What is a Corporate Resolution?

A corporate resolution is simply a formal record of decisions made by the board of directors of a corporation and their activities on behalf of the organization. States demand incorporated companies to employ some corporate resolutions for noting hefty business decisions. Besides, the board of directors of the company must vote to get their resolutions approved either while writing or in board meetings.

Certainly, resolutions assist the corporation to show that it’s an independent reality from its owners i.e shareholders and protect against board decisions that may build potential issues of interest. Mostly, resolutions are taken in meeting minutes but their structure and form may vary a little depending on the bylaws of the corporation and the state. Below I have discussed more information regarding corporate resolutions.

How are Corporate Resolutions different from Bylaws?

A corporation’s board of directors creates and accepts bylaws when initially the corporation is set up. Bylaws are the rules regarding how the corporation shall be actually governed. All the resolutions are made as required to form vital decisions and actions all taken by the board of directors on behalf of the corporation.

Why is there a need for corporate resolutions?

The corporate has the power to display that the business is an independent entity separate from its stakeholders and owners’ personal doings. They do so by issuing some corporate resolutions for needed actions and hefty decisions made by the board of directors of the company. As we look after the compliance formalities, a corporation must utilize and note resolutions appropriately. If they fail to do so, then they might face issues in piercing the corporate cover that guards the business’s, directors, shareholders, and other stakeholders against being held personally liable for every action of the company’s legal and debt issues.

It is highly necessary to brace the company’s governance rules even in a corporation with only members in it. Here the corporate resolutions play their part and offer a paper trail of the actions of the board of directors. They also assist in holding the board completely accountable with regulations and laws, duties to their shareholders.

When is the need for corporate resolutions?

Corporate resolutions may be used for a wide range of board actions on the company’s behalf.

Actions That Ordinarily Demand Resolutions

• Getting into contracts.
• Building corporate headquarters.
• Purchasing real estate.
• Selling company-owned real estate.
• Leasing office space, buildings, or other equipment.
• Applying for a patent.
• Registering copyright or trademark.
• Securing a line of credit or loan.
• Approving fresh board members.
• Hiring new C-level executives.
• Getting into a joint venture.
• Approving alterations to the bylaws of corporate.
• Approving filings with the SEC (Securities and Exchange Commission).
• Issue fresh shares of stock.
• Starting a business bank account and designating signers.
• Making some modifications to the company’s retirement plan.
• Expanding the business to other states as well.
• Change the designated registered agent of the company.

Actions That Ordinarily Do Not Demand Resolutions

• Taking new customers.
• Paying for invoices.
• Hiring fresh employees.
• Firing employees when needed.
• Coming up with fresh products and services.
• All the actions were taken by officers of the corporation (e.g., CEO, CTO, CMO), who have authority to make day-to-day actions or decisions on the company’s behalf.

How Do You Write Corporate Resolutions?

It is in the hands of the board of directors completely as they will make corporate resolutions and sign them at a board meeting. Before the meeting begins, all the board members should get a meeting agenda in their hands that have any actions or decisions to be resolved later on. These resolutions made follow a proper format approved by the state where their company is registered. There is a place for resolution in the body of a meeting’s minutes or documented well on a resolution form that brings the minutes of the meeting while every director voted on and approved the corporate resolution. Following are the examples of what exactly corporate resolutions might have:

• Organization’s name along with the body creating the resolution (e.g., “board of directors of XYZ, Inc.”)
• Location and date of the meeting where the directors voted on the resolution.
• The main purpose of the resolution (e.g., to manage effectiveness under a proper trade name)
• All the titles and names of board members and other persons who are there in the meeting.
• Valid date of the proposed decision or action after the approval of the resolution.
• A well-made statement that confirms the individuals present at the meeting reviewed and agreed to the corporate resolution (mentioning if it was approved well by unanimous consent or lists how board members voted if it was not unanimous)
• A complete statement that offers officers of the corporation the proper authority to take necessary actions out the resolution (e.g., “Resolved further, that the officers of this corporation are authorized and directed to take any action needed to effectuate the preceding resolution.”)

How do these resolutions get approved?

There are resolutions set for the meeting agenda and are well discussed among the members at the board meeting. Board members then vote, and the corporate secretary records all their votes alongside. It should be very particular that a company’s bylaws should have information regarding how many directors must vote in favor of a corporate resolution for it to be approved (e.g., plurality voting, unanimous voting, or majority voting).

Besides, there should be signatures of directors of approval on the minuted or the form that mentions the resolved decisions or actions. So, in these cases, resolutions might be approved by the written consent of all the directors without a board meeting. Moreover, the corporate secretary files approved corporate resolutions along with the minutes of the meeting in the corporate records book of the company.

What is the appropriate place for Resolutions?

Resolutions are something legal and should be precisely kept with a company’s corporate records like bylaws, formation documents, agreements, etc. Generally, companies do not have to submit corporate resolutions to any government agencies. But, there are a few financial institutions that might ask for proof of resolutions when corporations wish to open a fresh account. A company with which the corporation wants to get into a contract may simply request to see a resolution. There are a bunch of other circumstances where a company must display approved resolutions to show that the board of directors has authorized particular activities.

Wrapping Up

So, hope you all are now aware of the term corporate resolutions well. In this case, business owners have a job to play where they have to ensure they understand every federal and state recordkeeping need and keep the corporate resolutions and all other significant documentation for the demanded length of time. Choose wisely while you design your resolutions.