What are directors’ and shareholders’ resolutions?
Is a company resolution legally binding in South Africa?
“For an ordinary resolution to be approved by shareholders, it must be supported by more than 50% of the voting rights exercised on the resolution. … For a special resolution to be approved by shareholders, it must be supported by at least 75% of the voting rights exercised on the resolution.”
“… compliance with their fiduciary duty required that the power to increase the authorised shares be exercised in good faith and in the best interests of the company (a subjective test impeachable only on the limited grounds of irrationality) and for a proper purpose (an objective test). … I accordingly find that the round robin resolution signed on 31 March 2014 was invalid.”
When you need a Directors' & Shareholders' Resolutions
- The board needs to authorise a specific act — signing a material contract, opening or changing a bank account, borrowing, granting security, appointing a public officer or auditor, or declaring a distribution — and a bank, the SARS, a funder or a counterparty asks for a certified board resolution as proof of authority.
- Shareholders must approve a matter the Companies Act reserves to them — electing or removing a director, approving the annual financial statements, or appointing the auditor — by ordinary resolution at the AGM or in writing.
- You are doing something on the s 65(11) special-resolution list — amending the MOI, issuing shares or granting options to directors or related parties (ss 41, 42), giving financial assistance for share purchases or to directors (ss 44 and 45), a share buy-back (s 48(8)), approving director remuneration (s 66(9)), or a fundamental transaction or voluntary winding-up — and need a 75% special resolution.
- You want a fast, paperless decision without convening a meeting — a round-robin shareholders’ resolution under section 60 or a round-robin board resolution under section 74 — and need the notice, circulation and majority done correctly so the resolution stands.
- A dispute, due diligence on a sale or funding round, or a CIPC or court filing requires you to produce a clean, properly-minuted set of resolutions — and gaps, missing quorums or improperly-passed resolutions are surfacing.
- Your company is still running on an old pre-2008 “Table B” style provision (for example one that requires a round-robin to be signed by all directors) and you need the resolution procedure aligned with the current Act and your MOI.
What a Directors' & Shareholders' Resolutions should contain
Correct body and reserved-matter check
The resolution must come from the body the Act assigns to that decision — the board for management acts under section 66, the shareholders for matters reserved to them. A board resolution on a shareholder-reserved matter (or vice versa) is not validly authorised, so the first thing a good resolution gets right is who is deciding.
Resolution type — ordinary or special
For shareholders, identify whether the matter needs an ordinary resolution (over 50%, s 65(7)) or a special resolution (at least 75%, s 65(9)). Anything on the section 65(11) list — or any other provision or the MOI that calls for 75% — must be passed as a special resolution, and the resolution should say which it is.
Notice, quorum and how the vote is taken
A meeting needs proper notice and a quorum before business can start — generally holders of at least 25% of the voting rights, with a floor of two shareholders (private) or three (public) under section 64. The resolution (or minutes) should record that notice was given, a quorum was present, and how the vote was counted (show of hands or poll).
Written / round-robin mechanics
If the decision is taken without a meeting, follow the in-writing route: section 60 for shareholders (submit to all who may vote, decided within 20 business days, same majorities apply) or section 74 for directors (written consent of a majority of directors, notice to every director, unless the MOI says otherwise). AGM business cannot be done by round-robin.
Clear operative wording and authority to sign
The resolution should state the decision in unambiguous, self-contained terms (“RESOLVED THAT …”), identify the company, the date and the meeting or round-robin, and — critically for board resolutions banks and counterparties rely on — authorise named persons to sign and give effect to it, so a third party can act on it with confidence.
Proper purpose and good faith
A resolution is not bullet-proof just because the numbers add up. Directors must act in good faith, in the best interests of the company and for a proper purpose (ss 75–76); as CDH Invest v Petrotank shows, a resolution passed for an ulterior purpose can be set aside. Record the genuine commercial rationale, and follow conflict-of-interest disclosure rules where they apply.
Minuting, signing and record-keeping
The decision must be captured: minutes of the meeting or the signed written resolution, kept with the company’s records. CIPC, banks and acquirers routinely require certified copies, and some special resolutions (notably an MOI amendment via the Notice of Amendment) must be filed. Undocumented or unsigned resolutions are the most common cause of later disputes.
Ordinary resolution vs special resolution under the Companies Act 71 of 2008
| Feature | Ordinary resolution | Special resolution |
|---|---|---|
| Default threshold | More than 50% of voting rights exercised (s 65(7)) | At least 75% of voting rights exercised (s 65(9)) |
| Can the MOI change it? | Yes — may be raised, but a 10% margin from the special-resolution % must remain | Yes — may be raised or lowered, keeping at least a 10% margin (s 65(8) and (10)) |
| Typical use | Electing directors, approving AFS, appointing the auditor, routine approvals | Amending the MOI, share issues to directors, financial assistance, buy-backs, fundamental transactions (s 65(11)) |
| May it be passed in writing? | Yes — round-robin under s 60 (shareholders), same majority | Yes — round-robin under s 60 (shareholders), same 75% majority |
| Filing with CIPC | Generally not filed | Only where the specific provision requires it (e.g. an MOI amendment) |
Common South African pitfalls
- Using the wrong resolution type. Treating a section 65(11) matter — such as an MOI amendment, a share issue to a director, or financial assistance under ss 44/45 — as an ordinary 50% resolution when the Act demands a 75% special resolution. The decision is not validly authorised, and a filing or transaction built on it can be unwound.
