Ordinary Resolutions In New Zealand: When Your Company Needs One

If you run a New Zealand company, you'll eventually hit a decision that can't just be agreed to over a quick chat or email (even if everyone's on the same page).

That's where an ordinary resolution comes in. It's one of the most common "formal decision" tools your company will use, and getting it right matters - because if your process is messy, you can end up with decisions that are disputed, unenforceable, or simply not properly made under the Companies Act 1993.

Below, we'll break down what an ordinary resolution is, when you'll need one, how it's different from a special resolution, and the practical steps you can follow to pass and record one properly (without overcomplicating things).

What Is An Ordinary Resolution?

An ordinary resolution is a shareholder decision passed by a simple majority.

In plain terms, it's the "more than 50%" vote: for resolutions put to a vote at a meeting, it passes if it receives more than half of the votes cast (unless your constitution sets a higher threshold for that particular decision).

Who Makes An Ordinary Resolution?

Ordinary resolutions are typically made by the shareholders (not the directors). That's because they're used for decisions that the law (or your company's rules) reserve to the owners of the company.

Directors, on the other hand, usually make decisions via board resolutions. If you're trying to figure out whether something needs a shareholder resolution or a board resolution, it helps to understand Directors Resolution basics early on.

Where Do Ordinary Resolutions Come From In NZ?

The rules around shareholder resolutions sit primarily under the Companies Act 1993, plus:

• your company's Company Constitution (if you've adopted one); and
• any private agreement between shareholders (for example, a Shareholders Agreement).

This is important because even if a resolution is valid under the Companies Act, your constitution or shareholders agreement might impose extra requirements (like higher voting thresholds, notice periods, or veto rights for certain shareholders).

Do Ordinary Resolutions Have To Happen At A Meeting?

Not always.

Shareholders can usually pass an ordinary resolution either:

• at a shareholders? meeting (with proper notice and voting); or
• by written resolution (signing a written document instead of holding a meeting), if the Companies Act and your constitution allow it.

For many small businesses, written resolutions are the easiest option - especially where you have one shareholder, or a small group who are all in agreement.

When Does Your Company Need An Ordinary Resolution?

There isn't one master list that covers every company, because what you need an ordinary resolution for can depend on:

• what the Companies Act requires for that type of decision;
• what your constitution says; and
• what you and your shareholders agreed in your shareholders agreement.

That said, here are some very common situations where an ordinary resolution comes up for NZ companies (particularly small businesses and startups).

1) Appointing Or Removing A Director (In Many Cases)

Directors manage the company, so changes to the board can be a big deal - especially if you're bringing in an investor director or removing a founder.

Often, the appointment of a director can be done by:

• an ordinary resolution of shareholders; or
• another process set out in your constitution (for example, certain shareholders may have the right to appoint a director).

Removing a director can also involve shareholder approval and specific procedure requirements (including notice). Because the risk of dispute is high, it's smart to get advice before pushing ahead.

2) Approving Director Remuneration (If Required By Your Setup)

In many small companies, directors are also working in the business, so the line between "director payment" and "salary" can get blurry.

Depending on your constitution, shareholders agreement, and the circumstances (including any conflicts of interest), you may want - or need - shareholder approval for director remuneration. This is one of those areas where clear documentation helps prevent tension later.

3) Appointing An Auditor (Or Making Audit-Related Decisions)

Not every small company in NZ needs an auditor, but where an auditor is required (or shareholders decide to appoint one), it's important that the appointment and any related decisions are documented in the way the Companies Act and your constitution require - which can involve shareholder resolutions.

4) Decisions Your Constitution Specifically Reserves For Shareholders

Your constitution can "upgrade" certain decisions so they require shareholder approval even if directors would otherwise have the power.

For example, a Company Constitution might say shareholders must approve things like:

• issuing shares above a certain amount;
• entering into related-party transactions above a value threshold;
• changing how directors are appointed; or
• approving certain key contracts.

If you're not sure whether a decision is "board-level" or "shareholder-level", check your constitution and shareholders agreement first (and get legal advice if it's unclear).

5) Routine "Housekeeping" When You Want A Paper Trail

Sometimes, you could do something informally - but you still choose to pass an ordinary resolution because it creates a clean record.

This is common when you're:

• getting ready to sell the business;
• bringing on an investor;
• applying for finance; or
• trying to tidy up historic decisions so your company records are in order.

Good company records can make due diligence smoother and reduce the risk of last-minute legal issues.

Ordinary Resolution vs Special Resolution: What's The Difference?

This is one of the most common confusion points for business owners.

Both are shareholder resolutions - but they're used for different "levels" of decisions.

Ordinary Resolution (Simple Majority)

• Usually requires more than 50% of votes cast to pass (for resolutions voted on at a meeting).
• Used for many operational or governance decisions that shareholders must approve.
• Often used for director-related decisions, approvals required by the constitution, or shareholder confirmations.

Special Resolution (Higher Threshold)

• Requires a higher voting threshold (commonly 75% of votes cast).
• Used for more fundamental changes, such as decisions that significantly affect shareholder rights or the structure of the company.

In many cases, the Companies Act requires a special resolution for big-ticket items (for example, approving a "major transaction" or adopting/amending a constitution). So if you're dealing with a major change, it's worth double-checking whether an ordinary resolution is enough.

If you use the wrong type of resolution, you can create a real headache: the decision might be challengeable, and your company could end up needing to redo the process properly.

