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As stated in the Companies Act, the running and operations of a company are mostly the responsibilities of the company’s directors, and most of their decisions often come in the form of resolutions. These resolutions are often passed and finalized in meetings, but there may be situations where the directors are unable to meet in person.
In this case, the directors can instead submit a Directors’ Resolution in Writing (DRIW), which is a written resolution of the agreed-upon action or decision passed and signed by the directors outside of a formal meeting. This formal document serves as a record of the decision-making process and is legally binding.
When is a Directors’ Resolution in Writing Required?
A directors’ resolution is required for, but not limited to, the following company matters:
- Starting and opening a corporate bank account in Singapore
- Matters and transactions regarding company assets
- Mergers and acquisitions
- Appointment of officers, executives, and other relevant positions such as corporate secretary
- Issuance of new company stocks
How to Acquire a Directors’ Resolution in Writing?
To acquire or request a DRIW, the company must draft and send the text of the resolution to all the relevant members with the right to vote on such matters. This can be done through email, post, or the company website. With the text, the company should also indicate the deadline for voting, as well as the voting process.
However, as stated in the Companies Act, if a voting member or group of voting members representing at least 5% of the total number of voting members request that a physical meeting be held for the matter, then the company will have to oblige and forego the passing of a written resolution.
How is a Directors’ Resolution in Writing Passed?
Once the resolution has been circulated, the directors will then have to sign a copy of the resolution to indicate their agreement, and this can be done through physical signatures, electronic signatures, or any other agreed-upon method.
Should the resolution be signed by a majority of the directors, the resolution will be considered passed unless otherwise stated in the company’s constitution or articles of association.
When is a Directors’ Resolution in Writing Considered Effective?
The resolution is considered passed once it has obtained the signatures of the majority of the directors. It will become effective on the date that the last director has signed it unless otherwise stated in the resolution.
Do You Have to Keep the Directors’ Resolution in Writing?
Yes, the company will have to keep a record or copy of the signed resolution for ten years from the date of the resolution for compliance purposes. Depending on the nature or matter of the resolution, the company may also have to file it with relevant authorities such as the Accounting and Corporate Regulatory Authority (ACRA).
Auditors may also want to inspect these written resolutions during the company’s annual audit.
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