This is used to gain permission from existing shareholders to create new shares outside of a funding event.
In nearly all cases, SeedLegals will provide you with the appropriate Written Resolution (also referred to as the Shareholders Resolution). These are included within all of our Funding products.
However, there can be certain cases, for example where you allot shares outside of a funding round, where you need to create your own Resolution.
In this case - feel free to use our sample wording below.
Note: In the resolution below you are asking your shareholders to give the Company permission to allot new shares up to a maximum nominal amount, this is the total number of shares in the Company post the share issuance multiplied by the nominal value of your shares. For example:
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Total number of shares I want to allocate to my co-founders = 666
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Total number of shares in the Company before allocation = 1,000
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Total number of shares in the Company after the allocation to my co-founders = 1,666
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Nominal value of my shares = £0.001
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Maximum nominal amount = £1.666
For the written resolution template, please copy all the text below here and fill in the gaps:
Written Resolutions of [ ] Limited
Company Number [ ] (“the Company”)
Pursuant to Part 13, Chapter 2 of the Companies Act 2006, the undersigned being the eligible members (as such term is defined in Section 289 of the Companies Act) hereby approve the following written resolution as an Ordinary and Special Resolution of the Company and agree that the said resolution shall for all purposes be valid and effective as if the same had been passed at a general meeting of the Company duly convened and held.
ORDINARY RESOLUTION
Authority to Allot
THAT in accordance with section 551 of the Companies Act 2006, the directors of the Company be generally and unconditionally authorised to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company (“Rights”) so that the entire share capital of the Company will not exceed the maximum nominal amount of £[ ] comprising all share classes provided that this authority shall, unless renewed, varied or revoked by the Company, expire five years from the passing of this resolution save that the Company may, before such expiry, make an offer or agreement which would or might require shares to be allotted or Rights to be granted and the Directors may allot shares or grant Rights in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. This authority revokes and replaces all unexercised authorities previously granted to the Directors but without prejudice to any allotment of shares, or adoption of any share option pool, or grant of Rights already made or offered or agreed to be made pursuant to such authorities.
SPECIAL RESOLUTIONS
Dis-application of Pre-emption Rights
THAT, subject to the passing of the Authority to Allot resolution above, and in accordance with section 570 of the Companies Act 2006, the directors of the Company be generally empowered to allot equity securities (as defined in section 560 of the Companies Act 2006) pursuant to the authority conferred by the Authority to Allot above and as if section 561(1) of the Companies Act 2006 and any pre-emptions rights afforded to each shareholder on transfer including Company buyback did not apply to any such allotment and transfer, provided that this power shall:
1.be limited to the allotment of such number of equity securities that the entire share capital of the Company will not exceed the maximum nominal amount of £[ ]; and
2.continue for five years from the passing of this resolution (unless renewed, varied or revoked by the Company prior to or on that date), save that the Company may, before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired.
AGREEMENT
Please read the notes at the end of this document before signifying your agreement to the resolutions.
The undersigned, a person entitled to vote on the above resolutions, hereby irrevocably agrees to the above resolutions.
These resolutions are dated ....................
[Signatures]
NOTES
1. You can choose to agree to all of the resolutions or none of them but you cannot agree to only some of the resolutions. If you agree to all of the resolutions, please indicate your agreement by signing and dating this document where indicated above and returning it to the Company using one of the following delivery methods:
a) Email: by attaching a scanned copy of the signed document to an email and sending it to the Company CEO. Please write "Signed written resolutions" as the email subject.
b) Post or by hand: returning the signed copy to the CEO, ......(address).......
2. If you do not agree to all of the resolutions, you do not need to do anything. You will not be deemed to agree if you fail to reply.
3. Once you have indicated your agreement to the resolutions, you may not revoke your agreement.
4. Unless within 28 days of the above date, sufficient agreement is received for the resolutions to pass, they will lapse. If you agree to the resolutions, please ensure that your agreement reaches us before or during this date.
5. In the case of joint holders of shares, only the vote of the senior holder who votes will be counted by the Company. Seniority is determined by the order in which the names of the joint holders appear in the register of members.
6. If you are signing this document on behalf of a person under a power of attorney or other authority please send a copy of the relevant power of attorney or authority when returning this document.