How Do You Pass An Ordinary Resolution In Practice?

For small businesses, the goal is usually: do it properly, but keep it practical.

There are two common pathways: a shareholders? meeting or a written resolution.

Option 1: Pass An Ordinary Resolution At A Shareholders? Meeting

If you hold a meeting, you'll generally want to ensure you have:

• proper notice given to shareholders (timing and content can depend on your constitution and the Companies Act);
• a clear agenda so everyone knows what's being voted on;
• accurate voting (including proxies if permitted); and
• minutes that record the resolution and outcome.

Meetings can be helpful if shareholders don't all agree, or if you need a structured discussion before the vote.

Option 2: Pass An Ordinary Resolution As A Written Resolution

Written resolutions are very common in closely held companies (for example, one to three shareholders).

Instead of meeting, you circulate a written resolution, and shareholders sign to confirm their vote. This can be faster and easier - but only if it's drafted clearly and signed correctly.

One important point: under the Companies Act, a written shareholder resolution can have a different default approval threshold than a meeting vote (unless your constitution changes it). So don't assume "over 50%" automatically applies just because the decision is an ordinary resolution.

If you're producing documents yourself, pay close attention to:

• who is entitled to vote (and their voting power);
• whether the resolution needs to be signed by all shareholders or a particular percentage (this can vary depending on the Companies Act, your constitution, and the type of decision);
• how you'll store the signed copy in your company records.

If you want a reliable starting point for recording decisions, a Directors Resolution Template can help you understand what "good resolution formatting" looks like - but keep in mind shareholder resolutions are a different document type and need to match the decision you're making.

Step-By-Step Checklist (So You Don't Miss Anything)

Here's a practical checklist you can use when preparing an ordinary resolution:

1. Identify the decision you're trying to make (and write it down in one sentence).
2. Check authority: is it a director decision, or does it require shareholder approval?
3. Check your rules: Companies Act + constitution + shareholders agreement.
4. Confirm the threshold: is it an ordinary or special resolution, and are you voting at a meeting or by written resolution (which can affect the approval threshold)?
5. Draft the resolution in plain language (include dates, names, and key terms).
6. Follow the right process: meeting or written resolution, with any required notice.
7. Keep records: store signed resolutions/minutes with your company records.

If you're making decisions around shareholdings or control, the paperwork is even more important - because those decisions tend to come up later during fundraising, disputes, or a sale.

Common Ordinary Resolution Traps (And How To Avoid Them)

Most companies don't run into issues because they "never passed an ordinary resolution". They run into issues because they thought they had, but the process was flawed.

Here are some common traps we see for NZ small businesses.

1) Not Checking The Constitution Or Shareholders Agreement First

Your constitution and shareholders agreement can change the rules of the game.

For example, even if an ordinary resolution would normally be enough, your Shareholders Agreement might require:

• unanimous approval for certain matters;
• approval from a particular shareholder class; or
• a specific process before a vote can be taken.

If you skip this step, you can end up with a resolution that creates more conflict instead of solving it.

2) Using An Ordinary Resolution When The Law Requires A Special Resolution

Some decisions are simply too significant to be passed by a simple majority.

Examples can include fundamental company changes (like changes to the constitution or certain major company transactions). If you're anywhere near this territory, it's worth getting advice before you circulate documents for signature.

3) "Handshake" Agreements About Shares Or Ownership

Ownership decisions are where informal processes tend to come undone.

If you're changing who owns what, you'll usually need more than a quick message thread - you'll likely need formal documents and updated records.

Two topics that commonly overlap with ordinary resolutions are Changing Company Ownership and How To Transfer Shares. Even where an ordinary resolution is part of the process, there are often supporting steps (like updating the share register and director certificates) that must be done properly.

4) Vague Wording That Creates Ambiguity Later

An ordinary resolution should be clear enough that someone reading it in two years (with zero background) can understand:

• what was approved;
• who approved it;
• when it took effect; and
• any conditions or limits on the approval.

Vague wording like "approved the deal" or "agreed to changes" can cause problems later - particularly if the company is sold, audited, or involved in a dispute.

5) Poor Record-Keeping

Even if the resolution was properly passed, you still need to store it in your company records.

This matters because:

• banks and investors may ask for proof of approvals;
• buyers will usually review company records during due diligence; and
• if there's a shareholder dispute, your written records often become key evidence.

Good record-keeping is one of the simplest ways to protect your business from day one.

Key Takeaways

• An ordinary resolution is generally a shareholder decision passed by a simple majority (more than 50% of votes cast) when it's voted on at a meeting, unless your constitution requires a higher threshold.
• Ordinary resolutions are typically used for shareholder decisions that are not as "fundamental" as those requiring a special resolution, but they're still important and should be documented properly.
• Whether you need an ordinary resolution depends on the Companies Act 1993, your constitution, and any shareholders agreement.
• You can often pass an ordinary resolution either at a shareholders? meeting or as a written resolution, but the process and approval threshold can differ depending on the Companies Act and your constitution.
• Common mistakes include using the wrong type of resolution, skipping constitution/shareholder agreement requirements, vague drafting, and failing to keep proper company records.
• If the decision affects company control, director powers, or ownership, it's worth getting legal advice early - these are the areas most likely to cause disputes later.

If you'd like help preparing an ordinary resolution (or checking whether you need an ordinary or special resolution for a particular decision), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.