Overview of a Shareholders’ Resolution to Appoint Directors

What is a Shareholder’s Resolution to Appoint Directors?

Shareholders’ Resolution to Appoint Directors is a resolution passed by the shareholders of a company to appoint new directors.
A Shareholders’ Resolution to Appoint Directors is normally an ordinary resolution; that means it requires the approval of more than 50% of shareholders attending and voting on the matter.

There are two options when using a Shareholders’ Resolution to Appoint Directors:
If a general meeting (i.e., a meeting of shareholders) is convened to appoint the directors, use a Minutes of a General Meeting to Appoint Directors; or

If the company has only one shareholder or the shareholders choose to pass the resolution by way of a written resolution, use a Written Resolution to Appoint Directors.

What is the relationship between shareholders and directors?

In most cases, shareholders hold the maximum power in the company but the responsibility of day-to-day operation is given to directors. Directors and shareholders work closely discussing strategies, making long term plans, and implementing those plans in a transparent manner.

What right do all common shareholders have over a company?

The main rights that all common shareholders have over a company are:

1. 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.

2. 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 holds. They also have a claim on the portion of assets owned by the company.

3. 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.

4. Right to transfer ownership: All the common shareholders have the right to sell their shares to another person according to their need. When they sell their shares, automatically the ownership gets transferred to another person.

5. 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.

Can shareholders overrule directors?

In most cases, the director has the power under the company rule to make decisions in favor of the company so in that case, shareholders cannot directly overrule directors. But if directors are misusing their power, not in the favor of the company then a shareholder has the right to call the general meeting and appoint a new director if the majority of shareholders agree to do the same.

Can shareholders dismiss a director?

Shareholders who have a minimum of 5 % shares in the company have the legal right to call the general meeting if they are not satisfied with the decision made by the director. So, if more than 50% of the shareholders voted for the dismissal of the director, automatically the director is dismissed.

What is in a Shareholders’ Resolution to Appoint Directors?

Ensure that the following items are always part of this Shareholders’ Resolution to Appoint Directors

-Full legal entity name of the company
-Details of the meeting, including the location, the agenda, the date, and any meeting minutes
-Date of passing the resolution
-Full legal names of the directors


A good relationship between the Board and Shareholders is important to proper governance. A simple document outlining appointments of new directors is an easy way to ensure that all corporate matters are kept up to date. Trust Zegal in providing this.

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