Writing a Corporate Resolution: Tips and Insights

Running a business involves making big decisions. Maybe it’s opening a new office or bringing on a key executive. When it’s time to make those choices, corporate resolutions are formal documents that record the decisions made by your company’s board of directors.

Whether you’re running a small startup or a large corporation, these resolutions serve multiple functions. For one, they create a clear paper trail so you can see who decided what and when. This knowledge can protect your company from legal trouble, keep you in line with regulations, and maintain trust with your investors.

Want to know more? Let’s dig in.

Key Takeaways

• Corporate resolutions document major decisions and maintain the corporate veil that protects owners from personal liability in business operations.
• Board resolutions create accountability while ensuring corporate governance standards are met across all corporate actions and strategic decisions.
• While LLCs aren’t legally required to use resolutions like corporations, documenting decisions through a corporate resolution form protects both the legal entity and its owners.

What Is a Corporate Resolution?

A corporate resolution is a legal document that spells out a specific action or decision your board of directors has approved. More than a piece of paper, this binding document carries real weight.

Your board of directors is responsible for creating and approving these resolutions. That way, you can be sure any important decisions are made with your company’s best interests in mind. Once approved, the resolution becomes part of your company’s official corporate records.

Your company’s articles of incorporation are like its birth certificate, establishing its legal existence and basic structure. Corporate resolutions, on the other hand, are like the chapters of a book, documenting the key decisions that shape the company’s journey.

Why Are Corporate Resolutions Important for Corporate Governance?

If you’ve ever lost track of a crucial decision or faced questions about who authorized what, you know the value of a clear record. Board resolutions serve as that record, but with much higher stakes.

Your board members are the captains of your company’s team. Through their fiduciary duty, they’re legally bound to always point your business and its shareholders in the right direction. Corporate resolutions are their playbook, documenting each decision and ensuring they stay true to their responsibilities.

But there’s more to corporate resolutions than keeping your board of directors accountable. Corporate resolutions also make sure that your personal assets are safe and sound.

Creating a clear separation between your board and your assets means you won’t have to worry about your nest being compromised if any legal issues arise. This separation maintains the corporate veil that protects owners from personal liability. Indeed, corporate resolutions are vital to your company’s health and your own. Without them, you’re essentially putting your own pocketbook on the line.

Additionally, corporate resolutions keep everyone on the same page. With board resolutions, stakeholders better understand why big decisions were made and the reasoning behind them. It’s the kind of transparency you want to avoid misunderstandings, and, as a result, corporate resolutions help build trust among your members.

Corporate resolutions are worth the extra effort. Your assets are protected, open communication is promoted, and your members are more likely to make smart decisions for your business.

Who Needs a Corporate Resolution and When?

Corporate resolutions are a legal necessity for corporations. Whenever your company makes a major decision, such as acquiring another business, selling a significant asset, or changing its leadership, a corporate resolution must document that decision.

Corporate resolutions represent an official seal of approval from your board of directors. But what if you’re not a corporation? Perhaps you’re an LLC or a partnership. While LLCs and other business structures might not be legally required to use corporate resolutions under federal regulations, they can still be incredibly valuable.

Having a clear record of your major decisions can be a game-changer in establishing credibility with banks, investors, or potential partners. When exactly should you use a corporate resolution?

Here are a few common scenarios:

• Opening a Business Bank Account: Banks often require a corporate resolution to verify that the person opening the account has the authority to do so on behalf of the company.
• Entering Into Contracts: A corporate resolution can solidify the terms of a major contract and confirm that the company has authorized the agreement.
• Making Significant Financial Decisions: Whether securing a loan or investing in a new venture, a corporate resolution can demonstrate that the decision has been thoroughly vetted and approved.
• Hiring or Firing Executives: Changes in leadership are significant events for any company, and a corporate resolution can provide a clear record of the decision and its reasoning.

Skipping corporate resolutions might save you time if you’re a smaller business with a more informal structure, but doing so can have serious consequences. You could lose out on important opportunities, damage your reputation, or even face legal challenges.

What Are Common Types of Board Resolutions?

Corporate resolutions come in many flavors, each tailored to a specific type of decision. Here are some of the most common ones you might encounter:

• Financial Resolutions: These deal with the money side of things, like approving budgets, securing loans, issuing stock, or making major investments.
• Personnel Resolutions: These focus on changes in your company’s leadership or workforce, such as hiring or firing executives, approving compensation packages, or adopting employee stock ownership plans.
• Operational Resolutions: These cover a wide range of decisions affecting your business, from opening new locations or bank accounts to adopting new policies and procedures outlined in your bylaws.

One particularly important type of resolution is the corporate bank resolution. This document identifies who within your company is authorized to manage bank accounts and make financial transactions on behalf of the business. It’s a vital tool for preventing fraud and ensuring proper financial controls.

