A corporate resolution is a written record of a major decision by a company. It is primarily used to record the decision of the shareholders or board of directors and provide written evidence of the company’s authority to undertake that action.
They also serve as important compliance documents that show the shareholders or directors complied with company policy, state, and federal law, or relevant regulations.
Benefits of a Corporate Resolution:
- Holds the board accountable for its choices
- Provides legal evidence that a decision was made by those with proper authority
- Demonstrates legal compliance with state and federal regulators
- Maintains the corporate veil and liability shield
- Creates an organized record of major business decisions
When to Use a Corporate Resolution?
A corporate resolution is used to document any major decisions made during a shareholder or board of directors meeting. A corporate resolution is generally a required document for both C-corps and S-Corps. Major decisions may include, but are not limited to:
- Opening a new corporate bank account
- Transferring business ownership
- Hiring a new employee
- Voting for a new board member
- Selling shares of stock
- Designating corporate officers
- Setting up a new location or place of business
- Adopting large marketing campaigns
- Taking out a loan
- When the corporate bylaws require a corporate resolution to be filed
What to Include in a Corporate Resolution Form
Your corporate resolution needs to include the following details:
- The company’s legal identification
- The state that governs the company
- Company address
- Date the corporate resolution was made
- That a quorum was present
- Location of where the resolution was adopted
- The content of the resolution
- Signatures of the officers
- Certificate of Secretary
Corporate Resolution Terms
- Operating Agreement: An internal document that defines the relationship and authority of shareholders and directors, typically known as bylaws.
- Quorum: The number of people, or units of equity, that must be present at a corporate meeting for actions to be taken.
- Rescind: An action taken by a corporate decision-maker to undo their own previous action. A board director may bring a motion to rescind a resolution previously approved, but a resolution cannot be rescinded at the same board meeting.
- Revoke: An action that terminates, cancels, or nullifies a prior action or agreement by a corporate decision-maker.
- Meeting Minutes: Also known as corporate minutes, this is a written record of the issues discussed and any actions taken, decisions made, or board resolutions during the meeting.
