What Is An Ordinary Resolution Under The UK Companies Act?

If you run a UK limited company, there will be times when you need the shareholders to formally approve a decision.

That’s where a resolution comes in.

In practice, many day-to-day company decisions are approved using an ordinary resolution - and getting it right matters. If you don’t follow the right process under the Companies Act 2006 (and your company’s own rules), you can end up with decisions that are challengeable, hard to rely on, or problematic when you’re dealing with banks, investors, or a future sale.

This guide breaks down what an ordinary resolution is, when you need one, how to pass it, and what to watch out for as a director or shareholder in a small business.

What Is An Ordinary Resolution?

So, what is an ordinary resolution?

An ordinary resolution is a shareholders’ decision passed by a simple majority of votes (more than 50%) at a general meeting, or (in many cases) by a written resolution procedure.

It’s one of the main ways shareholders exercise control over a company. Directors manage the business day-to-day, but certain decisions are reserved for shareholders under the Companies Act 2006 and/or your company’s constitution.

Ordinary Resolution Companies Act: The Voting Threshold

Under the Companies Act 2006, an ordinary resolution is passed when it receives:

• More than 50% of the votes cast by eligible shareholders (whether at a meeting or via written resolution, depending on the method used).

“Eligible” here means shareholders who are entitled to vote on that resolution (for example, some shares may be non-voting, or voting may be restricted by the articles or a shareholders agreement).

How It’s Different From A Special Resolution

The key difference is the level of shareholder support needed:

• Ordinary resolution: more than 50% approval.
• Special resolution: typically 75% or more approval (used for bigger structural decisions).

As a small business owner, the “ordinary vs special” question comes up a lot - because if you use the wrong type, you might not actually have the authority you think you have.

When Do You Need An Ordinary Resolution?

Ordinary resolutions are commonly used for routine shareholder approvals and governance steps. They’re especially common in owner-managed companies where shareholders and directors overlap - but you still need to document the decision properly.

Common examples where an ordinary resolution may be required include:

• Appointing a director (this is often a board power under the articles/model articles, but some companies require or choose to get shareholder approval - and investor documents or a shareholders agreement may require it).
• Removing a director (shareholders can remove a director by ordinary resolution, but there is a specific Companies Act procedure including special notice, and it must be done at a meeting rather than by written resolution).
• Approving certain transactions where shareholder consent is required (this might come from your articles, a shareholders agreement, or investor terms).
• Ratifying acts by directors (in some situations, shareholders can approve/ratify particular conduct).
• Authorising political donations (where applicable).

Two important “small business reality checks”:

• Your articles (and any shareholders agreement) may add extra requirements even where the Companies Act doesn’t. For example, you might need a higher threshold than 50% for certain decisions.
• Some decisions must be special resolutions even if you’d rather keep things simple (for example, changing the articles is usually special, not ordinary).

If you’re not sure what rule applies, it’s worth checking your Company Constitution and any side agreement between shareholders.

How Do You Pass An Ordinary Resolution In Practice?

An ordinary resolution can generally be passed in one of two ways:

• At a general meeting (for example, an AGM or EGM).
• By a written resolution (a document circulated to shareholders for signature/approval, without holding a physical meeting) - except where the Companies Act requires a meeting (for example, removing a director under section 168).

Which option you choose often depends on:

• how quickly you need the decision,
• how many shareholders you have,
• whether shareholders are aligned or you expect disagreement, and
• what your articles say about decision-making.

Option 1: Ordinary Resolution At A General Meeting

If you pass the resolution at a general meeting, you’ll need to think about:

• Notice: Shareholders must be given proper notice of the meeting (and the proposed resolution), unless notice is validly shortened with consent.
• Quorum: Your articles usually set the minimum number of shareholders needed to hold a valid meeting.
• Voting method: This could be a show of hands or a poll (and the outcome can differ depending on method).
• Minutes: Keep accurate records of what was proposed and passed.

Even if it’s just you and your co-founder in a room, you should still document it properly. Clean governance records can save you a lot of pain later (especially if you raise investment, bring in a new shareholder, or sell the business). Keeping compliant meeting minutes is a great habit to build early.

Option 2: Ordinary Resolution By Written Resolution

Written resolutions are popular for small companies because they’re efficient and you don’t need to get everyone in the same place.

However, the process still matters - and written resolutions are not available for every type of decision under the Companies Act (for example, removing a director requires a meeting).

You’ll typically need to:

1. Draft the resolution clearly (what exactly is being approved?).
2. Circulate it to all eligible shareholders in line with the Companies Act and your articles.
3. Give shareholders the required time to respond (unless everyone signs immediately).
4. Confirm the voting outcome (more than 50% of eligible votes).
5. Store the resolution with your company records.

If you need a starting point, using an Ordinary Resolution format can help you make sure you’re covering the essentials - but it’s still important to tailor it to the decision and your company’s constitution.

What Should An Ordinary Resolution Include?

For an ordinary resolution to be useful (and enforceable in the real world), it should be clear, specific, and properly recorded.