Remember, this is just a snapshot of the many types of corporate resolutions you’ll encounter. The specific resolutions you need will depend on your company’s unique circumstances and the decisions that you face.

How To Write a Corporate Resolution: Document Essentials

A corporate resolution is essentially your plan for an important decision. Like any good plan, it needs the right components to turn out well. Whether you’re drafting a free form resolution or using a corporate resolution form template, here’s what you’ll need:

• Date: This is your timestamp, telling you when the decision was made.
• Title: The title should clearly state the purpose of the resolution (e.g., “Resolution to Authorize a Stock Purchase”).
• State of Incorporation: This is the location where your company was formed.
• Intentions (“Whereas” Statements): These explain the reasons behind the decision.
• Actions (“Resolved” Statements): These outline the specific steps you plan to take, like the instructions of a recipe.
• Consent Clause: This confirms that everyone involved agrees with the decision. Some corporate actions require unanimous approval depending on your bylaws.
• Signatures: These are the names and approvals of the people authorized to make the decision.

Use plain language, avoid jargon, and be specific about the actions you plan to take. It may be wise to have a lawyer review your resolution to make sure it’s in tip-top shape. And don’t forget the signatures, as they’re what make the resolution official.

What Happens After You Write a Corporate Resolution?

Once you’ve crafted your corporate resolution, it’s time to file it away with your other important documents, like your company’s articles of incorporation and meeting minutes.

Eventually, your resolutions may come in handy in several different scenarios. For example, if you’re opening a new bank account, the bank might ask for a resolution authorizing the action.

Additionally, if you enter into a partnership agreement or joint ventures, the other party might want proof that your company has officially approved the deal. If any legal issues arise, these resolutions can be crucial evidence in court.

It’s worth noting that shareholders can also submit shareholder resolutions for consideration. This approach gives them a voice in the company’s decision-making process, even if they’re not on the board of directors.

Maintaining Board Meeting Minutes and Corporate Accountability

Proper corporate governance requires more than just passing resolutions. Your business should maintain detailed meeting minutes from every board meeting where decisions are discussed and voted upon.

Meeting minutes serve as a companion to your corporate resolutions. While the resolution captures the final decision, the meeting minutes document the discussion, the reasoning, and the vote count. Together, they create a complete record that demonstrates accountability and proper corporate formalities.

For corporations, keeping accurate meeting minutes isn’t optional. State laws require them. For LLCs, while not always legally mandated, maintaining these records protects the limited liability status that makes the business structure attractive to owners.

How Corporate Resolutions Support Bylaws and Operating Agreements

Your company’s bylaws (for corporations) or operating agreement (for LLCs) establish the framework for how your business operates. These foundational documents set the rules for decision-making, voting requirements, and management structure.

Corporate resolutions work within this framework. They don’t replace your bylaws or operating agreement. Instead, they document specific decisions made according to the procedures outlined in those governing documents. Think of your bylaws as the constitution and resolutions as the laws passed under that constitution’s authority.

When drafting resolutions, always reference your bylaws or operating agreement to ensure you’re following the proper procedures. Some decisions might require a simple majority vote, while others need unanimous approval or must follow specific notification requirements.

Mosey Keeps Your Business Compliant

Corporate resolutions document your biggest decisions, but they’re just one piece of your compliance puzzle. Entity registrations, annual reports, employment policies, state-specific requirements—keeping all of it organized across multiple states gets complicated fast.

That’s where Mosey helps. Our compliance platform centralizes all your mail and notices, tracks filing deadlines, and automates state requirements so nothing slips through the cracks. Whether you’re maintaining corporate formalities with resolutions or staying on top of multi-state registrations, Mosey ensures you’re always compliant and ready for whatever comes next.

Want to find out more? Schedule a demo with Mosey and take your compliance efforts to the next level.

Frequently Asked Questions: Corporate Resolutions

Do you need a corporate resolution for an LLC?

LLCs are not legally required to use corporate resolutions like corporations, but they should strongly consider them. Using a corporate resolution form helps LLCs maintain proper records, establish authority for major decisions, and protect the limited liability status that separates business and personal assets.

What is an example of a company resolution?

A company resolution example is a formal document authorizing a specific action, such as opening a bank account or approving a major purchase. The resolution includes the decision details, voting results, effective dates, and signatures from authorized members or board members who approved the corporate action.

What is the meaning of company resolution?

A company resolution is a formal written record documenting an important business decision made by a company’s board, members, or owners. It serves as official documentation of corporate actions and helps maintain corporate formalities, ensuring decisions are properly authorized and legally binding for the business.

Is a corporate resolution the same as an operating agreement?

No, a corporate resolution and operating agreement serve different purposes. An operating agreement establishes the ongoing rules and structure for how an LLC operates, while a corporate resolution documents a specific one-time decision or action taken by the company’s members or managers.

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