Resolution

What is a resolution in business?

A resolution is a formal decision made by a company’s shareholders or directors, recorded in writing and kept in the company’s records. It confirms that the company has agreed to take a specific action — such as appointing a director, approving financials, or changing the company’s name.

Resolutions are legally binding and required under South African company law. Depending on the type of decision being made, you’ll either need an Ordinary Resolution or a Special Resolution.

What is the difference between an Ordinary and a Special Resolution?

  • Ordinary Resolution:
    Requires more than 50% of voting rights to pass.
    Used for everyday decisions like: Most ordinary resolutions are internal and don’t need to be submitted to CIPC, unless they lead to a change that affects company records (e.g. a director appointment).
    • Electing or removing a director
    • Approving financial statements
    • Declaring dividends
    • Approving routine contracts
  • Special Resolution:
    Requires at least 75% of shareholders (by voting rights) to approve.
    Used for big or structural decisions like: Special resolutions must usually be filed with CIPC using the appropriate forms (e.g. CoR15.2 for MOI changes).
    • Amending the Memorandum of Incorporation (MOI)
    • Changing the company name or type
    • Authorising a share buyback
    • Selling major assets
    • Winding up the company

How do I pass a resolution?

Resolutions can be passed in two ways:

  • At a meeting with a vote
  • By round-robin, where all shareholders sign the same written resolution (commonly used in smaller or single-shareholder companies)

Even if you’re the only shareholder, you still need to record the resolution in writing and keep it on file, especially for anything related to SARS or CIPC compliance.

Need help registering your company and drafting the right resolutions?

Govchain makes Company Registration fast, affordable, and fully compliant, including help with director appointments, shareholder decisions, and all required resolutions.

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