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.

Conclusion

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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