Are you trying to write a corporate resolution? Then this is for you. Before drafting a resolution, it's important to understand what it is, what it's used for and how they work.
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What is a corporate resolution?
A corporate resolution is a written document detailing the binding actions of the board of directors of a company. For instance, a resolution may describe who can perform a certain action on behalf of the corporation. This can range from signing contracts to authorizing a director or officer to represent the company.
What is a corporate resolution used for?
A corporate resolution documents the decisions and actions of a corporation. It is often used instead of holding meetings. Important decisions must be recorded by the board of directors and inserted in the minute book (read more on minute books here). The purpose is to keep the board of directors accountable for their actions. More than that, it also serves to provide a paper trail for third parties, like banks, investors, and government agencies.
How do corporate resolutions work?
Corporations are separate legal entities and have their own existence, liabilities, and assets. To uphold this separation, corporations act independently from their owners. Resolutions help demonstrate this independence, which includes high-level decisions. Officers manage the day-to-day activities which are not recorded as corporate resolutions.
What is included in a corporate resolution?
Corporate resolutions generally include the following elements:
The name of the resolution to describe its purpose;
The date and time of the resolution;
"Whereas" statements are used to introduce the intention behind the resolution;
A "therefore" or "resolved" statement to show the action to be taken to achieve the purpose of the resolution;
The laws under which the corporate resolution is governed;
Signatures of the directors.
Resolutions are an integral part of a corporation’s history. Ensure they are drafted without ambiguity to prevent any miscommunications or issues down the line. We can help draft various simple and complex resolutions, including your annual resolutions to ensure your corporation stays current with its legal obligations.
This blog post is not legal advice and is for general informational purposes only. Always speak with a lawyer before acting on any of the information contained herein.