10.1 REQUIREMENTS OF A WELL DRAFTED RESOLUTION ARE AS FOLLOWS:
The term resolutions should only be used in regard to a proposed motion that has been carried after a vote at either a Directors or a Shareholders meeting.
The wording for resolutions should be carefully drafted in unambiguous language so that there are no possible misunderstandings which may result in a fight in the future.
Drafting Resolutions
1. Definition and Purpose:
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A resolution is a motion formally approved in a meeting. It represents decisions made by shareholders or directors.
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Drafting clear, precise resolutions avoids future disputes and ensures proper documentation of decisions.
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2. Key Features of a Good Resolution:
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Concise and lucid wording without unnecessary complexity.
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Avoidance of ambiguity to prevent misunderstandings.
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Positive framing (e.g., stating decisions affirmatively rather than negatively).
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Single-sentence structure with qualifying or coordinate clauses if necessary.
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Complex resolutions should be broken into separate parts for clarity and voting simplicity.3. Drafting Tips:
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Resolutions must reflect the actual action intended (e.g., "That Mr. A be, and he is hereby, appointed as director").
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Phrasing like "and is hereby" indicates immediate effect but should only be used for actions completed during the meeting.
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Specificity is critical to include dates, conditions, or qualifications to avoid ambiguity.4. Examples of Resolutions:
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Appointment of committees with powers.
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Approval of financial guarantees.
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Allotment or transfer of shares.
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Convening annual general meetings.
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Adopting agreements or issuing prospectuses.
Nature and Recording of Minutes
1. Types of Minutes:
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Minutes of Narration: General descriptions of actions, such as declaring a meeting open or noting discussions without formal resolutions.
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Minutes of Resolution: Documenting only the decisions made, prefixed by “Resolved:.”2. Components of Minutes:
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Nature of the meeting (e.g., board meeting, general meeting).
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Date, time, and venue.
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Attendees and their roles (names or reference to an attendance register).
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Apologies received for absentees.
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Approval of previous minutes.
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Specific resolutions passed with their exact wording.
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Any additional details necessary for context or clarity.3. Importance:
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Minutes serve as the official, statutory record of decisions.
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They may be used in legal proceedings to evidence the actions and deliberations of the meeting.
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Proper recording ensures clarity, transparency, and compliance with laws.
Legal Requirements for Minutes
1. Company Obligations:
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Minutes must be kept for shareholder meetings and board meetings (including resolutions).
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These records must be retained for at least seven years, per the Companies Act.
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Companies must store these records at their registered office or notify authorities if stored elsewhere.2. Electronic Records:
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Electronic or mechanically reproduced copies are acceptable if they meet legal requirements for authenticity and conversion to written form.3. Approval and Evidence:
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Once signed by the chairperson, minutes become prima facie evidence of the meeting’s proceedings.
Form and Formats of Minute Books
1. Types of Minute Books:
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Bound Books: Pages are pre-numbered and handwritten or typed and pasted in.
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Guard Books: Additional space is allowed for thicker typed sheets.
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Stub Books: Sheets are pasted in and attached to stubs, which remain visible for reference.
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Loose-Leaf Books: Pages are typed and stored but must be securely locked to avoid tampering.2. Safeguarding:
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Ensuring the authenticity of minutes is critical. Loose-leaf systems must include locks to prevent alterations.
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Alterations, if necessary, must follow strict guidelines (e.g., crossing out errors with ink and initialing corrections).
Writing and Circulating Minutes
1. Procedure:
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Draft minutes should be prepared within 24 hours after the meeting.
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Chairperson reviews and approves the draft before circulation to other attendees.
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Directors may request changes, but final approval comes from the chairperson.2. Timeliness:
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Minutes should be approved and signed promptly while details are fresh in attendees’ minds.
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Formal approval may occur at subsequent meetings but is not legally required before signing by the chairperson.
Content and Format of Minutes
1. Essential Details:
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Every resolution must begin with “Resolved: That” followed by the exact wording.
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Resolutions should be recorded in the order discussed and include context when necessary.2. Exclusions:
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Minutes should not include detailed arguments or discussions unless required for legal or explanatory purposes.
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Trivial matters and personal biases must be excluded.3. Record Keeping:
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Separate books for general, board, committee, and manager meetings.
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Minutes must be indexed, numbered, and cross-referenced for ease of access.
Alteration and Rescission of Minutes
1. Alterations:
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Allowed only before the chairperson’s signature.
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Corrections must be clear and duly initialed, avoiding erasure or correction fluid.2. Rescission:
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Once signed, minutes cannot be changed.
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Rescinding a decision requires a new resolution recorded in subsequent minutes.
Legal Inspection and Accessibility
1. Inspection Rights:
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Shareholders may inspect minutes of general meetings but typically not board or committee meetings unless specified in the company’s constitution.2. Use of Minutes:
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They serve as a permanent statutory record, are available for inspection, and may be evidence in legal matters.
Best Practices and Recommendations
1. Timely Preparation:
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Draft and distribute minutes immediately after meetings for review and approval within a few days.2. Accuracy and Clarity:
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Avoid ambiguity and ensure resolutions and discussions are faithfully recorded.3. Approval Process:
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Obtain chairperson and director input before issuing final minutes to avoid unnecessary corrections later.4. Finalization:
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Once approved, minutes become permanent and must not be altered.