Key Takeaways

  • A board resolution is a formal, legally binding record of decisions made by a company’s board of directors.
  • Drafting a resolution involves proposing a motion, documenting it clearly, reviewing it with legal counsel if necessary, and obtaining board signatures.
  • Board resolutions serve various purposes, such as appointing officers, issuing shares, approving mergers, or authorizing financial actions.
  • They provide legal proof of corporate decisions and help demonstrate compliance with fiduciary duties.
  • Proper documentation, storage with corporate minutes, and clear wording are essential for validity and enforceability.

A board resolution is drafted when the board wants a formal record of an issue they deem very important. In the event of non-compliance, the resolution acts as the official record to prove that the issue was discussed and agreed on.

Drafting Board Resolutions

Board resolutions are made either by the board of directors of a company, their shareholders, or a governmental organization. Resolutions are important for companies in that they aid the process of making decisions. However, it should be noted that board resolutions are not required by law and are less powerful than bylaws, which take precedence if any conflict occurs between the two.

Bylaws can be used to amend previously existing bylaws and even other resolutions.

The drafting of a resolution begins with a motion. One member of the board proposes it, and if it is seconded, it is then drafted. There is no length requirement for resolutions, and they can be as long or as short as needed. It is important, however, that the resolution is clear in its language so as to reduce the chances of misunderstandings in the future among members of the board.

When a resolution is to be drafted, it is often done ahead of the meeting where it is to be presented. This makes it easier for members of the board to review the resolutions and discuss it during the meeting. After this is done, a copy of the resolution is given to the board member who drafted the original copy to make sure it is in line with their wishes. Like every legal document, resolutions need to be signed and dated by the members of the board as they would do with minutes of meetings.

When a resolution involves any legal technicalities, they have to be first drafted and looked over by legal counsel before they are given to the president of the organization for review and then to other members of the board during the meeting.

It sometimes happens that new ideas are discussed during the meeting but no actual resolution is brought up. In this case, the secretary may write out a resolution either on the spot during the meeting or after the meeting and then submit to the chairman for review.

Due to their importance, resolutions need to be kept very carefully, with a backup copy being made and the original copy kept with either with the minutes of the meeting or other important documents.

Essential Elements of a Board Resolution

While there is no universal legal requirement for the structure of a board resolution, certain elements are typically included to ensure clarity and enforceability:

  • Title and Date: Clearly identify the document as a “Board Resolution” and include the date of adoption.
  • Introduction and Authority: State the legal basis for the meeting and the authority of the board to make decisions (e.g., according to the company’s bylaws or articles of incorporation).
  • Background or “Whereas” Clauses: Provide context or justification for the decision being made.
  • Resolved Clauses: Outline the decision itself using language such as “Resolved, that…” followed by the specific action authorized.
  • Effective Date: Note when the resolution will take effect, if not immediate.
  • Signatures: Include signatures of board members or the corporate secretary to validate the document.

Clarity is key—vague or ambiguous language can lead to misinterpretation and legal disputes. Each resolution should address only one primary topic to maintain focus and legal precision.

Steps to Pass a Board Resolution

Passing a board resolution typically follows a structured process to ensure legality and proper record-keeping:

  1. Proposal: A board member introduces a motion during a meeting or via written consent.
  2. Discussion: The board deliberates, may amend, and evaluates the potential impact.
  3. Vote: A majority (or as defined in the bylaws) must vote in favor of the motion.
  4. Drafting: The approved resolution is written formally, often by the corporate secretary.
  5. Approval and Signatures: Once finalized, it is signed by authorized directors.
  6. Record-Keeping: The resolution is filed with corporate records and stored alongside meeting minutes.

This procedure ensures that decisions are properly documented, legally binding, and defensible if challenged in court or by regulatory authorities.

Other Terms for a Board Resolution

There are various names for a board resolution:

  • Corporate minutes
  • Director's resolution
  • Corporate resolution
  • Consent to action without meeting
  • Resolution of board of directors
  • Directors' meeting minutes

"Consent to action" and "directors resolution" are used interchangeably and can also be used to document the decisions of the board in place of a corporate meeting. This can only occur with the consent of the directors for the decision.

In the event of the directors being unable to attend meetings, a director's resolution can act as an appropriate alternative.

If a formal meeting does hold, corporate resolutions can serve as a record of the minutes of the meeting, regardless of whether the meeting is in person or over mediums such as conference calls.

Reasons for Board Resolutions

Resolutions are not restricted in their use in that they can be drawn up for virtually any reason and for any decision the board comes to.

The secretary is usually the person who writes up a resolution. Board resolutions can be drafted for any of the following reasons:

  • In the case of governmental agencies that want to honor individuals.
  • To record decisions made at meetings
  • When the company shares are to be sold
  • When new staff are being hired
  • When a new member of the board is appointed
  • To record shareholder decisions
  • In the case of a non-profit organization distributing funds for new projects

Common Types of Board Resolutions

Board resolutions vary widely depending on a company’s needs. Common examples include:

  • Organizational Resolutions: Approving bylaws, appointing officers, or forming committees.
  • Financial Resolutions: Authorizing loans, opening bank accounts, or approving budgets.
  • Corporate Governance Resolutions: Approving mergers, acquisitions, or dissolutions.
  • Shareholder and Stock Resolutions: Issuing or repurchasing shares, declaring dividends.
  • Operational Resolutions: Approving major contracts, entering joint ventures, or setting policies.

In nonprofits, resolutions might include approving charitable grants or authorizing fundraising initiatives.

Corporate Minutes

Corporate minutes are the official recordings of the events that take place during director's meetings, which include all decisions taken and any votes cast with regards to these decisions.

It is important that these minutes are written in a manner that is clear, concise, and easy to understand.  This is because they are legal documents and evidence of the events of the meetings.

As a result of this, the methods by which the minutes are recorded needs ensure that the intentions of the board are well expressed, without any room for confusion. No language that can be used against the company should be allowed in the recording of the minutes.

Best Practices for Managing Board Resolutions

Proper handling of board resolutions enhances their legal effectiveness and supports strong corporate governance. Here are key best practices:

  • Maintain Consistent Format: Use a standard template to ensure completeness and reduce errors.
  • Ensure Accuracy: Double-check details such as names, dates, and legal references before finalizing.
  • Secure Storage: Store signed resolutions in a secure, easily accessible corporate records book.
  • Legal Review: Involve legal counsel for complex or high-stakes decisions to mitigate risk.
  • Periodic Review: Revisit older resolutions to ensure they remain relevant and accurately reflect current company practices.

Following these steps ensures that board resolutions are more than just administrative documents—they become valuable legal evidence of proper decision-making and fiduciary compliance.

Frequently Asked Questions

  1. What is a board resolution?
    A board resolution is a formal document that records decisions made by a company’s board of directors. It serves as legal proof of board actions.
  2. Are board resolutions legally binding?
    Yes. Once properly passed and recorded, board resolutions are legally binding on the company and its officers.
  3. Do all board decisions require a resolution?
    Not necessarily. Minor operational decisions may not require formal resolutions, but major legal, financial, or structural actions generally do.
  4. Can a board resolution be passed without a meeting?
    Yes. Many corporations allow resolutions by written consent, provided all directors sign the document.
  5. How long should a board resolution be kept?
    Resolutions should be retained permanently as part of the company’s corporate records, often alongside meeting minutes.

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