Directors’ Resolutions: When You Need One and How To Pass It

If you run a limited company, you’ll eventually hit a point where an important decision needs to be made “properly” - not just agreed in a chat, an email chain, or a quick call between directors.

That’s where a directors’ resolution comes in. It’s a practical way to record director decisions in a clear, compliant format, so your company can prove what it decided, when, and who approved it.

In this guide, we’ll walk you through what a directors’ resolution is in the UK, the situations where you’ll usually need one, and how to pass one in a way that protects your business (and the people running it).

What Is A Directors’ Resolution (And Why Does It Matter)?

A directors’ resolution is a formal company document that records a decision made by the directors of a company.

Think of it as the written proof of a board decision. Even in a small company with one or two directors, documenting decisions matters because it:

• creates a paper trail (helpful for banks, investors, accountants, auditors, and sometimes regulators)
• reduces disputes (“we agreed this” is much easier to prove when it’s written down)
• helps show directors acted properly and in line with their duties
• supports compliance with your company’s constitution and the Companies Act framework

Many directors’ resolutions are also used to authorise someone to sign contracts or take steps on behalf of the company. If you’ve ever had a supplier ask, “Can you show authority for this?” - a resolution is often the simplest answer.

Directors’ Resolution Vs Shareholders’ Resolution

It’s easy to mix these up, especially if you’re a founder wearing multiple hats.

• Directors’ resolutions are decisions made by the board (the directors) as part of managing the company’s day-to-day and strategic operations.
• Shareholders’ resolutions are decisions made by the owners (shareholders) and usually relate to big structural or constitutional decisions.

Some decisions must be made by shareholders (or require both directors and shareholders). If you have a Shareholders Agreement, it may also set out certain “reserved matters” that require shareholder approval even if directors want to proceed.

Do Small Companies Really Need These Formalities?

In practice, yes - even if you’re a one-director company.

Small businesses often need to show:

• why money was moved
• why a contract was signed
• why a director was appointed or resigned
• why shares were issued or transferred

When it’s not properly documented, you can end up with delays, rejected applications, or messy internal disagreements later (especially if the business grows, takes investment, or a co-founder relationship changes).

When Do You Need A Directors’ Resolution? Common Scenarios For UK SMEs

There’s no single master list because the exact requirements depend on:

• your Company Constitution (your Articles of Association)
• any shareholders’ agreement or investor documents
• what a bank, landlord, investor, or counterparty requires as evidence
• the legal form of what you’re doing (e.g. entering a deed vs a standard contract)

That said, UK small businesses commonly use a directors resolution for the following.

1) Entering Into A Significant Contract

If the contract is high value, long-term, or risky (for example, a major supplier agreement, a large client deal, or a new commercial lease), it’s common to pass a resolution approving:

• the company entering into the contract
• the final form of the agreement (sometimes attached as a schedule)
• who is authorised to sign on the company’s behalf

This becomes especially important where you’re signing a deed or something with a formal execution clause - execution is an area where small errors can cause big headaches. The rules can get technical, so it’s worth understanding the basics of executing contracts and deeds.

2) Appointing Or Removing A Director

Appointments and resignations should be clearly recorded. A directors’ resolution often covers:

• the appointment or acceptance of a resignation
• authority to file Companies House forms
• updates to company records (registers, statutory books)

Even where Companies House filings are made, your internal company records should match what’s been done externally.

3) Opening A Bank Account Or Agreeing A Loan

Banks commonly ask for a board resolution as part of onboarding, particularly where:

• the company is borrowing
• there are multiple directors
• there are restrictions in the Articles

A resolution can also document that the directors considered affordability and risk - which can be useful if questions come up later about whether directors acted responsibly.

4) Issuing Shares Or Approving Share Transfers

Share issuances and transfers often require:

• director approval (e.g. approving the allotment of shares)
• shareholder approval (depending on what you’re doing and your constitution)
• updating registers and issuing share certificates

If you’re bringing in a new co-founder, investor, or doing an employee incentive arrangement, getting the approvals right is crucial - otherwise you can end up with “paper ownership” that doesn’t match legal reality.

5) Declaring Dividends

Dividends aren’t just “taking money out” of the company. Exactly what’s needed can depend on whether it’s an interim dividend (typically decided by the directors) or a final dividend (which is usually recommended by the directors but approved by shareholders, depending on the Articles).

In practice, directors will usually want a clear paper trail confirming that:

• the company has sufficient distributable profits
• the dividend is declared or recommended in line with the Articles
• the dividend will be paid to the correct shareholders

Accountants often ask for these records because dividends affect company reporting and shareholder tax positions. (Sprintlaw can help with the legal documentation and process, but we don’t provide tax or accounting advice.)

6) Approving Key Policies Or Compliance Steps

Depending on your business, a directors’ resolution may also be used to adopt key internal documents and processes - for example, when you implement data protection measures and formally adopt a Privacy Policy, or approve internal risk controls.

How Do You Pass A Directors’ Resolution In The UK?

In the UK, directors can usually pass resolutions in two main ways:

• at a board meeting (a meeting of directors where the decision is discussed and voted on); or
• as a written directors’ resolution (directors sign a written document approving the decision, without holding a meeting).

The correct method depends on your Articles of Association and any other governance documents.

