Introduction to this document

Written resolution to approve substantial property transaction

The shareholders’ consent is required for “substantial property transactions” between a director and the company. In most cases, a written resolution will be the easiest way of achieving this.

Substantial property transaction

If a director of a company or its holding company, or a person/company connected to the director, enters into a substantial property transaction with the company, the shareholders must approve it first (or the transaction must be conditional on the shareholders’ subsequent approval). Typically, these transactions will arise where a director sells or leases premises to the company, or vice versa, but the definition covers all non-cash assets over a certain value. See our Substantial Property Transaction Checklist to see whether your transaction falls into this category.

If the director is a director of the company’s holding company, the shareholders of the holding company also need to approve the transaction.

Using a written resolution

A written resolution is usually the most efficient way of obtaining shareholder consent, so our model takes that form. Private companies can use the written resolution procedure set out in the Companies Act 2006, or an alternative procedure set out in their articles. Our model resolution follows the statutory procedure. If your company’s articles set out an alternative procedure, you can adapt the model as necessary.

See our Written Resolution Procedure model for an explanation of the procedure itself. The model can be adapted for use at a meeting if preferred.

An ordinary resolution is usually required, but check your articles as they may call for a higher majority or unanimity.

Next steps

Once the deadline for responding to the resolution has passed, add up the votes to check that approval has been granted. The company should record the resolution result as evidence that the statutory requirements have been complied with.