How to Write Corporate Resolution: Best Practices

Every business makes important decisions. These decisions have to be recorded in the form of corporate resolutions — documents that aim to hold the board accountable for their actions and show regulators that the board sticks to its fiduciary responsibilities.

The article below explores the significance of corporate resolutions, provides insight into where and how they’re used, and explains the rules and regulations governing them. 

Let’s start with the basics:

• What is it? A corporate resolution is a formal document that serves as a written record of important decisions and actions made by an organization’s board.
• When is it used? It’s impossible to list all actions that require a board resolution, but examples can be establishing a fiscal year, opening bank accounts, and issuing shares of stock.
• Why is it important? It ensures transparency, accountability, and adherence to fiduciary responsibilities.
• What does it consist of? The most essential elements are the title, date, location of a meeting, resolutions, details of the decisions, names of participants, and signatures.

What is a corporate resolution?

A corporate resolution is a formal document that details corporate actions taken during a board meeting. A board resolution is sometimes called a corporate resolution or directors’ resolution. Simply put, a board resolution is a formal document of a board’s decision.

It includes information about important decisions made by the board of directors and indicates the responsibilities of certain board members or shareholders (like the authority to open a bank account or approve new board members). 

The initial purpose of a corporate resolution is to:

• Serve as important compliance documents, demonstrating to the licensing board and state and federal regulators that the corporation meets its legal requirements
• Hold the board of directors accountable for its decisions should legal issues arise
• Provide a clear record of the board’s decisions, helping to prevent misunderstandings and conflicts within the corporation
• Improve honesty and transparency and ensure the board of directors acts in the corporation’s best interest

In short, any decision the board of directors makes should be reflected in the corporate resolution.

A corporate resolution form is a legal record included in the company’s meeting minutes that is voted on during a board meeting — either offline or by board vote by email.

Not all of the board’s actions have to be documented in a corporate resolution. For instance, routine decisions, like engaging with vendors for everyday supplies, are generally not recorded. However, major vendor contracts should be included.

Types of corporate resolutions

These are the three types of corporate resolutions.

1. Ordinary business resolutions

Ordinary resolutions are used for regular, everyday decisions. They require a majority vote, typically above 50%, to pass. They are often proposed and voted on during general meetings, where members vote by a show of hands, proxy, poll, or, sometimes, in writing.

Typical decisions that require an ordinary resolution are:

• Appointing or removing a director
• Appointing or removing a company secretary
• Approving an expensive transaction
• Increasing the share capital limit
• Making changes to a director’s contract

However, some companies may specify in their articles that certain business decisions, normally requiring an ordinary resolution, must be passed by a special resolution instead.

2. Special resolutions

Special resolutions are used for more important matters and major decisions and need at least 75% of members’ votes to be approved. A special company resolution is usually passed either through a show of hands or a poll at a general meeting of shareholders.

Decisions that typically require a special resolution include:

• Changing the company name
• Changing the company’s articles of association
• Reducing the company’s share capital
• Converting the company’s legal structure
• Changing the business objectives
• Designating corporate officers
• Appointing a board chairperson

Companies often modify their articles to specify the use of special resolutions for other types of decisions, ensuring a higher level of scrutiny and protection for members, particularly minority shareholders.

3. Unanimous written resolutions

A unanimous written resolution is a practical and convenient option for making company decisions without the need for board meetings. It’s aimed to make the process faster for more routine matters, like:

• Ratifying past decisions taken by the board
• Changing the company’s registered address
• Updating the company’s articles of association
• Approving minor contractual agreements

A written resolution of corporation typically needs unanimous approval, although it’s possible to change the articles to require majority agreement instead of unanimity.

Note: There are two types of corporate resolutions — for internal records and for external usage. Internal corporate resolutions aim to document major board decisions and the company’s day-to-day activities. On the other hand, external corporate resolutions are usually required by banks or other outside entities for certain business transactions. Include all resolution details for internal documentation, but make sure external entities don’t receive any sensitive company data.

What’s included in a corporate resolution?

The “filling” of a corporate resolution depends on local state requirements. However, the information presented in the corp resolution typically consists of the following:

• Legal company identification
• Company legal name
• Title and purpose of the resolution
• Signatures of the individual(s) designated to sign resolutions (typically a chairman)
• List of board members present at the meeting
• Date, time, and location of a board meeting
• Text of the resolution itself
• Voting quorum
• Information on whether the resolution is voted by unanimous consent (if not, provide a list of all board members and their “yes”/”no” votes)
• Dated signatures of relevant board members

If you’re unsure what to include in your company’s business resolution, consider using this board resolution template.

Also, to understand which corporate action requires documentation in a resolution, it’s crucial to evaluate its significance and impact on the company. Generally, any major decision made by the board should be recorded. To be sure, adhere to legal and regulatory guidelines and consult your company’s bylaws and state laws for specific requirements.

Furthermore, before drafting the resolution, a thorough collection of all necessary information is crucial. It ensures the resolution is legally compliant, helps in making informed decisions, prevents costly errors, and promotes transparency and accountability.

How to write a corporate resolution in 6 steps

Writing a corporate resolution properly is highly important, as failure to do so can result in issues with legal compliance, miscommunication, and potential challenges from stakeholders.

Learn how to write a business resolution form by following the first five simple steps:

1. Hold a board meeting

Company resolutions are typically created during board meetings, like special, emergency, or annual board meetings, where board members discuss and vote on the resolution’s content.