Option 1: Passing A Directors’ Resolution At A Board Meeting

A board meeting route is often best where:

• the decision is sensitive or complex
• there are conflicts to manage (e.g. a director has an interest)
• directors want the discussion properly recorded

In practice, the steps look like this:

1. Check your Articles for notice requirements, quorum (minimum number of directors needed), and voting rules.
2. Send meeting notice and agenda to the directors.
3. Hold the meeting (this can usually be in person, by phone, or video call, subject to your Articles).
4. Vote on the resolution and confirm it’s passed according to your Articles.
5. Prepare the written record of what happened.

Even if the meeting is informal, it’s important to produce clear meeting minutes of board meetings that reflect the decision and any key points.

Option 2: Passing A Written Directors’ Resolution

A written directors resolution is common for small businesses because it’s quick and tidy - especially when directors are aligned and you don’t need a detailed discussion on record.

Typically, the process is:

1. Draft the resolution with clear wording (what is approved, any limits, and who is authorised to act).
2. Circulate it to all directors entitled to vote.
3. All required directors sign (this may need to be unanimous in some cases - for example, under the Model Articles it’s commonly drafted to require all eligible directors to indicate agreement - or it may be a majority, depending on your Articles).
4. Store it with your company records (and provide copies to relevant parties such as your accountant or bank).

If you want something practical to start from, a Directors Resolution template can help ensure you include the standard clauses and formalities.

Do Directors’ Resolutions Need To Be Filed With Companies House?

Most directors’ resolutions do not need to be filed with Companies House.

However, the action you take following the resolution might trigger Companies House filings - for example, appointing a new director or allotting shares.

Even where nothing is filed, you should still store your directors’ resolutions safely as part of your statutory company records.

What Should A Directors’ Resolution Include? (A Simple Checklist)

A well-drafted directors resolution should be clear enough that someone reading it later (who wasn’t involved) can understand exactly what was approved and why it matters.

While the content changes depending on the decision, most directors’ resolutions include:

• Company name and registered number
• Date the resolution is passed
• Names of the directors approving the resolution
• The decision in precise terms (what is being approved)
• Authority to act (e.g. authorising a named director to negotiate, finalise, and sign)
• Any conditions or limits (e.g. cap on spend, requirement to obtain legal review, requirement for shareholder approval)
• Signatures of directors (and sometimes a company secretary if relevant)

Be Careful With Signing Authority

A common issue for small businesses is assuming that any director (or senior employee) can sign anything at any time.

In reality, signing authority depends on:

• your internal company rules (Articles and board decisions)
• how the contract is executed (especially for deeds)
• what the counterparty requires as evidence

It’s worth getting comfortable with the basics of legal signature requirements so your documents don’t get challenged later.

Watch Out For Conflicts Of Interest

If a director has a personal interest in a transaction (for example, the company is contracting with a business owned by a director, or granting a director a loan), you need to manage conflicts properly.

Your Articles will usually have rules about:

• declaring the interest
• whether that director can vote
• whether they count towards quorum

If you don’t handle conflicts correctly, you risk the decision being challenged - and you risk directors breaching their legal duties.

Common Mistakes With Directors’ Resolutions (And How To Avoid Them)

Directors’ resolutions are meant to make life easier, but only if they’re done properly. Here are some common traps we see with UK SMEs.

Using Vague Wording

A resolution that says “approved” without specifying what was approved can be close to useless later.

Instead, be specific about:

• the transaction / contract name
• the parties
• the main commercial points (price, term, key obligations)
• who has authority to sign

Passing A Directors’ Resolution When You Actually Need Shareholder Approval

Some decisions are not just “board level”. Depending on what you’re doing, you might need:

• an ordinary resolution of shareholders
• a special resolution of shareholders
• both a directors’ resolution and a shareholders’ resolution

For example, changing your Articles, certain share rights changes, or other fundamental company actions often require shareholder approval.

If you’re unsure which resolution you need, it can help to step back and confirm whether the decision is a board management decision or an ownership/constitutional decision. The distinction matters.

Not Keeping Records Organised

It’s not enough to pass a directors resolution - you also need to store it properly.

Good recordkeeping helps with:

• due diligence if you sell or raise money
• accounting and tax documentation
• internal disputes
• audit trails

At a minimum, keep a dedicated folder (digital and/or physical) for corporate records, and store signed resolutions and minutes together.

Relying On DIY Templates For Complex Decisions

Templates can be a helpful starting point, but they’re not one-size-fits-all.

If your resolution relates to:

• a significant contract
• a related party transaction
• borrowing or security
• share issuances or complex cap tables

…it’s worth getting legal help to make sure the document actually does what you need, and matches your constitution and wider transaction documents.

Key Takeaways

• A directors’ resolution is a formal record of a decision made by a company’s directors, and it helps protect your business by creating clear evidence of what was approved.
• UK small businesses commonly use directors’ resolutions to approve major contracts, appoint or remove directors, open bank accounts, borrow money, issue shares, and deal with dividends.
• You can usually pass a directors’ resolution either at a board meeting (with minutes) or as a written directors’ resolution, depending on what your Articles allow.
• A strong resolution should clearly identify the company, the decision, who is authorised to act, and include proper signatures - vague wording can cause avoidable disputes and delays.
• Always check whether shareholder approval is required as well, particularly for “big” decisions that affect ownership or your company’s constitution.
• Getting the paperwork right early on can save you time (and stress) later - especially if you plan to raise investment, expand, or sell the business.

If you’d like help drafting or reviewing a directors’ resolution, or you want to make sure your company approvals process is set up properly, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.