What You Should Know About Directors Resolution In Singapore

Directors are responsible for managing all the company’s business affairs. Certain decisions in the company will require the official resolutions of the company’s board of directors.

USE OF DIRECTORS’ RESOLUTION IN SINGAPORE

In Singapore, a directors resolution comprises formal documents stating the company’s decisions, initiatives, and goals from every member of the board of directors. Typically, the resolutions are decided by a simple majority vote or approval by every director. The resolution will become the official reference and mandate for managing the company.

Additionally, the board of directors’ resolution is compulsory for company matters such as the following:

• Securing and opening the corporate bank account in singapore must be discussed and decided in the Directors’ Resolution.
• Transactions on every of the company assets must be within the regulations mandated in the Directors’ resolution.
• Issuance of new stocks for the company is under the directors’ resolution based on the discussion made by the board of directors.
• Mergers and acquisitions of the company must be discussed first with all members of the board of directors, and an official statement must be announced.
• Appointing the officers, executives, and other relevant positions, such as Singapore company secretary, must be decided in the directors’ resolution.

WHAT IS INCLUDED IN THE RESOLUTION OF THE BOARD OF DIRECTORS?

What management actions need a board of directors’ decision is not specified in the Companies Act. The company’s charter, which varies from company to company and outlines the conditions for the board’s resolution and when it is required, will determine this. Thus, it is likely that different board resolutions exist among companies. However, the board of directors must decide on a few typical problems that the majority of directors encounter. This includes: 

• Appointment of company officers, i.e. auditors, company secretary;
• Cash loans and pledge of company property;
• Creating a corporate bank account;
• Asset sales for the company;
• Approval of mergers and acquisitions;
• Issue of shares.

This list varies by company.

Board Decisions and Directors’ Responsibilities

As with annual returns, the board of directors’ resolutions are not submitted to any legal body in Singapore; however, they still align with the responsibilities of the company’s directors. As a result, the resolutions of the board of directors can demonstrate whether or not the directors are carrying out their duties with regard to the company.

For example, at a directors’ meeting, directors are required by section 156(1)(a) of the Companies Act to declare their interest in dealings with the company. They could do this verbally or in writing, like on a form. When disclosed, such important intentions or decisions will be documented in the board meeting minutes.

The board of directors may decide to take additional action in response to this disclosure, such as permitting a director to participate or neglecting the performance of a specific task or transaction. Therefore, shareholders can determine whether the directors have complied with this obligation regarding the declaration of economic interests by reviewing the minutes of the meetings and subsequent board resolutions.

In addition to being the company’s trustees, the directors must steer clear of any possible conflicts of interest. Shareholders will need board resolutions attesting to the directors’ decisions to verify that the directors have carried out their duties. Board resolutions may also be admitted into evidence in legal proceedings.

The decisions that directors make on behalf of their companies are influenced by the company’s constitution. It is evident from the aforementioned example that board resolutions are essential to guaranteeing directors fulfill their responsibilities. Board resolutions that are properly documented help in the board’s continued accountability to the company and its shareholders.

QUORUM OF THE BOARD RESOLUTION

According to Section 179(1)(a) of the Companies Act, a company meeting shall have a quorum of at least two members.

However, The company charter will specify the number of board members needed to create a quorum for the meeting. As an example, the Model Constitution for Private Companies’ paragraph 51(2) states that some companies will use two as their quorum, while others might not.

Furthermore, the company’s constitution specifies which important employees must be present at the meeting. For instance, some businesses require that all directors and appointed officers in charge of running the business be present at board meetings. 

As a result, depending on their constitution, various businesses will have different quorums and attendance requirements for board meetings.

HOW TO ACQUIRE A DIRECTORS’ RESOLUTION?

Acquiring a board of directors’ resolution depends on the Company’s constitution. However, there are two ways of acquiring it –

• The ‘resolution’ can be obtained through a physical and formal board of directors general meeting. 
• The ‘resolution’ on the company’s matters can also be in writing without any actual and physical meetings by the board of directors. A director’s resolution in writing (DRIW) can either be in a physical or softcopy version. This can only be done under conditions such as follow:
• The company must notify about the resolution in writing to all members who have a voting right during the general meeting. The notification can be sent via email, the postage of an official letter, or on the company’s website.
• The matters/issues discussed in the resolution in writing will not require physical involvement as mentioned or sanctioned by the Company’s Memorandum and Articles of Association. 
• No 5% of the members representing the company will request a physical meeting. 

