not able to vote physically, they can do so by using a proxy and mail in their vote.
Ownership in a portion of the company: Every shareholder has some amount of ownership in the company. However, the influence of shareholders over a company entirely depends upon the number of shares he/she acquires. They also have a claim on the portion of assets owned by the company.
Right to dividends: Dividends can be defined as the sum of money paid to shareholders by the company out of its profits. So, whenever the company makes some profit all the shareholders have the right to get the dividends out of that profit.
Right to transfer ownership: All the common shareholders have the right to sell their shares to another person according to their needs. When they sell their shares, automatically the ownership gets transferred to another person.
Right to information: Shareholders are also entitled to the right to information such as examining basic documents like company bylaws and minutes done by board meetings.
After passing the Shareholders’ Resolution to Alter Constitution with a majority of more than 75% of shareholders, a company can adopt a new constitution. A company constitution can be altered according to the needs and requirements of the business. So, analyzing an existing constitution helps in creating a better version of the existing constitution and saves time and money.
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