- Skipping the quorum or notice. Starting a meeting, or counting a vote, before a quorum is present (generally 25% of the voting rights, with a two/three shareholder floor under s 64), or without proper notice. A resolution taken at an inquorate or improperly-convened meeting is open to challenge.
- Getting the round-robin wrong. Under section 60 a written shareholders’ resolution must be put to all shareholders entitled to vote (courts expect near-simultaneous circulation) and decided within 20 business days; under section 74 a board round-robin needs a majority of directors and notice to every director — unless the MOI still requires all directors to sign. Cherry-picking who receives the resolution, or relying on the old “all directors must sign” rule when the MOI no longer says so, invalidates it.
- Ignoring proper purpose and conflicts. As CDH Invest v Petrotank confirms, a board resolution that passes on the numbers can still be set aside if the directors acted for an improper purpose or failed to disclose a personal financial interest under section 75. Passing the vote is not the same as exercising the power lawfully.
- Not checking the MOI first. The MOI can raise voting thresholds, change quorum, restrict round-robins, or reserve extra matters to shareholders. Applying the Act’s defaults without reading the company’s own MOI is a frequent and avoidable error.
- Failing to document, sign or file. Verbal “decisions”, unsigned written resolutions, or special resolutions that should have been filed with CIPC (for example an MOI amendment) but were not, leave the company unable to prove the decision — the gap usually surfaces in a bank request, due diligence or a dispute.
Frequently asked questions
What is the difference between an ordinary and a special resolution in South Africa?
An ordinary resolution is a shareholders’ decision carried by more than 50% of the voting rights exercised (section 65(7) of the Companies Act 71 of 2008), used for everyday matters like electing directors or approving the financial statements. A special resolution needs at least 75% (section 65(9)) and is required for high-stakes matters such as amending the MOI. A company’s MOI can adjust these percentages, but at least a 10-percentage-point gap must remain between the two.
What matters require a special resolution?
Section 65(11) lists them: amending the MOI; ratifying a consolidated MOI; ratifying acts beyond the company’s or directors’ authority (s 20); approving certain share issues or option grants to directors and related parties (ss 41 and 42); authorising financial assistance for share purchases (s 44) or to directors (s 45); approving a share buy-back from a director or related party (s 48(8)); approving director remuneration (s 66(9)); a voluntary winding-up; a transfer of registration to a foreign jurisdiction; and any fundamental transaction. The MOI can add further special-resolution matters.
Can shareholders pass a resolution without holding a meeting?
Yes. Section 60 of the Companies Act allows shareholders to act in writing (a “round-robin”) instead of meeting. The resolution must be submitted to every shareholder entitled to vote on it and is adopted if enough of them support it in writing within 20 business days — using the same majorities (over 50% for ordinary, at least 75% for special). The main exception is that business required to be done at the annual general meeting cannot be passed by round-robin.
How do directors pass a resolution without meeting?
Section 74 allows a board decision that could have been taken at a meeting to be adopted instead by the written consent of a majority of the directors, given in person or electronically, provided every director received notice of the matter — unless the company’s MOI provides otherwise. Many older MOIs still carry the pre-2008 rule requiring all directors to sign, so always check the MOI before relying on a simple majority round-robin.
What is a quorum for a shareholders’ meeting?
Under section 64 of the Companies Act, a shareholders’ meeting may not begin until shareholders holding in aggregate at least 25% of the voting rights for at least one matter are present. There is also a headcount floor: at least two shareholders for most private companies and at least three for a public company. The MOI may set a different quorum, and these requirements must be met before any resolution is voted on.
Does a special resolution have to be filed with CIPC?
Not automatically. There is no general rule that special resolutions are filed at the Companies and Intellectual Property Commission — filing is only required where the specific provision says so. The clearest example is an amendment to the MOI, which must be filed with CIPC (by a Notice of Amendment) to take effect. Most other special resolutions are kept in the company’s records rather than filed.
Can a validly-passed resolution still be challenged?
Yes. Reaching the required majority is not the end of the enquiry. In CDH Invest NV v Petrotank South Africa [2019] ZASCA 53 the Supreme Court of Appeal set aside a round-robin directors’ resolution that had the numbers, because the directors increased the authorised shares for an improper purpose. A resolution can also be void for lack of quorum, defective notice, an undisclosed conflict of interest, or being beyond the powers the Act or MOI confer.
Can the MOI change the voting thresholds for resolutions?
Yes, within limits. Section 65(8) and (10) of the Companies Act lets a company’s MOI set different percentages for ordinary and special resolutions — for example to give minority shareholders more protection — but a margin of at least 10 percentage points must always separate the ordinary-resolution threshold from the special-resolution threshold. The MOI can also raise quorum requirements and reserve additional matters for special resolutions.
Sources & authority
- Companies Act 71 of 2008, ss 60, 64, 65, 66 and 74 (resolutions, quorum, written resolutions, board authority) — lawlibrary.org.za work page
- Companies Act 71 of 2008 — consolidated text, ss 60, 64, 65 and 74
- CDH Invest NV v Petrotank South Africa (Pty) Ltd and Others (483/2018) [2019] ZASCA 53; 2019 (4) SA 436 (SCA) (1 April 2019)
This guide is general information, not legal advice. It reflects the law as at June 2026.