Shareholder resolution template

Creating a shareholder resolution can be complex, but it doesn't have to be.

We've put together this complete guide to help you get to grips with shareholder resolutions and how contract templates can simplify this process.

What is a Shareholder Resolution?

Shareholder resolutions are decisions made by the shareholders of a corporation, usually during the company's annual general meeting (AGM).

These decisions span a wide range of topics, from election of board directors to approving dividends and changing the company's bylaws, to numerous other corporate governance matters.

Why should you use a Shareholder Resolution?

Shareholder resolutions ensure that the shareholders' collective voice is heard by the board of directors and executive management. This is a crucial tool in the corporate world, not to be underestimated.

These resolutions represent formal votes on certain aspects of a company's governance and operations and can be proposed by the board or the shareholders themselves.

They might cover a wide range of subjects such as changes in corporate governance, electing directors, approval of significant transactions, or company policies on environmental and social issues. Shareholder resolutions are an important aspect of transparency and accountability in business operations.

When are Shareholder Resolutions typically used?

Typically, they serve as a key mechanism for shareholder engagement and corporate governance.

Shareholder resolutions have multiple uses and implications, making them a vital part of the functioning of a corporation.

They can be used to:

1. Facilitate shareholder input

‍Shareholder resolutions allow shareholders to propose changes and express their view to management and the board of directors. This enables the shareholders, as owners of the company, to influence its policies and direction.

2. Enhance corporate governance

‍Resolutions can propose changes to a company's bylaws, management structure, or other aspects of corporate governance. This can help ensure the company is being run effectively, ethically and in line with shareholders' interests.

3. Approve major decisions

^‍Major corporate decisions, such as mergers, acquisitions, or large-scale investments, often require approval via a shareholder resolution. This means that significant changes to the company's operations or strategy are backed by its owners.

4. Address environmental, social and governance (ESG) Issues

‍Increasingly, shareholders use resolutions to push companies to take action on ESG issues. These can range from environmental sustainability to diversity and inclusion, allowing shareholders to influence a company's impact on wider society. This is becoming a more significant factor in agreements and is one to watch.

5. Resolve disputes

‍In some cases, shareholder resolutions can be used to resolve disputes or issues within the company. For example, if there's disagreement about the company's direction or management, a resolution can be used to settle the matter in a democratic manner.

What is included in a Shareholders Resolution?

While the specifics can vary based on the unique context of each company and the issues at hand, most shareholder resolutions include the following elements:

1. Title

‍A concise, clear title that indicates the purpose of the resolution. The title should give an immediate sense of what the resolution seeks to achieve.

2. Recitals

‍Also known as the preamble or whereas clauses, these provide the context or reasoning behind the resolution. They set out the background information, facts and circumstances that led to the resolution being proposed.

3. Resolving clause

‍This is the heart of the resolution, detailing the action(s) that the shareholders wish the company to take. The language here is often quite formal, beginning with a phrase like "Resolved, that...".

4. Explanatory statement

‍This section expands on the reasons for the resolution, providing a detailed explanation of its rationale and intended benefits. It can also address potential objections or questions from other shareholders.

5. Voting instruction

The resolution will also include specific instructions on how to vote, the date and time of the vote, and any rules regarding proxies or voting by mail.

6. Sponsor(s)

‍Finally, the resolution will state the name(s) of the shareholder(s) proposing the resolution. This usually includes the individual or group's name and the number of shares they hold.

Just remember, the format and requirements for shareholder resolutions can vary depending on the laws of the jurisdiction and the company's bylaws. It's always a good idea to consult with a legal professional when drafting a shareholder resolution to ensure it is valid, enforceable, and effective.

How do Shareholder Resolutions work?

Understanding the process of shareholder resolutions is key to their successful implementation. The steps involved may include:

1. Proposal submission

‍The first step in the process is for a shareholder or a group of shareholders to submit a resolution. They must own a minimum number of shares, often stipulated in the company's bylaws or applicable regulations, to propose a resolution.

