A corporate resolution is a legal document that serves as a record of important decisions taken by the leaders of a company, usually the board of directors during a board meeting. Corporate resolutions are filed along with the meeting minutes, so that shareholders can access details of decisions that were made on their behalf, and so that a written record is available should it be needed for any other purpose. Corporate resolutions are not required to be filed with any government agency, but once a decision is entered onto one it becomes legally binding, and part of the official company record.
Not all actions taken by the board need to be recorded on a corporate resolution, only those that will have a significant impact on the direction of the company, its finances, or its structure and so on. Placing these decisions in a corporate resolution makes the details easier to retrieve at a later date without needing to access the full meeting minutes.
Examples of decisions that could be recorded on a corporate resolution include:
- Taking out new corporate finance, or restructuring existing loans.
- Making any changes in board membership or senior staff of the company.
- The decision to acquire assets, including other companies.
- Issuing new shares, or buying back existing ones.
What Information a Corporate Resolution Should Contain
Although a corporate resolution doesn't need to be filed with the government, it is still a legal document and should follow a certain standard structure. It needs to contain the following:
- The legal name of the company along with any other legal identification such as company numbers and so on.
- The governing body that's making the corporate resolution, usually the board of directors.
- The date, time, and location of the meeting in which the decisions were made.
- Details of each of the decisions made, and optionally any supporting information such as vote counts or dissenting opinions.
- A legal declaration of the accuracy of the document, signed by the appropriate parties, such as the chairman of the board, company secretary, treasurer, and others present.
How Much Detail is Needed?
When the corporate resolution is intended for internal records, it should include as much detail as appropriate to provide a proper written record. In some circumstances, however, the resolution will be intended for third parties, such as for presenting to a bank as part of a finance application. In these cases, only the most important and relevant details should be included, with a separate, more complete, resolution prepared for internal records.
A corporate resolution is a fairly simple document, but its contents are still legally binding and it is part of the official company record, and so care needs to be taken when drawing one up. It's good practice to use a legally approved template for the majority of resolutions. For the most important decisions, or those that didn't receive unanimous approval or were otherwise contentious, a corporate resolution should be reviewed and approved by a corporate attorney.