REQUIREMENTS TO PASS A DIRECTORS’ RESOLUTION

The requirements to pass a Directors’ Resolution are sanctioned under the Companies Act, Section 179(1)(a). According to the Companies Act, the requirements to pass a Directors’ Resolution are as follow:

• At least two (2) members of the Board of Directors will form the quorum meeting in the company. (It can be different depending on the Articles of Association of the company)
• Companies must follow their Constitution or Memorandum on different attendance requirements for the board meetings. 
• A resolution in voting (physical voting in the meeting) can be made using a postal ballot.
• Resolution in writing (either physical or electronic) can be signed by all directors to be effective.
• Regardless of the method of acquiring the directors’ resolution (either voting or writing), the resolution is deemed effective when it is voted on or signed. 

COMPLIANCES AFTER PASSING THE DIRECTORS’ RESOLUTION

Submitting any of the directors’ resolutions to any authorities in Singapore is not compulsory. Nonetheless, there are certain compliances following the passing of a Directors’ resolution. The compliances are:

• Directors’ resolutions must be documented and filed formally to prove they are active and fulfill their fiduciary duties.
• Every resolution must be recorded in the company’s minute book within one (1) month after the passing of the resolution.
• The resolution must be kept for ten (10) years and handled by the Singapore company secretary.
• A disclosure must be made verbally or in writing for any resolutions approval made during the board meeting and recorded in the minutes of the meeting. (Especially if the approval conflict with the interest of the company and its shareholders)

TYPES OF SINGAPORE COMPANY RESOLUTIONS THAT YOU SHOULD TAKE NOTE OF

Singapore has three types of company resolutions, including the board of directors resolution. Each type of company resolution can be passed on to different matters and issues involving the company. The summary of the other two types of company resolutions is as follows:

Ordinary Resolution 

The Ordinary resolution is also passed using a voting system during the company’s general meeting. The company’s issues that require Ordinary Resolutions are as below:

• Removal of the company’s director before their term of office expires. 
• Filling and electing the new director, replacing the removal of a director. 
• Deciding the remuneration and compensation for the company’s auditors.
• All types of business transactions. (except the specific business transactions that require a special resolution with a special majority under the Companies Act or Constitution)

Unlike a directors’ resolution, an ordinary resolution is passed by the company’s members or shareholders. The protocol to acquire the standard resolution is as follows:

1. A fourteen (14) days’ notice must be given to all shareholders before the meeting date. 
2. Voting can occur if some shareholders are absent as long as 95% of the shareholders or members with voting rights in the company are present.
3. The resolution can be passed by the majority of the shareholders or members categorized as voting during the meeting. The vote can be done by show of hands or poll. 
4. Certain issues and matters of the company will require a special majority vote that has not less than three-quarters of the shareholders/members, including the proxies. The matters are:

• Appointing the company’s auditor. (Whether appointing a new one or removing the outgoing company’s auditor)
• Declaring the dividends for the shareholders and directors of the company

Special Resolution

Similar to the ordinary resolution, a special resolution is made by a voting system at a general meeting. However, a special resolution will only be required to be passed on the company’s matters and issues, such as below:

• Modifying a provision in the Constitution of the Company
• Altering or rebranding the company’s name
• Reducing the company’s share capital
• Converting the business from a public company to a private company
• Converting the class of the company’s shares
• Winding up the company voluntarily
• Transferring the company’s property by a liquidator
• Arranging matters between the company and its creditors

The passing of a special resolution must follow the following terms:

1. At least 75% of the shareholders/members have voted in favor of the proposal discussed during the general meeting. (also called a special majority vote) 
2. Those who attend the meeting but do not cast a vote on the resolution are not included in the calculation of the majority.
3. The shareholders/members must be given the advance written notice before the meeting for Special Resolution:
   • Public Company: 21 days written notice 
   • Private Company: 14 days written notice 
4. If members with at least 95% of the voting rights agree to hold the meeting, the meeting can still convene with less advance notice.

CONCLUSION

Company resolutions, especially directors’ resolutions, are very significant and crucial. This is because resolutions can provide certain benefits, such as a quick and efficient way to handle issues or business affairs of the company that might otherwise take much time to conclude. Also, resolutions can hold the directors and other members or shareholders accountable for the company’s direction and growth.

Resolutions can also assist in providing a record of the company’s decisions that act as precedence in navigating the company’s goals and performances. Therefore, it can be said that resolutions greatly aid in a smoother business function.