Corporate Resolutions | Definition, Benefits, Uses, & What to Include

What Are Corporate Resolutions?

A corporate resolution is a formal document that states the official decisions or binding corporate actions made by a corporation's board of directors or shareholders.

This is an essential legal document because it provides the rules and frameworks on how to act and come to a decision under different situations.

How Does It Work?

Generally, corporate resolutions are passed during a meeting of the board of directors or shareholders.

The resolutions are then recorded in the official minutes of the meeting. The process for passing corporate resolutions tends to follows these steps:

• The proposal is drafted and presented to the board of directors or shareholders for approval
• If the board or shareholders approve the proposal, it goes to the company's attorney for review
• Once the attorney has approved the resolution, it is filed with the appropriate government agency

Uses of Corporate Resolutions

There are several reasons why a corporation might pass a resolution, including:

Requirements to Introduce Corporate Resolutions

In order to pass a corporate resolution, a majority of the members of the board of directors or shareholders must be in attendance and voting.

Introducing a corporate resolution requires meeting the following requirements:

Benefits of Corporate Resolutions

There are several benefits to passing corporate resolutions, including:

• Increased accountability and transparency
• More accessible communication between directors and shareholders
• Clearer records of the corporation's official decisions
• They provide a clear and concise record of the company's official actions and decisions
• They can help ensure that all stakeholders (board of directors, shareholders, employees, and so on) are aware of the company's goals and objectives
• They can help prevent disagreements among stakeholders about the company's direction or operations

What to Include in a Corporate Resolution?

Drafting a corporate resolution requires the inclusion of numerous items:

• The name of the corporation
• The date of the resolution
• The state where the corporation is established, and under whose laws they operate
• The name of the person who proposed the resolution
• The title or subject matter of the resolution and its purpose
• The signatures of all directors or shareholders who approved the resolution
• A declaration that the body has agreed upon the resolution. When consent to approve is not unanimous, list the board members and their respective votes
• Resolutions can include statements beginning with the word "Whereas" to indicate the intention of creating the document
• A line where the terms "therefore" and "resolved" are indicated specifies the actions to be taken by the board

Corporate Resolutions vs Meeting Minutes

Although corporate resolutions and meeting minutes are official records of a corporation's decisions, they serve different purposes.

Corporate resolutions make formal decisions that have legal implications. Meeting minutes document the proceedings of a meeting, including the decisions made and the reasons for them.

Final Thoughts

Passing corporate resolutions is essential for a corporation to communicate its official decisions to its directors, shareholders, and government agencies.

It is also a valuable tool for increasing accountability and transparency.

If you are contemplating introducing a corporate resolution, consult with an attorney first to guarantee consideration of all legal requirements.

FAQs

1. What is a corporate resolution?

It is a formal document that documents the actions of a corporation's board of directors or shareholders.

2. What are some of the things a corporate resolution can be used for?

Appointing new directors or officers, authorizing the sale or purchase of assets, deciding on salaries and bonuses paid to executives, changing the company's bylaws, and modifying health benefits.

3. How is a corporate resolution passed?

To pass a corporate resolution, a majority of the members of the board or shareholders must be in attendance and voting.

4. Who can introduce a corporate resolution?

The president or secretary of the corporation can introduce a corporate resolution.

5. What is the process for filing a corporate resolution?

The proposal must be filed with the appropriate government agency.