At a minimum, it’s good practice for an ordinary resolution to include:

• The company name and company number.
• The type of resolution (state it’s an “ordinary resolution”).
• The exact decision being approved (avoid vague wording like “approved generally”).
• The date the resolution is passed.
• Who voted and how (especially if not unanimous).
• Signatures (for written resolutions) or confirmation it was passed at a meeting.

Be Careful With “Hidden” Approval Requirements

One of the most common traps for small businesses is assuming that because shareholders own the company, they can approve anything by a simple vote.

In reality, you may have:

• different share classes with different voting rights,
• reserved matters requiring a higher threshold,
• director powers limited by the articles, or
• investor veto rights (common once you raise funding).

This is why having a properly drafted Shareholders Agreement can be so valuable - it sets out who can decide what, and how decisions must be approved, before disagreements (or growth) make things messy.

Do You Need Witnesses Or Special Signing Rules?

Most ordinary resolutions don’t require witnesses in the same way deeds do, but signing formal company documents can still trip people up.

For example, if your resolution is approving entry into a deed (or you’re documenting a transaction that requires a deed), execution rules may apply. It’s worth understanding the difference between standard signatures and deeds, and who can sign on the company’s behalf. If you’re dealing with a deed or formal execution requirements, executing contracts properly becomes crucial.

Do Ordinary Resolutions Need To Be Filed With Companies House?

It depends.

Many ordinary resolutions are kept internally (in your statutory books/company records) and do not need to be filed with Companies House.

However, some shareholder decisions trigger filings or updates - either because:

• the Companies Act requires it,
• Companies House requires a specific form for the change (for example, director appointments), or
• your company is making changes to its public record.

Typical examples of changes that often involve filings include:

• Director changes (appointment/resignation/termination).
• Allotting shares (often requires forms/returns).
• Registered office address changes.

The practical takeaway is: even if the resolution itself isn’t filed, the outcome of the resolution may require a Companies House filing. If you’re unsure, it’s worth getting advice before you assume the paperwork is done.

What Records Do You Need To Keep?

As a director, you should treat good record-keeping as part of running a well-managed company. You’ll usually want to store:

• signed written resolutions,
• meeting notices and supporting documents,
• minutes of general meetings, and
• any related board minutes or director resolutions.

This is particularly important if you ever face:

• a dispute between shareholders,
• due diligence for investment or a sale, or
• questions from banks, accountants, or regulators about authority and approvals.

Common Mistakes Small Businesses Make With Ordinary Resolutions (And How To Avoid Them)

Most ordinary resolution issues aren’t about bad intentions - they’re about moving fast and not realising there’s a formal process behind “simple” decisions.

Here are some common mistakes we see in small companies:

1. Using The Wrong Type Of Resolution

If a decision requires a special resolution (75%), passing an ordinary resolution won’t fix it.

This often happens with structural changes like amending the articles or certain capital changes. If you’re unsure, check the Companies Act requirements and your articles before you ask shareholders to vote.

2. Not Following The Correct Notice Or Circulation Rules

Meeting notice requirements, circulation rules for written resolutions, and quorum requirements are easy to overlook - but they can affect whether a resolution is valid.

If you’re holding a formal shareholder meeting (especially where there could be disagreement), it can be worth reviewing meeting mechanics like EGM notice and process requirements.

3. Wording That’s Too Vague To Rely On

A resolution should be specific enough that a third party can read it and understand what was approved.

For example, if you’re authorising directors to sign a particular contract, the resolution should identify:

• the parties,
• the nature of the agreement, and
• any approval limits (like maximum value).

Vagueness can also lead to disputes later (“Did shareholders approve this transaction, or something else?”).

4. Forgetting The “Bigger Picture” Governance Documents

Your company’s decision-making rules don’t live in one place. You may need to consider:

• the Companies Act 2006,
• your articles of association (constitution),
• a shareholders agreement,
• any investment documents or side letters, and
• the specific statutory process for certain decisions (for example, director removal).

If you’ve grown quickly (new shareholders, multiple directors, external investment), it’s worth making sure these documents still reflect how the business operates today.

5. Not Keeping Evidence Of Authority

Even if everyone agreed, you may later need to prove that the decision was properly approved.

This becomes important when:

• a director leaves and challenges past decisions,
• there’s a shareholder dispute, or
• you’re selling the business and due diligence starts digging through your records.

Keeping signed resolutions and tidy minutes is one of the simplest ways to protect your company from day one.

Key Takeaways

• What is an ordinary resolution? It’s a shareholders’ decision passed by a simple majority (more than 50%) under the Companies Act 2006 and/or your company’s constitution.
• Ordinary resolutions are commonly used for routine approvals, but you still need to follow the correct process and record the decision properly.
• You can often pass an ordinary resolution either at a general meeting or via written resolution - but some decisions (such as removing a director) must be made at a meeting under the Companies Act.
• Not all decisions can be made by ordinary resolution; some require a special resolution (typically 75%), so always check the legal and constitutional requirements.
• Many ordinary resolutions don’t need to be filed at Companies House, but the result of the resolution (like appointing a director) often triggers filings.
• Clear drafting, correct voting mechanics, and strong record-keeping help prevent disputes and make future fundraising or sale processes much smoother.

If you’d like help drafting an ordinary resolution, reviewing your company decision-making rules, or putting a clear governance setup in place, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.