2. Include introductory elements

At the top of the page, write your company’s name and the governing body making the resolution. Add further legal identification number and the state where the board of directors meeting takes place. Also, include the board meeting’s location, date, time, and resolution number  — they are important for legal purposes. For example:

XYZ Corporation A Corporation Registered in the State of [State] Legal Identification Number: [Legal ID Number] Board of Directors Resolution Title: [Title of the Resolution] Date: [Date of Resolution] Location: [Location of Board Meeting]

3. Write a statement of consent

A statement is included to declare the company’s board consent and agreement. If all members are in favor, this can be noted. If not, the business resolution document should specify which members voted for and against the resolution. For example:

The undersigned, being all the directors of ABC Corporation (the “Corporation”), do hereby consent to the adoption of the following resolutions by unanimous consent.

4. Provide the list of corporate resolutions

All decisions made and voted on during the board meeting should be listed in this section. Each detail of the decision should be represented as a separate resolution and a separate paragraph. For example:

RESOLVED: That the corporation will open a new bank account at JPMorgan Chase. RESOLVED: That the company will hire Jack Smith as a new CTO. RESOLVED: That the corporation will open a new business location in Chicago, Illinois.

5. Sign and date the document

A resolution of corporation is a legally binding document only when signed and dated by a corporate secretary, corporate treasurer, board chairperson, and vice chairman.

Tip: Take on the legal services of a law firm when preparing a resolution for business to make sure it is written to meet state and federal requirements.

Finalizing and implementing the corporate resolution

Here’s what to keep in mind when finalizing and implementing a company resolution document.

1. Review and editing

Reviewing and editing a corporate resolution document is crucial for ensuring clarity and accuracy. This step helps identify and correct any errors, ambiguities, or inconsistencies in the document. It ensures that the resolution accurately reflects the board’s intentions and complies with legal and regulatory requirements. 

2. Approval process

The approval process of the organization resolution  involves the following steps:

1. The resolution is presented to the board during a meeting or through written consent.
2. Board members discuss the resolution, ask questions, and clarify any points.
3. A formal vote is held, typically requiring a specific majority or unanimous consent, depending on the company’s bylaws.
4. The results of the vote, including who voted for or against the resolution, are documented in the resolution.
5. Board members present at the meeting sign the resolution to indicate their approval.
6. Copies of the signed resolution are distributed to relevant parties.

3. Implementation and follow-up

To ensure that a resolution for business is properly implemented and followed up:

1. Designate specific individuals or departments responsible for executing the resolution’s directives.
2. Establish a timeline for the implementation of the resolution, including key milestones and deadlines.
3. Monitor the progress of the resolution’s implementation, and hold regular follow-up meetings to address any challenges or adjustments.
4. Maintain records of the implementation process, including any decisions or modifications made.
5. Provide updates to the board, shareholders, or other stakeholders.

A company resolution example

Even though boards aren’t typically required to submit their decisions to regulatory bodies, having official and approved corporate resolution documents in place can protect board members in the event of legal inquiries or disputes.

To simplify the process of resolution creation and to ensure clarity and transparency, use a corporate resolution template — a document that will save you time and ensure your decisions are well-documented and compliant with legal standards.

Download our white paper to access a business resolution sample and gain insights into additional tools that can assist in creating high-quality board resolutions and other board of directors documents.

Common mistakes to avoid

Typical mistakes boards make when creating a resolution for company include:

• Ambiguity and vagueness. When resolutions lack precision, it becomes challenging to understand the board’s intentions and may result in questions and misunderstandings. To avoid this, use language that leaves no room for doubt and provide context when needed.
• Lack of proper authorization. Failing to obtain the right approvals and signatures can make resolutions invalid and expose the organization and its board members to legal and regulatory risks. To avoid this, refer to your organization’s bylaws describing procedures of how decisions should be made and who has the authority to sign and approve resolutions.
• Failure to keep records. When resolutions aren’t documented and stored systematically, it becomes challenging to track the organization’s decision-making history. This may lead to difficulties during audits or legal inquiries, which can harm the company’s reputation. To avoid this, implement an organized documentation system and consider using board management software for this purpose.

Creating corporate resolutions with board management software 

Board management products are often called board portals, or simply boardrooms, and are designed to make corporate governance easier and more effective. 

With the help of virtual board meeting software, you can easily create a business resolution letter and enable an online discussion, board voting, and approval. This significantly improves the internal business processes and facilitates board of directors decision-making. 

To try an effective paperless board meeting, choose a reliable boardroom provider like iDeals, which is a TOP-1 choice of our experts.

By implementing the iDeals board management software into your business, you’ll have an easier time finding how to write a notice to a corporate resolution because iDeals automates this process. Additionally, you can create a  company resolution example or template for your company to use for future resolutions.

Key takeaways

• Corporate resolution is a legally binding document that specifies all the major board of director decisions. 
• Board resolutions are required when a company is opening a new business entity, hiring C-level executives, entering a new joining venture, voting for a new board member, and many other situations.
• A proper corporate resolution indicates the company’s name, its legal identification, the meeting’s date, time, and location, the voting quorum, the list of resolutions, and relevant signatures.
• The whole process of creating a resolution for company is significantly simplified when using board management software.

FAQ

What is a corporate resolution for a nonprofit?

A corporate resolution for a nonprofit organization doesn’t differ much from a resolution for a for-profit corporation. You need to document the specifics of the resolution, including the board meeting’s date, time, location, and the list of board members. 

Who signs a corporate resolution?

Like all legal documents, corporate resolutions must be signed by all board members to be legally binding. The must signatures should be provided by a corporate secretary, corporate treasurer, board chairmen, and vice chairperson.

What does a corporate resolution look like?

A corporate resolution looks like a legal document where the name of the organization, its legal identification, location, date, time, voting quorum, list of resolutions, and signatures of responsible board members are provided.  

Do LLCs need to use corporate resolutions? 

A limited liability company (LLC) isn’t required to prepare corporate resolutions. That’s because, typically, LLCs are subject to fewer regulations and have more flexibility in their decision-making and documentation processes, if compared to corporations.