Ordinary vs Special Resolutions in New Zealand: Key Differences

If you run a company in New Zealand, you’ll eventually hit a decision that can’t be made with a casual “sounds good” in an email thread. Maybe you’re bringing on a new shareholder, updating the rules your company operates under, or selling the business.

That’s where company resolutions come in. One of the most common points of confusion we see for small businesses is understanding the difference between ordinary and special resolutions - what they mean, when you need each one, and what can happen if you get it wrong.

In this guide, we’ll break it down in plain English, with practical examples, so you can make decisions confidently and keep your company compliant under the Companies Act 1993.

Note: This article is general information only and isn’t legal advice. Because the right process can depend on your company’s constitution, any shareholders agreement, and the specific decision you’re making, get advice for your circumstances.

What Is A Company Resolution (And Why Does It Matter)?

A company resolution is a formal decision made by:

• shareholders (for bigger “ownership-level” decisions), or
• directors (for “management-level” decisions).

Resolutions matter because they create a clear legal record of how major decisions were approved. That record can be crucial when:

• a shareholder later disputes what was agreed;
• you’re raising capital or transferring shares;
• a bank, investor, accountant, or buyer asks for proof of approvals;
• your company needs to show it followed correct process under the Companies Act 1993 and its constitution.

In practice, resolutions also reduce business risk. If you’re planning to grow, bring in new people, or eventually sell, keeping a clean paper trail is one of the simplest ways to protect your business from day one.

It’s also worth remembering that a company’s constitution and shareholders agreement often add extra decision-making rules on top of the Companies Act, so it’s not always as simple as “majority wins”. If you’re relying on a Company Constitution or a Shareholders Agreement, it’s a good idea to make sure your resolutions line up with those documents too.

Ordinary vs Special Resolutions: What’s The Difference?

The difference between ordinary and special resolutions usually comes down to two key things:

• How much support is needed to pass the resolution (the voting threshold); and
• What kind of decision is being made (routine decisions vs fundamental changes).

Ordinary Resolution (Simple Majority)

An ordinary resolution is generally understood as being passed by a simple majority of votes cast - in other words, more than 50% (unless your constitution requires something higher for that particular decision).

These are commonly used for shareholder decisions where the law and your company documents don’t require a higher threshold.

Special Resolution (75% Majority)

A special resolution requires a higher level of agreement. Under the Companies Act 1993, it typically means approval by 75% or more of the votes of shareholders who are entitled to vote and who vote on the resolution (unless the constitution sets a different threshold).

Special resolutions are designed for major decisions that materially affect shareholders’ rights or the company’s structure.

For small businesses, the 75% threshold often has a practical impact: if you have multiple shareholders and one holds more than 25%, that shareholder can potentially block special resolutions. This is why getting your shareholder arrangements right early (including decision-making rules) can save you serious headaches later.

When Do You Use An Ordinary Resolution In NZ?

There isn’t a single master list of every possible decision that might be made by ordinary resolution, because it depends on:

• what the Companies Act 1993 requires for that decision;
• what your company’s constitution says (if you have one); and
• what’s in any shareholders agreement.

That said, ordinary resolutions are generally used for decisions that are important but not “fundamental” changes to the company’s identity or shareholder rights.

Common Examples Of Ordinary Resolutions

Depending on your company’s documents and the decision being made, an ordinary resolution may be used for things like:

• approving certain shareholder actions where a special resolution isn’t required;
• appointing or removing directors (often subject to your constitution);
• approving company matters at an annual meeting (for companies that hold them);
• ratifying certain actions taken by directors (in some situations).

Tip for business owners: even where an ordinary resolution is technically enough, you might still choose to document the decision carefully (including reasons and the votes) if the matter is likely to come up later in due diligence or a dispute.

If you’re already formalising company governance, you may also find that a Directors Resolution is useful for director-level decisions - it’s different from a shareholder resolution, but the idea is the same: keep a clear written record of approvals.

When Do You Need A Special Resolution In NZ?

Special resolutions come up when you’re making a decision that changes the company in a significant way, or that affects shareholders’ rights more directly.

Under the Companies Act 1993, special resolutions are required for certain key decisions (and your constitution might require them for additional matters too).

Common Examples Of Special Resolutions

Some common situations where a special resolution is required include:

• Adopting, amending, or revoking a constitution (your company rules) - often a special resolution is needed to change the “ground rules” for how the company operates.
• Approving major transactions in some cases (depending on the circumstances and the Act’s requirements, including any exceptions and disclosure steps).
• Putting the company into liquidation (for example, if shareholders decide to wind up the company).
• Other decisions the Companies Act labels as requiring a special resolution, as well as anything your constitution upgrades to a higher threshold.

For many small companies, the most common “surprise” special resolution is related to changes in the company’s internal rules. If you’re changing how decisions are made, shareholder rights, share transfer rules, or director powers, you may need to pass a special resolution and update your constitution properly.

If you’re at that point, it can be worth having a lawyer review your Company Constitution before you circulate documents for signing - it’s much easier to get it right upfront than to untangle later if an approval was invalid.

How Do You Pass A Resolution Properly (Without Creating A Mess For Yourself Later)?

In a small business, it’s tempting to treat resolutions as “admin”. But the way you pass a resolution matters just as much as the final vote.

To reduce risk, think about three layers:

• the legal threshold (ordinary vs special resolution requirements);
• the process requirements (notice, voting, and signing); and
• the evidence (your written records).

