Writing a corporate board resolution can be challenging for those unfamiliar with the intricate formatting and content requirements, not to mention the need for legal compliance.
Because the board of directors is responsible for making binding decisions that affect the company, using clear language to effectively communicate its intent while avoiding ambiguity proves vital.
A well-drafted corporate resolution must be concise when outlining the specific action the organization intends to take. It should also include a detailed record of the meeting minutes and legally compliant board voting procedures to enable transparency in corporate decision-making.
What is a Corporate Resolution?
A corporate resolution is a formal declaration of intent or decision made by a board of directors. It serves as a documented record of the board’s actions and decisions, outlining their commitments, approvals, or directives.
Corporate resolutions are pivotal in ensuring a company’s decisions are both legally sound and well-documented, especially when articles of association are concerned. They provide a clear trail of decisions made by a board, which is essential for legal compliance and accountability.
Corporate resolutions also serve as a historical reference for the board’s actions, and may be required for certain transactions or financial activities.
How to Draft a Corporate Resolution
A corporate resolution is necessary when a board makes significant organizational changes. Because it’s a binding document, consider the following elements before drafting a corporate resolution.
1. Identify the Purpose
The aim of the resolution should be defined in a manner that leaves no room for ambiguity. Whether it’s approving a merger, amending bylaws, or authorizing a notable expenditure, clarity of purpose is paramount.
2. Format the Resolution
The formatting of a corporate resolution should adhere to established guidelines. It typically includes a heading, such as “Resolution of [Company Name]” followed by the purpose, details of the decision, and signatures of authorized individuals.
3. Draft the Resolution
Craft the resolution using clear and concise language. Avoid jargon or complex terminology.
4. Review and Approve
Before finalizing the resolution, include all relevant parties in the review process. Ensure it aligns with the company’s goals and legal requirements. After approval, present the resolution at a board meeting for official adoption.
5. Record and Maintain
Once adopted, the corporate resolution should be carefully logged and archived. It becomes a part of the company’s official records and may be needed for future reference or legal compliance. You can use a board of directors’ resolution template to capture just about every intended company action.
Corporate Resolution Examples
Corporate resolution examples include everything from authorizations for financial transactions and mergers to partnership approval, adoption of new bylaws, and executive compensation decisions.
For example, an organization may draft a corporate resolution to document changes to its governance structure, or to approve compensation changes for the board of directors. When determining the compensation packages for top executives, a corporate resolution outlines the board’s decision and justifications.
OnBoard Powers Effective Boards
Corporate resolutions serve as the foundation of effective board governance. They provide a framework for making decisions, ensuring compliance, and maintaining a transparent record of board actions. Properly drafted and recorded resolutions enable smooth operations and decision-making within a corporation.
OnBoard’s leading platform for board meeting management supports in-person and virtual meetings, making it versatile for today’s changing work environment.
Some of the core OnBoard features include:
- Agenda management: OnBoard simplifies agenda creation and distribution, ensuring all necessary topics are covered in meetings.
- Document management: The platform allows for secure storage and easy retrieval of crucial documents, such as financial reports, strategic plans, and meeting minutes.
- Voting and resolution tracking: OnBoard facilitates electronic voting and tracking of resolutions, making decision-making processes smoother and more transparent.
Download our free board meeting template agenda to bring structure, clarity, and efficiency to board meetings.
Frequently Asked Questions (FAQ)
What is the Difference Between a Corporate Resolution and Bylaws?
A corporate resolution formally documents specific decisions or actions taken by a company's board of directors or shareholders. It typically addresses key issues like authorizing contracts, appointing officers, or approving major business transactions.
Bylaws are a comprehensive set of rules and regulations that outline the internal workings and structure of a corporation, including details like board composition, meeting procedures, and shareholder rights.
What is the Difference Between a Corporate Resolution and Written Consent?
A corporate resolution records decisions made during a formal meeting of the board of directors or shareholders. It usually requires a meeting with proper notice, discussion, and voting. Conversely, written consent is a written agreement signed by the board members, normally used for urgent matters, and can streamline decision-making without the need for a formal meeting.
About The Author
- Josh Palmer serves as OnBoard's Head of Content. An experienced content creator, his previous roles have spanned numerous industries including B2C and B2B home improvement, healthcare, and software-as-a-service (SaaS). An Indianapolis native and graduate of Indiana University, Palmer currently resides in Fishers, Ind.
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