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A corporate resolution is a formal document that details corporate actions taken during a board meeting. A board resolution is sometimes called a corporate resolution or directors’ resolution. Simply put, a board resolution is a formal document of a board’s decision.
It includes information about important decisions made by the board of directors and indicates the responsibilities of certain board members or shareholders (like the authority to open a bank account or approve new board members).
The initial purpose of a corporate resolution is to:
In short, any decision the board of directors makes should be reflected in the corporate resolution.
A corporate resolution form is a legal record included in the company’s meeting minutes that is voted on during a board meeting — either offline or by board vote by email.
Not all of the board’s actions have to be documented in a corporate resolution. For instance, routine decisions, like engaging with vendors for everyday supplies, are generally not recorded. However, major vendor contracts should be included.
These are the three types of corporate resolutions.
Ordinary resolutions are used for regular, everyday decisions. They require a majority vote, typically above 50%, to pass. They are often proposed and voted on during general meetings, where members vote by a show of hands, proxy, poll, or, sometimes, in writing.
Typical decisions that require an ordinary resolution are:
However, some companies may specify in their articles that certain business decisions, normally requiring an ordinary resolution, must be passed by a special resolution instead.
Special resolutions are used for more important matters and major decisions and need at least 75% of members’ votes to be approved. A special company resolution is usually passed either through a show of hands or a poll at a general meeting of shareholders.
Decisions that typically require a special resolution include:
Companies often modify their articles to specify the use of special resolutions for other types of decisions, ensuring a higher level of scrutiny and protection for members, particularly minority shareholders.
A unanimous written resolution is a practical and convenient option for making company decisions without the need for board meetings. It’s aimed to make the process faster for more routine matters, like:
A written resolution of corporation typically needs unanimous approval, although it’s possible to change the articles to require majority agreement instead of unanimity.
The “filling” of a corporate resolution depends on local state requirements. However, the information presented in the corp resolution typically consists of the following:
If you’re unsure what to include in your company’s business resolution, consider using this board resolution template.
Also, to understand which corporate action requires documentation in a resolution, it’s crucial to evaluate its significance and impact on the company. Generally, any major decision made by the board should be recorded. To be sure, adhere to legal and regulatory guidelines and consult your company’s bylaws and state laws for specific requirements.
Furthermore, before drafting the resolution, a thorough collection of all necessary information is crucial. It ensures the resolution is legally compliant, helps in making informed decisions, prevents costly errors, and promotes transparency and accountability.
Writing a corporate resolution properly is highly important, as failure to do so can result in issues with legal compliance, miscommunication, and potential challenges from stakeholders.
Learn how to write a business resolution form by following the first five simple steps:
Company resolutions are typically created during board meetings, like special, emergency, or annual board meetings, where board members discuss and vote on the resolution’s content.
At the top of the page, write your company’s name and the governing body making the resolution. Add further legal identification number and the state where the board of directors meeting takes place. Also, include the board meeting’s location, date, time, and resolution number — they are important for legal purposes. For example:
Board of Directors Resolution
A statement is included to declare the company’s board consent and agreement. If all members are in favor, this can be noted. If not, the business resolution document should specify which members voted for and against the resolution. For example:
| The undersigned, being all the directors of ABC Corporation (the “Corporation”), do hereby consent to the adoption of the following resolutions by unanimous consent. |
All decisions made and voted on during the board meeting should be listed in this section. Each detail of the decision should be represented as a separate resolution and a separate paragraph. For example:
| RESOLVED: That the corporation will open a new bank account at JPMorgan Chase. RESOLVED: That the company will hire Jack Smith as a new CTO. RESOLVED: That the corporation will open a new business location in Chicago, Illinois. |
A resolution of corporation is a legally binding document only when signed and dated by a corporate secretary, corporate treasurer, board chairperson, and vice chairman.
| Tip: Take on the legal services of a law firm when preparing a resolution for business to make sure it is written to meet state and federal requirements. |
Here’s what to keep in mind when finalizing and implementing a company resolution document.
Reviewing and editing a corporate resolution document is crucial for ensuring clarity and accuracy. This step helps identify and correct any errors, ambiguities, or inconsistencies in the document. It ensures that the resolution accurately reflects the board’s intentions and complies with legal and regulatory requirements.
The approval process of the organization resolution involves the following steps:
To ensure that a resolution for business is properly implemented and followed up:
Even though boards aren’t typically required to submit their decisions to regulatory bodies, having official and approved corporate resolution documents in place can protect board members in the event of legal inquiries or disputes.
To simplify the process of resolution creation and to ensure clarity and transparency, use a corporate resolution template — a document that will save you time and ensure your decisions are well-documented and compliant with legal standards.
Download our white paper to access a business resolution sample and gain insights into additional tools that can assist in creating high-quality board resolutions and other board of directors documents.
Typical mistakes boards make when creating a resolution for company include:
Board management products are often called board portals, or simply boardrooms, and are designed to make corporate governance easier and more effective.
With the help of virtual board meeting software, you can easily create a business resolution letter and enable an online discussion, board voting, and approval. This significantly improves the internal business processes and facilitates board of directors decision-making.
To try an effective paperless board meeting, choose a reliable boardroom provider like iDeals, which is a TOP-1 choice of our experts.
By implementing the iDeals board management software into your business, you’ll have an easier time finding how to write a notice to a corporate resolution because iDeals automates this process. Additionally, you can create a company resolution example or template for your company to use for future resolutions.