Elective Resolution

Elective Resolution Private Limited Company Companies Act 1985 Annual General Meeting Companies Act 2006
An elective resolution was a unanimous decision by all members of a private limited company to dispense with certain provisions of the Companies Act 1985, such as holding an annual general meeting. This requirement was abolished by the Companies Act 2006.
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Elective Resolution: In-Depth Analysis

Definition

An elective resolution was a mechanism used by private limited companies in the United Kingdom, allowing them to unanimously agree to circumvent specific statutory requirements under the Companies Act 1985. This could include provisions like the mandatory annual general meeting (AGM). However, the Companies Act 2006 abolished the need for such a resolution.

Examples

  1. Annual General Meeting (AGM) Waiver: A private limited company could use an elective resolution to dispense with the requirement to hold an AGM, provided all shareholders agreed. This allowed for flexible corporate governance.

  2. Reducing Financial Reporting Requirements: By passing an elective resolution, a company could simplify its financial reporting obligations and administrative tasks as long as all shareholders consented.

Frequently Asked Questions

Q1: What was the purpose of an elective resolution?

An elective resolution allowed a private limited company to dispense with certain statutory requirements under the Companies Act 1985 by obtaining unanimous agreement from its members.

Q2: What kind of provisions could be waived using an elective resolution?

Provisions that could be waived included holding annual general meetings and certain financial reporting requirements.

Q3: How was an elective resolution passed?

An elective resolution required unanimity, meaning every member of the company had to agree to the resolution.

Q4: Is the elective resolution relevant under the Companies Act 2006?

No, the requirement for elective resolutions was abolished by the Companies Act 2006.

Q5: Why was the elective resolution abolished?

The Companies Act 2006 aimed to modernize and simplify company law, making it more efficient. Abolishing elective resolutions helped to streamline processes and reduce administrative burdens.

  1. Private Limited Company: A type of business entity in the UK characterized by limited liability and restrictions on share transfers. Unlike public companies, they don’t need to offer shares to the public.

  2. Companies Act 1985: The legislative framework for company law in the UK before it was replaced by the Companies Act 2006. It included provisions related to the formation, operation, and dissolution of companies.

  3. Annual General Meeting (AGM): A mandatory yearly gathering of a company’s interested shareholders, where directors present the annual report and shareholders vote on various company matters.

  4. Companies Act 2006: The primary source of company law in the United Kingdom, which replaced the Companies Act 1985, aiming to simplify and modernize the framework for company operations.

Online Resources

Suggested Books for Further Studies

  • Company Law by Alan Dignam & John Lowry
  • Mayson, French & Ryan on Company Law by Derek French
  • Gower and Davies’ Principles of Modern Company Law by Paul L. Davies & Sarah Worthington

Accounting Basics: “Elective Resolution” Fundamentals Quiz

### What did an elective resolution allow a private limited company to do under the Companies Act 1985? - [x] Waive certain statutory requirements - [ ] Expand public share offerings - [ ] Merge with another company without shareholder approval - [ ] Change audit requirements > **Explanation:** An elective resolution enabled a private limited company to waive certain statutory requirements, such as holding an annual general meeting, with unanimous shareholder approval. ### To pass an elective resolution, what was required from the company’s members? - [x] Unanimity - [ ] Majority vote - [ ] Board approval - [ ] No objections > **Explanation:** Unanimous consent of all the members was required to pass an elective resolution under the Companies Act 1985. ### What provision could a private limited company dispense with using an elective resolution? - [x] Holding an annual general meeting - [ ] Filing tax returns - [ ] Paying dividends - [ ] Employing auditors > **Explanation:** A private limited company could use an elective resolution to dispense with the requirement of holding an annual general meeting. ### What happened to the elective resolution requirement with the introduction of the Companies Act 2006? - [x] It was abolished - [ ] It was expanded - [ ] It remained unchanged - [ ] It became more stringent > **Explanation:** The Companies Act 2006 abolished the requirement for elective resolutions, streamlining corporate governance. ### Why was the concept of elective resolution considered beneficial? - [x] It allowed for flexible corporate governance - [ ] It reduced shareholder rights - [ ] It increased bureaucratic obligations - [ ] It required less legal oversight > **Explanation:** Elective resolutions allowed for flexible corporate governance by enabling companies to bypass certain statutory requirements with unanimous consent. ### Which document primarily governed UK company law after the abolition of elective resolutions? - [x] Companies Act 2006 - [ ] Companies Act 1976 - [ ] GAAP Principles - [ ] International Financial Reporting Standards (IFRS) > **Explanation:** The Companies Act 2006 became the primary legislation governing UK company law after the abolition of elective resolutions. ### What type of companies primarily used elective resolutions? - [x] Private limited companies - [ ] Public limited companies - [ ] Non-profit organizations - [ ] Sole proprietorships > **Explanation:** Elective resolutions were primarily used by private limited companies to dispense with particular statutory requirements. ### Did elective resolutions apply to public limited companies under the Companies Act 1985? - [ ] Yes - [x] No - [ ] Only in certain conditions - [ ] Only for financial reporting waivers > **Explanation:** Elective resolutions applied to private limited companies and not to public limited companies under the Companies Act 1985. ### What kind of consent was necessary for an elective resolution to be valid? - [x] Unanimous consent of all members - [ ] Majority consent of shareholders - [ ] Special Board approval - [ ] Regulatory oversight > **Explanation:** Unanimous consent from all the members of the company was required for an elective resolution to be valid. ### How did the Companies Act 2006 aim to modernize company law? - [x] By simplifying statutory requirements and reducing administrative burdens - [ ] By introducing more regulations - [ ] By adding more layers of compliance - [ ] By retaining elective resolutions > **Explanation:** One of the objectives of the Companies Act 2006 was to simplify and streamline statutory requirements, thereby reducing the administrative burden on companies.

Thank you for exploring the comprehensive analysis of “Elective Resolution” and tackling our sample exam quiz questions. Keep striving for excellence in your financial knowledge!

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