Board vs Shareholder Resolutions: Key Differences

Resolutions are the building blocks of corporate decision-making. They document important choices and ensure clarity and compliance under UK company law and the Companies (Jersey) Law 1991. But when comparing a board resolution vs shareholder resolution, the distinctions in initiation, voting requirements, and scope of authority are critical for any business to understand.

This article explores the difference between board and shareholder resolutions, explains how written resolutions work, and provides practical tips for choosing the right resolution type for your company.

What Is a Board Resolution?

A board resolution is a formal record of board meeting decisions, usually taken during a directors’ meeting. It is an essential part of company governance and provides evidence of board approval for actions ranging from opening a bank account to appointing an auditor. Under Jersey law, directors must act in the best interests of the company as a whole, not just current shareholders, and may face personal liability if board decisions breach statutory duties.

Resolution examples of board resolutions include approving contracts, declaring dividends, or appointing senior officers. These resolutions are part of the resolution process that captures director decisions and ensures alignment with corporate governance practices.

Because the board is responsible for management, board resolutions usually deal with operational or strategic matters. They require a simple majority of directors present, unless company articles specify otherwise.

What Is a Shareholder Resolution?

So, what is a shareholder resolution? It is a decision passed by the company’s owners, not its directors. These are raised at annual general meetings (AGMs) or by written consent when permitted.

There are two different types of resolutions shareholders can pass:

• Ordinary resolution: Requires a simple majority of votes, often used for routine approvals such as re-appointing directors or approving accounts.

• Special resolution: Requires at least typically two thirds of shareholder voting, typically used for significant changes like amending articles or approving major acquisitions.

Shareholder resolutions protect shareholder rights by ensuring owners have a say on matters affecting ownership and the company’s constitution. In Jersey, shareholder resolutions follow similar principles, with ordinary resolutions requiring a simple majority and special resolutions requiring a two-thirds or three-quarters majority, depending on the company’s articles. The Companies (Jersey) Law also allows written shareholder resolutions, but procedural details may differ slightly from UK company law.

Over the last few decades, the ownership of UK listed companies has shifted dramatically from individuals to institutions. Overseas investors now account for more than half of the UK market, which means the outcome of a shareholder resolution can be strongly shaped by global capital flows as well as domestic voices. This change highlights why companies must treat shareholder rights not only as a legal obligation but as a practical reflection of who really holds influence today.

Board vs Shareholder Resolutions Explained

The main difference is the decision-maker: a board resolution is a decision by the company's board of directors, while a shareholder resolution is a decision made by the company's shareholders (owners). A board-written resolution pertains to the day-to-day operations and management of the company, whereas a shareholder-written resolution addresses fundamental ownership matters like changing the company's articles or removing directors.

It’s important to note that the difference between board and shareholder resolutions lies not only in who makes the decision but also in the decision-making authority and voting requirements. Directors typically vote by majority at a board meeting, whereas shareholders may need a majority or a super-majority, depending on whether it is an ordinary or special resolution.

In practice, the balance between board and shareholder powers reflects broader trends in corporate ownership. Large institutional investors can collectively wield significant influence, while activist hedge funds have shown how even relatively small holdings can spark substantial change. Coalition building, often requiring around 25% of voting rights, is a common feature of this dynamic. This makes the decision-making process around resolutions an important arena for management accountability.

Written Resolutions: How They Work

A written resolution vs board resolution differs mainly in procedure. Written resolutions avoid the need for physical meetings by allowing directors or shareholders to approve matters in writing.

For directors, a board written resolution can be used for straightforward approvals between meetings, supporting faster corporate decision-making. For shareholders, written resolutions are often used in private companies where circulating documents for signature is more practical than convening an AGM.

However, not all matters can be passed this way. Under UK company law, certain company meeting resolutions require a formal meeting, especially when the law specifies procedural requirements.

On the legal requirements for written shareholder resolutions and board involvement, company law specialists, Herrington Carmichael, note: “Resolutions agreed by shareholders by way of written resolution must have been circulated on the authority of the company’s board — otherwise the resolutions will be invalid... The board must circulate the written resolution to all eligible voting shareholders if requested by shareholders holding not less than five percent of voting rights.” This illustrates the board’s gatekeeper role even in shareholder resolutions.

When to Use Board vs Shareholder Resolutions

Understanding when to use a board resolution vs shareholder resolution is central to company compliance rules. Whether under UK company law or the Companies (Jersey) Law 1991, the same principles apply: routine matters sit with the board, while structural or ownership changes require shareholder approval.

Board resolutions are best suited for:

• Approving routine director decisions

• Operational matters such as contracts or financing

• Short-term corporate governance practices

Shareholder resolutions are required for:

• Amending company articles

• Removing directors or auditors

• Major structural changes to the company

The difference also lies in unanimous vs majority voting. Board resolutions often pass with a simple majority, while shareholder resolutions may require unanimous consent in small companies or super-majority approval for special matters. The potential for shareholder activism adds weight to how companies approach these decisions. While not all institutions intervene due to coordination costs or free-rider concerns, those that do can drive significant outcomes. 

The UK Corporate Governance Code reinforces this by ensuring boards are accountable through independent directors and a clear separation of chair and CEO roles, creating a governance environment where shareholder resolutions and board oversight work hand-in-hand. In Jersey, the principle of collective board responsibility means directors remain accountable for decisions even when powers are delegated, which adds another layer of scrutiny to board resolutions compared with shareholder approvals.

Tips for Choosing the Right Resolution

When weighing up a written resolution vs board resolution, consider the following best practice resolutions:

• Always check the articles of association to see if special rules apply.

• Determine whether the matter is managerial (board) or ownership-related (shareholder).

• Use templates that reflect meeting documentation best practices to ensure clarity and compliance.

• For sensitive issues, consider convening a meeting even if a written resolution is permitted to maintain transparency.

• Document the resolution process carefully to demonstrate adherence to company compliance rules. Companies incorporated in Jersey should also ensure compliance with filing obligations such as special resolutions, annual returns and maintenance of statutory registers, since failures can attract financial penalties.

By following these best practice steps for resolutions, companies can balance speed with accountability, ensuring both directors and shareholders fulfil their roles within good corporate governance practices.

This balance is reinforced by the view of Jeri-Lea Brown, Founder of Sage Governance, who notes: “Resolutions are not just a box-ticking exercise. They define how authority flows in a company and ensure both directors and shareholders are accountable in line with company law in the UK and Jersey.”

Sage Governance helps companies navigate resolutions with clarity and compliance. Contact us today for expert support in strengthening your corporate governance framework.

FAQs

Can all decisions be made by written resolution?

No. While written resolutions are convenient, certain company meeting resolutions under UK company law or the Companies (Jersey) Law must be decided at a formal meeting, especially those requiring special procedures.

What happens if a resolution is invalid?

An invalid resolution may be unenforceable and expose the company to compliance risks. This could undermine corporate governance practices and decision-making authority.

Are resolution requirements the same in Jersey and the UK?

Not entirely. While both frameworks recognise ordinary and special resolutions, the Companies (Jersey) Law 1991 includes specific provisions on written resolutions and sometimes requires different voting thresholds depending on the articles of association.