Corporate Resolutions | Board Resolution Templates
Corporate resolutions are formal declarations of major decisions made by a corporate entity. The resolutions are used to determine which corporate officers are legally able to sign contracts, make transfers or assignments, sell or lease real estate, and make other important decisions that bind the corporation.
How to use it?
Every business makes decisions, and those decisions must be agreed on and put in writing. That's what a corporate resolution does. Yes, there are specific requirements for corporate resolutions, to make sure everything is complete, clear, and accurate.
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How Resolutions are used by Corporates?
As outlined above, a corporation is an entity that has multiple layers of responsibility. A corporation exists separately from its shareholders. One of the benefits corporate status confers is corporate personhood, i.e. the corporation being granted many of the same rights given to a person. With these benefits come additional formalities and recordkeeping responsibilities. Making legally binding decisions in a corporation requires corporate resolutions that follow the format approved by each state. Resolutions are filed and kept with the official corporate records.
Resolutions are usually reserved for the biggest decisions a corporation makes. These decisions most often involve:
- something which has an impact on the ownership of the corporation;
- the major financial decisions of the corporation;
- the appointment of new officers and top employees of the corporation; and
- conflicts or disagreements between those involved in the corporation.
By way of example, corporate resolutions are typically required in order for a company to open bank accounts, execute contracts, lease equipment or facilities, and many more situations where the corporation's ownership or directors must be in agreement in order to transact business. Resolutions are also sometimes utilized to solve a disagreement or conflict, such as when the shareholders disagree with the way the corporation is doing business.
Daily business operations do not need to be made by official resolutions, such as:
- ordering office supplies;
- hiring or firing mid-level employees; or
- paying vendors.
The following issues should usually be achieved by corporate resolution.
- Issuance of stock to new shareholders, or existing shareholders
- Purchase of real property or approval of a significant lease
- Authorization of a substantial loan or line of credit
- Federal and state tax elections with consequences for the corporation
- Adoption of stock options or retirement plans
- Changes in key insurance and fringe benefit plans
- Proceedings of shareholder and director meetings
These are all situations which typically call for a resolution by the board of directors or the shareholders. This creates a paper trail of documentation that is helpful for later review by a corporation's officers, the IRS, creditors, banks, or the courts.
The most significant reason that people choose to incorporate is to separate their assets and limit personal liability. However, this benefit can be lost if the corporation is not diligent about following the laws applicable to incorporation. If you do not carefully follow the rules about recordkeeping, separation of finances, holding shareholders' meetings, and adopting resolutions, then a court could wind up piercing the corporate veil, which means the benefits of incorporation would be lost.
Corporate resolutions, therefore, can ensure that the corporation follows the applicable rules. Resolutions are part of the guiding principles of a corporation. They go hand-in-hand with bylaws.
Typical Corporate Resolutions
Typical Corporate Resolutions
A corporate resolution needs to be on file for any major decision made by the board of directors. Here are some examples of corporate resolutions, from initial incorporation documents to closing the business.
At initial incorporation, the board might create corporate resolutions to approve new board members and officers, accept the initial bylaws, setting up a corporate bank account at a specific bank, and designating signers for that account. Some other typical resolutions that a board of directors might create during the course of business would be:
- To document that a new board member was voted in
- To record a board decision
- To document a decision by shareholders
- To approve hiring new employee
- To approve selling shares (a share offering)Buying or selling the corporation's real estate
- Designating corporate officers
- Deciding to join another business in a joint venture
- Setting up a location in a new state or states
- Adopting a new marketing campaign, including Purchasing a a new trademark
- Taking out a loan
What to Include in a Corporate Resolution Form
What to Include in a Corporate Resolution Form
The exact form of a corporate resolution is determined by your state's business services department, but in general, a corporate resolution must include:
- The date of the resolution
- The state in which the corporation is formed and under whose laws it is acting
- Signatures of officers designated to sign corporate resolutions––usually the board chairperson or the corporate secretary
- Title the document with its purpose. For example, "Resolution to Accept Bank Depository."
- A phrase stating that the resolution has the consent and agreement of the board members. If the resolution passes by unanimous consent, state this. If consent is not unanimous, you will need to include a list of board members and their "yea" or "nay" votes.
- (optional) A "whereas" statement or statements indicating the intentions of the board in creating this resolution. For example, "Whereas it is the intention of this board to designate a bank account...."
- A "therefore" or "resolved" statement that specifies the action to be taken. For example, "Therefore by written unanimous consent...the designation of XYZ bank as a depository of the Corporation is approved.
Shareholder Resolutions
The shareholders of a corporation may also file resolutions. These resolutions are often created at an annual meeting of the corporation. If the corporation's stock is publicly held (sold to the public), the shareholder resolution process is regulated by the Securities and Exchange Commission (SEC).5
These resolutions are non-binding, that is, the corporate board is not required to do anything to enact them. They are typically presented by activist groups to influence the board on environmental, social, ethical, or human rights issues.
A corporate resolution needs to be on file for any major decision made by the board of directors. Here are some examples of corporate resolutions, from initial incorporation documents to closing the business.
At initial incorporation, the board might create corporate resolutions to approve new board members and officers, accept the initial bylaws, setting up a corporate bank account at a specific bank, and designating signers for that account
Some other typical resolutions that a board of directors might create during the course of business would be:
- To document that a new board member was voted in
- To record a board decision
- To document a decision by shareholders
- To approve hiring new employee
- To approve selling shares (a share offering)Buying or selling the corporation's real estate
- Designating corporate officers
- Deciding to join another business in a joint venture
- Setting up a location in a new state or states
- Adopting a new marketing campaign, including Purchasing a a new trademark
- Taking out a loan
Resolutions for Companies
In this section you will find various types of Board Resolutions as needed by the Companies for their proceedings.
