Special Resolution
A Special Resolution is defined as:
“a proposal accepted by a majority of votes cast in each shareholder class separately, on a one-shareholder one-vote basis, plus at least 75% of all members in favour irrespective of shareholder class on a one-shareholder one-vote basis."
However, under the Co-operative and Community Benefit Society Act 2014, a special resolution is defined in specific circumstances to mean 75% of members in favour on a one-member, one-vote basis. In FairShares FCA Approved Rules, therefore, weighted voting is applied when a special resolution is called to limit the voting power of non-user members (i.e. absentee investors) to 25%.
In all other cases, Clause 25 states:
(a) A Special Resolution is passed if:
- a majority of votes cast in each shareholder class separately (on a one-shareholder one-vote basis) are in favour of the resolution;
- at least 75% of all members cast their vote in favour of the resolution, irrespective of shareholder class, on a one-shareholder one-vote basis.
A Special Resolution is required:
- to change the Articles of Association (Clause 9)
- to extend the provisions for issuing Labour and User Shares to supplier companies, associations and charities (Clause 12).
- to change the Capital Gain Fraction (Clause 15(a)).
- to merge or sell the organisation (Clause 19(b))
- to dissolve the organisation (Clause 19(c)).
- to increase the budget for Basic Wages by more than inflation (Clause 34(e))
- to fund Capital Expenditure, Extraordinary Research and Development costs in excess of £5,000 without compensating members with Investor Shares.
- to change the Labour Share Fraction, User Share Fraction (Clause 40) or Investor Share Fraction (Clause 44).
- to transfer more than the amount defined in Clause 37 to Reserves without compensating members with Investor Shares.
In Clause 25, a Class Resolution can change an Ordinary Resolution into a Special Resolution. This clause is triggered if, in General Meeting, there is a request for a poll of members. The Chair must offer each shareholder class a chance to pass a Class Resolution that changes the Ordinary Resolution into a Special Resolution.
The effect of the above (defined in Clause 25) is that a vote that would normally require a simple majority (adjusted for the proportion of voting power given to each shareholder class) would then need 75% support, plus majority in each shareholder class (except where local laws define the requirements for special resolutions differently).
For example, for FCA Approved Rules (approval pending), there are additional clauses for passing special resolutions in accordance with the Co-operatives and Community Benefit Society Act 2014. Only 2/3 majorities are required to merge with another co-operative society, and 75% of other special resolutions. Similarly, dissolution can be triggered by a 2/3 majority, followed within two weeks by a further simple majority vote at a special General Meeting.
If no poll is requested, and no shareholder class registers an objection, voting takes place on the basis of an Ordinary Resolution (i.e. on a one shareholder (member), one vote basis).
The following cannot be changed by Special Resolution
- The ratio between the highest and lowest paid member of staff (Clause 34(c) and 48)
- A resolution to terminate a person's membership (Clause 51(a))
Special Resolutions have to be passed to remove or amend Clauses 34, 48 and 51 if the above is not desired.
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