Introduction

A corporate resolution is a formal document used by a corporation’s board of directors or shareholders to record key decisions made by the organization. It provides legal proof that the business had the authority to take a particular action. This document serves as an essential record for governance and ensures compliance with corporate regulations.

Companies use corporate resolutions to document major business decisions such as appointing executives, authorizing contracts, acquiring assets, or making financial commitments. Properly drafted corporate resolutions help businesses maintain transparency and accountability in their decision-making processes.

This guide will cover everything you need to know about corporate resolutions, including their purpose, components, when to use them, and how to draft them effectively.

Table of Contents

1. Introduction
2. What is a Corporate Resolution?
3. When to Use a Corporate Resolution?
4. What to Include in a Corporate Resolution Form
5. How to Write a Corporate Resolution
6. Frequently Asked Questions

What is a Corporate Resolution?

A corporate resolution is a written statement issued by a corporation’s board of directors or shareholders to formally document significant business decisions. It serves as a record of the company’s intent and authorizations, ensuring that decisions comply with corporate governance policies.

Types of Corporate Resolutions

• Board of Directors Resolutions – Decisions made by the board of directors regarding corporate strategy, financial matters, or executive appointments.
• Shareholder Resolutions – Decisions approved by the shareholders, typically regarding elections of directors, mergers, or amendments to bylaws.
• Committee Resolutions – Resolutions passed by specialized committees, such as an audit or compensation committee, addressing specific areas of corporate governance.
• Unanimous Written Resolutions – In cases where formal meetings are not held, resolutions can be passed with the written consent of all board members or shareholders.

Key Elements of a Corporate Resolution

A properly formatted corporate resolution typically includes the following:

• Title – A descriptive heading that states the purpose of the resolution.
• Date – The date on which the resolution was passed.
• Recitals – A background statement that explains the reason for the resolution.
• Operative Clause – The specific action or decision being authorized.
• Signatures – The signatures of the authorized board members or shareholders.
• Corporate Seal (Optional) – Some companies may choose to affix their corporate seal for added formality.

Corporate resolutions play a vital role in legal compliance and governance. They serve as official records that prove the organization has followed the correct procedures in making significant business decisions.

When to Use a Corporate Resolution

Corporate resolutions should be used in any situation where a formal record of an important decision is needed. This ensures transparency and legal validity in corporate governance.

Common Situations Requiring a Corporate Resolution

• Appointment or Removal of Officers and Directors – When appointing a new CEO, CFO, or board member, or when removing an existing officer or director.
• Authorization of Contracts – When entering into significant contracts, agreements, or partnerships.
• Declaration of Dividends – When distributing dividends to shareholders.
• Borrowing and Financial Transactions – When securing loans, credit lines, or issuing corporate bonds.
• Stock Issuance or Repurchase – When authorizing the issuance of new shares or repurchasing existing shares.
• Mergers and Acquisitions – When approving mergers, acquisitions, or the sale of business assets.
• Amending Corporate Bylaws – When making changes to the corporation’s governing documents.
• Approval of Financial Statements – When officially approving financial reports and annual budgets.
• Opening Bank Accounts – When authorizing the opening of new business bank accounts.
• Dissolution or Liquidation – When formally closing or liquidating the business.
• Legal Actions – When initiating or settling lawsuits or arbitration cases.

By using corporate resolutions in these scenarios, businesses can maintain clear documentation of their decisions and ensure compliance with legal and regulatory requirements.

What to Include in a Corporate Resolution Form

A corporate resolution form provides a structured way to document the corporation’s formal decisions. The following elements should be included in a well-drafted resolution:

Title

The resolution should begin with a descriptive title that reflects its purpose, such as “Corporate Resolution to Appoint New CEO” or “Corporate Resolution to Authorize Loan Agreement.”

Date

Specify the exact date when the resolution was adopted. This provides a clear timeline for legal and record-keeping purposes.

Type of Meeting

Indicate whether the resolution was passed during a board of directors meeting, a shareholder meeting, or a committee meeting.

Recitals or Background Information

Provide context for the resolution by briefly describing why it is being adopted. This section outlines the problem or need for the decision.

Operative Clause

This section details the action being taken. It should include:

• A clear statement of the decision being made.
• Authorization for the corporation to proceed with the action.
• Any conditions or terms associated with the decision.

Voting Results (if applicable)

If the resolution was approved through a vote, document the number of votes in favor, against, and any abstentions.

Signatures

Ensure the resolution includes signatures of authorized board members or shareholders, along with their printed names and titles.

Corporate Seal (Optional)

Some businesses may choose to affix their corporate seal to add legitimacy to the document.

Supporting Documents

If the resolution is related to contracts, financial agreements, or policy changes, attach relevant documents as appendices.

How to Write a Corporate Resolution

Drafting a corporate resolution requires careful consideration to ensure clarity and legal validity. Below is a step-by-step guide on how to write a corporate resolution:

Title and Introduction

• Begin with a formal title that reflects the subject of the resolution.
• Introduce the purpose of the resolution, including the date and type of meeting.

Identify the Governing Body

• Clearly state whether the resolution is being adopted by the board of directors, shareholders, or a committee.

Provide Context and Justification

• Use “WHEREAS” clauses to provide background information and justification for the decision.

State the Decision or Action

• Use “BE IT RESOLVED” to introduce the formal action being taken.

Outline Any Conditions or Terms

• Specify any conditions, limitations, or next steps associated with the resolution.

Voting Results and Authorization

• Record the vote count if applicable.
• Ensure proper authorization by obtaining required signatures.

Signatures and Documentation

• Include signatures of key personnel and distribute copies for corporate records.

Frequently Asked Questions (FAQs)

What is a corporate resolution for an LLC?

A corporate resolution for an LLC documents decisions made by LLC members. While not always legally required, it is recommended for record-keeping and clarity in decision-making.

Does a corporate resolution need to be notarized?

No, corporate resolutions do not require notarization. They become legally binding upon the signatures of authorized board members or shareholders.

What is the difference between a board resolution and a shareholder resolution?

A board resolution is adopted by the board of directors to make executive decisions, whereas a shareholder resolution is passed by the shareholders to approve corporate changes such as mergers or bylaw amendments.

Can corporate resolutions be adopted without holding a formal meeting?

Yes, corporate resolutions can be adopted through unanimous written consent, allowing all members to sign the resolution without convening a meeting.