If you have ever tried to figure out how to write a corporate resolution, then this post is for you. To fully understand the processes involved in writing a corporate resolution, you must first understand what exactly a written corporate resolution is, what it is used for, and when it's necessary.
What Is a Written Corporate Resolution?
A corporate resolution is a document written during a board of directors meeting detailing a corporate action taken during the meeting. The importance of well-written corporate resolutions to your company cannot be overstated. It serves as the documented rules and framework guiding the board's actions at any point in time. You're most likely to find a corporate resolution document within the company board's meeting minutes.
Who Are the Board of Directors?
Typically, board of directors is the term used to refer to a group of people placed in charge of decision-making on behalf of the investors and shareholders of a company. The group formulates policies, makes appointments where necessary, and generally determines the company's direction.
The Board of Directors is empowered by the company's corporate bylaws to look out for the shareholders’ interests regarding the way the company is managed and the activities it engages in.
Here is an article where you can learn more about corporate resolutions.
How To Write a Corporate Resolution – Step by Step
The perfect corporate resolution document is a result of carefully crafted sections. Outlined below is a detailed description of the process to guide you to produce legally binding corporate resolution documents.
Step 1: Write the Company's Name
Corporate resolutions are critical documents and could be required by banks or even the courts if it comes to that. The last thing you want is for your corporate resolution document to be disqualified on technical grounds.
This is why properly labelling the document is one of the most important steps in crafting an effective and legally binding corporate resolution document. You must write the company's name at the top of the page, along with the governing body making the decision or formulating a policy. A perfect example of this would be: “ Corporate resolution by the board of directors of ABC group of companies, Inc.”
With the name of the organization and the governing body properly identified, you have kick-started the process of writing a legally acceptable corporate resolution.
Step 2: Include Further Legal Identification
Again, the importance of making your document a legally binding one is further outlined by the need to include another line of legal identification. You cannot take this for granted. In this case, documentation could be something like: “ ABC group of companies was incorporated in the state of XYZ on February 12, 2012.”
Clearly outlining the state where the company was incorporated is very important because different states have corporate laws, which can be unique. This would come in handy for corporate lawyers in the event of a legal dispute.
Step 3: Include Location, Date and Time
It is essential to include the location where the board meeting is taking place. Also, the date and time must be clearly spelt out.
A voting quorum is very important at board meetings. To explain the term quorum, it represents the minimum number of participants a body or an organization requires for a valid session to hold.
For example, if a board meeting is held without the quorum required by the corporate bylaws or charters of the organization, decisions taken during such meetings cannot be said to be binding as the meeting itself is not recognized.
Thus, you need to list the number of board members present and correctly identify them alongside the location, date and time.
Step 4: List the Board Resolutions
Every resolution made and agreed upon by the board in a show of hands or verbal vote must be listed in this section of the corporate resolution document. Depending on how important or lengthy the meeting is, this is most likely the bulkiest section of your document.
It would typically read like this:
- RESOLVED: That the company will employ a new Chief Technology Officer.
- RESOLVED: That the board of directors directs the HR department to screen and present qualified candidates for the CTO position for interview by board members.
- RESOLVED: That the company will draft a new working briefly for the new CTO during the next board meeting.
This is optional. However, it is advised to include a section for the details of each resolution acted upon during the meeting. This would typically include the discussion, the debates or argument and which member voted for or against which decision. Also, have the result of the vote.
Step 5: Sign and Date the Document
To round off a legally binding corporate resolution document, you need to ensure the document is signed and dated by the following members:
- Chairperson of the board
- Vice-chairperson of the board
- Corporate secretary
- Corporate treasurer
This verifies the information contained in the document as verifiable truth.
Here is an article where you can learn more about writing a corporate resolution.
24 projects on CC
What’s Typically Included in a Corporate Resolution?
There are two types of corporate resolution documents. One is merely for documenting internal decisions made by the board of an organization, while the other is deemed necessary by banks and other institutions during particular transactions.
For the internal documentation, you must include details of each resolution, while for the ones needed by external entities, you do not need to disclose sensitive company information. All that is required is a quorum.
Here's a list of what's needed in a corporate resolution document:
- Company's legal identification
- List of members present
- Location
- Date/time.
- Resolutions
- Dated signatures of relevant members present.
When is a Corporate Resolution Required?
Despite the importance of the corporate resolution document, you cannot include everything in it. Below is a list of actions taken by a company where you want a corporate resolution:
- The decision to approve new board members
- Issuing new shares of stocks
- Hiring new C- level officers
- Setting up a business bank account
- Launching new branch of the business
- Register a new trademark
- Take a business loan
- Effect changes to the company's corporate bylaws.
- Engage in the purchase or sale of company properties.
- Launch a joint venture
- Create a corporate seal or change the existing one.
- Agree to a filing with the SEC.
- Accept the company's corporate bylaws and constitution.
Note that you don't need to draft a corporate resolution for corporate actions taken by senior officers like Chief Technology Officer, Chief Marketing Officer etc. Since these officers and others on their level are put there by the board, they reserve the right to make decisions on the daily running of the company.
Here is an article about when to write a corporate resolution
Does a Corporate Resolution Need to be Notarized?
A corporate resolution document does not need to be notarized. Once the document has been signed off and dated by the chairperson, vice-chairperson, corporate treasurer and secretary, it becomes a binding document.
Get Help with Corporate Governance
Do you need help managing corporate governance?
Post a project in ContractsCounsel’s marketplace to receive free bids from corporate lawyers on our platform. All lawyers are vetted by our team and peer reviewed by customers for you to explore before hiring.
Los Angeles, California
11 Yrs Experience
Licensed in CA
Southwestern Law School
-p-60.f6a3b047f4d6.jpeg){kind=avatar}
-p-60.4f0f42e7f6e3.jpg){kind=avatar}