1) Check What Rules Apply To Your Company

Before you draft anything, check:

• the Companies Act 1993 requirements for the specific decision;
• your constitution (if you have one); and
• your shareholders agreement (if you have one).

These documents often set additional requirements, like:

• higher voting thresholds (e.g. unanimous consent for certain matters);
• pre-approval rights for particular shareholders;
• notice periods and meeting rules;
• who can vote, and whether different classes of shares exist.

If you’re not sure whether the Companies Act or your documents require an ordinary or special resolution, it’s worth pausing and getting advice - choosing the wrong type can mean the decision is vulnerable to challenge.

2) Decide Whether You Need A Meeting Or A Written Resolution

Many companies pass shareholder resolutions by:

• meeting (in person or via permitted online methods), or
• written resolution signed by shareholders (often simpler for small companies).

For busy founders, written resolutions are usually the practical option - but it’s important to note that, under the Companies Act 1993, written shareholder resolutions generally need to be signed by shareholders holding at least 75% of the voting rights (unless your constitution says otherwise). So even if the underlying decision would be an “ordinary” resolution at a meeting, the written-resolution signing threshold can still be higher.

3) Get The Wording Right (This Is Where Errors Happen)

A resolution should clearly state:

• what decision is being approved;
• whether it is an ordinary resolution or special resolution;
• the date it takes effect (if relevant); and
• any supporting details (for example, referencing an attached document like a new constitution or a share sale agreement).

If your resolution is approving a transaction document, make sure the names, dates, and attachments match exactly. “Close enough” is where disputes start - especially when you’re selling a business or raising money.

For example, if you’re planning a change in ownership, you might also need documents dealing with share transfers and possibly a broader Share Sale Agreement, depending on the deal structure.

4) Keep Clean Company Records

Once passed, keep your signed resolutions with your company records. This is one of those areas where doing the admin properly pays off later.

Good recordkeeping helps when:

• you’re onboarding a new director, shareholder, or investor;
• you’re doing due diligence for a sale;
• you’re dealing with a shareholder dispute; or
• your accountant asks for proof a decision was properly made.

If you’re preparing for a sale or investment, your buyer/investor will likely ask for these records as part of due diligence. A messy approvals trail can delay (or derail) the deal.

Common Small Business Scenarios (And Which Resolution You Might Need)

To make the ordinary vs special resolutions question more practical, here are a few common scenarios we see for NZ SMEs. Keep in mind that your constitution and shareholders agreement can change the answer, so treat these as general guidance only.

Scenario 1: You Want To Change The Company Constitution

This typically requires a special resolution. A constitution affects how your company runs and what rights shareholders have, so the law expects a higher level of agreement.

If you’re updating your governance documents, it’s also a good time to check whether your Shareholders Agreement needs updating as well (these documents should “talk to each other” rather than conflict).

Scenario 2: You’re Bringing In A New Shareholder

This might involve:

• issuing new shares (diluting existing shareholders), or
• transferring existing shares from one shareholder to another.

Depending on how you’re doing it and what your documents say, you may need shareholder approvals. In many small companies, this is where processes fall over because the founders agree commercially, but forget to properly document approvals.

If you’re changing who owns what, make sure your share paperwork and approvals are consistent - share changes are one of those areas where “we’ll sort it later” can become expensive later.

Scenario 3: You’re Selling The Business

When you sell a business, approvals might be needed at both:

• shareholder level (especially if there’s a share sale, major transaction, or constitutional requirement), and
• director level (to approve the company entering into the sale documents).

A key point is that the buyer will likely want to see clear evidence of approvals, particularly where not all shareholders are selling, or where certain rights apply. If you’re heading toward a sale, having a properly structured Business Sale Agreement (and the correct company approvals to back it up) can save a lot of back-and-forth.

Scenario 4: You’ve Had A Falling Out With A Co-Founder

This is where voting thresholds become very real. If you need a special resolution (75%) and you’ve got a shareholder who holds 25% or more and is not cooperating, you may be stuck unless your constitution/shareholders agreement gives you another pathway.

This is exactly why many businesses put governance documents in place early, while everyone is aligned. It’s hard to negotiate fair rules once trust has broken down.

Scenario 5: You’re Making A Decision That Affects Customer Data Or Marketing

This might not look like a “resolution” issue at first, but if you’re changing how the business collects or uses personal information (for example, introducing a new platform, customer database, or marketing approach), it can trigger internal governance steps and compliance work.

From a legal foundations perspective, it’s also a good time to check your Privacy Policy is up to date and reflects what you actually do in the business (especially under the Privacy Act 2020).

Key Takeaways

• An ordinary resolution generally requires a simple majority (more than 50%) and is used for many standard shareholder decisions (unless a higher threshold applies under your company documents).
• A special resolution generally requires a 75% majority and is used for significant decisions that affect the company’s structure or shareholders’ rights (such as changing the constitution).
• When deciding between ordinary and special resolutions, the right answer depends on the Companies Act 1993 and your company’s constitution and shareholders agreement.
• Getting the process right matters - clear wording, correct voting thresholds, and proper records can prevent disputes and delays later (especially during a capital raise or business sale).
• For small businesses with multiple shareholders, special resolutions can be challenging if ownership is split - so it’s smart to set decision-making rules early while everyone is aligned.
• If you’re unsure which resolution you need (or how to document it properly), it’s worth getting advice before you sign anything, since fixing governance mistakes later is often far more costly.

If you’d like help with company resolutions, updating your company governance, or getting the right documents in place, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.