2. Review by the board

‍Once submitted, the board of directors reviews the proposal. The board has the responsibility to ensure that the proposal is legal and in line with the company's bylaws. In some cases, they may negotiate with the proposing shareholder(s) for amendments.

3. Inclusion in the proxy statement

‍If the resolution passes the board's review, it is included in the company's proxy statement. This document is sent to all shareholders in advance of the annual general meeting (AGM) and includes information about the upcoming votes.

4. Voting

‍During the AGM, shareholders vote on the resolution - voting can be done in person or by proxy. Most companies follow the 'one share, one vote' rule, but this can vary depending on the company's specific voting policies.

5. Implementation

‍If the resolution receives the necessary number of votes (usually a majority), it is passed and becomes a directive that the company is obliged to implement.

It's worth noting that the exact process can vary depending on jurisdiction, company size and the specific rules set out in a company’s bylaws.

Hence, understanding the regulatory framework and consulting with attorneys or lawyers is so important when drafting and proposing a shareholder resolution.

How are Shareholder Resolutions templates traditionally implemented?

Traditionally, the process of creating and managing shareholder resolutions involves numerous steps and various stakeholders.

Here's a typical workflow:

1. Drafting

‍The process begins with drafting the resolution. This usually involves the shareholder(s) proposing the resolution, possibly with the help of legal counsel, to ensure the language is precise and the proposal is in line with the company's bylaws and regulatory requirements.

2. Review and approval

‍The draft resolution is then submitted to the board of directors. They, potentially with the help of legal advisors or a company secretary, review the resolution to ensure it meets all necessary criteria. They may suggest changes or reject proposals that are not in line with the company's strategic objectives or legal requirements.

3. Distribution

‍Once approved by the board, the resolution is typically included in the company's annual proxy statement, which is then distributed to all shareholders. This process can involve printing and mailing physical copies, or sending out digital versions via email.

4. Voting

‍Shareholders then have a chance to vote on the resolution, usually at the company's annual general meeting (AGM). Voting typically requires a show of hands or voting by proxy, which can involve collecting and tallying physical proxy cards.

5. Record keeping

‍After the AGM, the results of the vote are documented and stored for future reference. This is usually done by the company secretary and can involve significant paperwork.

This traditional approach can be time-consuming and prone to errors, especially for companies with numerous, complex shareholders. It can also be less accessible for shareholders who are unable to attend the AGM in person.

Fortunately, modern digital tools are starting to offer more streamlined, efficient approach to managing legal and corporate documents.

Juro is one of them.

Streamline Shareholder Resolutions with Juro

Juro's intelligent contract platform offers a transformative solution for managing shareholder resolutions. Here's how it can simplify the process:

1. Digital drafting

With Juro, you can draft shareholder resolutions digitally, collaborating with stakeholders in real-time. This eliminates the need for multiple versions and back-and-forth emails, making the drafting process faster and more efficient.

2. Customizable templates

Customize templates for shareholder resolutions with Juro. These can be modified to suit your company's specific needs, ensuring consistency and reducing the risk of errors.

3. Faster review and approval processes

‍Juro's platform enables seamless review and approval processes. Proposed resolutions can be reviewed by relevant parties directly within the platform, with comments and changes tracked clearly, ensuring transparency and accountability.

4. Easy distribution and voting

‍Once approved, the resolution can be shared digitally with all shareholders directly from the Juro platform. Juro also enables secure electronic signatures, which can be used to cast votes, making the voting process simpler and more accessible for all shareholders.

5. Centralized record keeping

‍Juro stores all your resolutions in one place, creating a centralized contract repository that's easily searchable. This makes record keeping easier and ensures compliance, making it painless to refer back to past resolutions.

Juro helps companies streamline their shareholder resolution procedures, making them quicker, more efficient and more transparent.

This not only saves time and resources but also enhances shareholder engagement and ensures a higher level of corporate governance.

To find out more about how Juro can improve the way you manage your legal documents, hit the button below for a personalized demo.