Corporate resolutions are written records of all formal decisions made by a company’s board of directors or shareholders. The resolutions are binding. If there is unanimous consent by members, resolutions can be taken even without a meeting of directors and shareholders.
Generally, several key resolutions are made after the incorporation of a company, and then various supplementary resolutions are made through the life of the business. Initial resolutions typically state the registered office, define which individuals have the authority to act on behalf of the corporation, and designate the members of the board of directors.
Here are some other resolutions that might be taken at the first meeting of the board:
- Approval of company bylaws
- Adoption of corporate seal
- Selection of corporate tax year
- Establish meeting times for Board of Directors
- Authorize treasurer to manage accounts
- Payment of incorporation expenses
- Compliance with Securities Law
- Any state-required forms
- Optional qualification of stock
- Issue shares of stock
Supplementary resolutions can be made after formation in regard to a number of topics, such as issuing shares, instituting dividends, entering contracts, selling assets, changing CEO's, and many others. Any major structural change in the business is conveyed in the form of a corporate resolution.
Here are a number of common resolutions taken in later board meetings:
- Resolution to acquire assets
- Resolution to buyback shares
- Resolution to adopt a trade name
- Resolution to assign lease
- Resolution to authorize contract
- Resolution to borrow capital
- Resolution to borrow on inventory and equipment
- Resolution to commence litigation
- Resolution to defend suit
- Resolution to exercise option to extend lease
- Resolution to file chapter 7 bankruptcy
- Resolution to file chapter 11 bankruptcy
- Resolution to terminate a contract
- Resolution to terminate an employee
- Resolution to terminate lease
Having a written record of these decisions is important in case shareholders or government agencies call for an investigation of corporate action. By recording the details of the action, who supports the action and who’s against it, the company is protected from a number of legal actions. The documentation proves that any action was taken on behalf of the corporation, not by some third party interest.
While there are many purposes for issuing a corporate resolution, the format tends to be pretty standard. Each resolution must have a signature by the organization’s secretary, proving that appropriate board members took the decision.
The resolution must clearly state its purpose, and delineate any changes made within the organization.
Here is an example of what a typical resolution looks like, and you can find many more within our documents archive.
Generally speaking, most companies maintain the resolutions for 6 years. However, with the advent of digital storage, many companies retain digital copies for the entire life of the company.
Sample Corporate Resolution:
Resolution to terminate CEO
(Name of corporation)
RESOLVED, that it is desirable and in the best interest of this corporation that we terminate our relationship with CEO X, immediately, and without any complication.
The undersigned hereby certifies that he/she is the Secretary and the custodian of the books and records and seal of ____________________________ (corporation name), duly organized and existing under the law of the State of ____________________; the foregoing is a true and correct copy of a resolution duly adopted at a meeting of the Board of Directors of said corporation, held on the ___ day of ___________________, _____, and that a quorum was met at all times, that the passage of said resolution was in all respects legal, and that said resolution is in full force and effect.
Dated this ____ day of ______________________________, _____.
Signature of secretary
Printed Name of Secretary
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