Board of Directors Resolution

The board of directors resolution is a document that is used to identify decisions that will need to be made throughout the fiscal year. Specifically, the board of directors are a group of people who oversee the significant business decisions of a corporation. The board is hired by the shareholders of the company. In turn, the board hires officers who have daily oversight into the company’s operations. While the officers and board both make decisions regarding the company, the board implements a written resolution to ensure consistency and improvement of the company’s operations and profits.

Board Resolution

The resolution is also referred to a corporate resolution, resolution of board of directors, board resolution, and other associated names. Such resolutions are determined at the annual board of directors meetings in addition to several other agenda items that are discussed at this meeting. Some of the typical board resolutions include:

  1. How and when to distribute dividends
  2. Hiring and firing of executives
  3. Compensation policies
  4. Specific goals
  5. Disposable income to meet the company’s short and long-term objectives and goals

Generally, these items are talking points during the meeting, which are then input into the written resolutions. Any decisions made in the resolutions are legally binding, as the board has full and complete oversight into such significant decisions. Keep in mind, however, that if the shareholders believe as though the wrong decision is being made, they can potentially bring a legal suit against the board members for a failure of the required duties of loyalty and care that such board members are expected to take when acting on behalf of the company and its shareholders.

Once the resolutions have been written, they need not be submitted to any government agency, nor do they need to be handed out to the shareholders. So long as the document is kept with the remaining books and records, that is sufficient.

Decisions in a Board Resolution

Not only will the resolutions provide the specific decisions to be made, but it will also provide the steps required in order to reach each resolution. Furthermore, the resolutions will be dated with when the meeting was held among the board members. Each decision will include additional information into when the decision must be made, what steps will be taken in order to reach the decision, and who else will be involved in those required steps. For example, a decision might require additional input from one or more of the officers, and thus, an officer will be made aware of what is required of him or her.

However, there are certain decisions that are required to be made during the annual meeting. Even so, these immediate decisions must still be documented. Some of these decisions might include:

  1. Electing or firing officers
  2. Amending the corporate bylaws
  3. Engaging in financial decisions, i.e., approving a loan or business contract
  4. Issuing additional stock
  5. Purchasing, selling, or leasing real estate
  6. Hiring new employees
  7. Creating a new department and choosing a department head to run the unit

What is a Certified Corporate Resolution?

A certified corporate resolution is one that is made at the board meeting that was previously or simultaneously approved by either the secretary or president of the company. Such resolutions are beneficial if a financial institution or outside business vendor requires verification to allow certain business activity. An example of this might be the business entering into a loan contract with a financial institution. The bank itself might require that the secretary, president, or someone with the authorization to sign documentation verify that the board can enter into the agreement on behalf of the corporation.

Corporate minutes are meeting minutes that are recorded during the board and shareholder meetings. The meetings might be recorded on a device or alternatively drafted by the secretary of the corporation. Meeting minutes are incredibly beneficial and important; most states require corporations to record meetings via the minutes. The minutes provide an accurate record of what was discussed, along with decisions that were made. The minutes must also be kept on file for future reference by anyone that wishes to view them.

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