Corporate Resolution 2024 (guide + free template)

This post covers everything you need to know about corporate resolution

Company decisions must be made properly.

The proper way to make company decisions is through corporate resolutions or board resolutions.

Here I will take you through

• corporate resolution definition
• When a board resolution is necessary
• How corporate resolutions are made/created?
• Issues That Requires board Resolution
• Why do you need a board Resolution
• Contents Corporate Resolution
• How to pass a valid Corporate Resolution
• Corporate Resolution template
• etc.

Let’s get started

Corporate Resolution Definition

A corporate resolution is a formal written document drawn from a valid meeting of the board of directors detailing the binding decision made at that meeting.

In very simple language, the corporate resolution is a decision made at a board meeting.

When a corporate resolution is necessary

A corporate resolution is necessary whenever the board of directors is up to make a major binding decision.

How corporate resolutions are made?

Corporate resolutions are made at the meeting of the board of directors.

Generally, the process of passing a board resolution is very simple.

The process is initiated by the secretary who tables the motion/agenda and the chairperson allows a member to contribute.

Members discuss and provide their views on the Agenda and what the members agree/resolve is recorded by the secretary as a resolution.

Sometimes it may appear that members failed to agree.

Here the chairman may allow the resolution to be passed through voting.

When the vote is 50% /50% the chairman has the casting vote.

It is worth noting that a valid board resolution can only be passed at a valid meeting attended by enough quorum.

Later I will share with you what are the legal requirements for a valid board meeting

Issues That Requires Corporate Resolution

The following are corporate issues that require board resolutions.

1. To authorize a person to act on a certain issue on behalf of the company
2. To issue shares or increase share capital
3. To issue dividends
4. To Merge or acquire another business
5. To buy or sell company properties
6. To hire executive employees
7. To change the name of the company
8. To enter into a contract or joint venture
9. To wind up the company
10. To remove or add a new board member
11. To open a bank account
12. To mortgage/pledge company property
13. To issue or take a loan
14. To set up a new office in a new location
15. Further issues that require board resolution may be expressed or implied provided in the MEMART of the company

Why do you need a Corporate Resolution?

The following is why your corporate needs a board resolution

1. Authority
2. Transparency and accountability
3. Director’s liability
4. Compliance issues

Authority

Authority is the primary aim of board resolution. It entails that the issue (s) are resolved or the decision-making has been made with proper authority.

Corporate resolution vest authority to directors regarding certain issues.

For example when a board resolution says that X should deal with the opening of a bank account.

When X starts to implement that resolution on behalf of a company, a bank must require proof that they are dealing with a person with the authority to transact.

A board resolution form can clear that doubt.

Transparency and Accountability

Company law requires directors to act in utmost good faith and for the best interest of the company.

On the face of it, corporate resolution entails transparency and enhances accountability.

An essential company resolution leaves a paper trail in case it needs to be evaluated by shareholders, officers, or the IRS in the future.

Directors’ liability

Directors are personally liable for their unlawful acts during company management. It can be criminal or civil liability.

Board resolution can help the court to direct its decision specifically to a person who is authorized to act.

Further, when it comes to corporate liability, the corporate resolution act is evidence that a certain unlawful act done by the company was or was not authorized by a board of directors.

Compliance Issues

In daily activities, a company must comply with the requirements of the law, MEMART, and external stakeholders.

Company law requires some of the corporate activities to be resolved as corporate resolution.  

MEMART may specifically provide issues that require board resolution.

Banks, brokerages, and asset managers may require corporate a resolution before entering into any business transaction with a company just to be sure of the company’s mandate to transact.

How to pass a valid Corporate Resolution

For your board resolution to be valid it must be Passed in a valid meeting, Voluntarily voted, and Signed, certified, and stamped by the chairman and secretary of the meeting passed the resolution.

Passed in a valid meeting

Invalid meetings lead to invalid resolutions. I can’t emphasize enough the importance of a valid meeting when passing a corporate resolution.

Generally, I can say that a valid meeting is a meeting that complies with all provisions of company law and articles of association of a company regarding meetings.

The following must be fulfilled for a meeting to be called a valid meeting

1. It must be properly arranged i.e. it must be planned by an authorized person and the person who invites the member must have the authority to do so.
2. The notice must be given to all who must attend the meeting.  This must comply with the provision of the Articles of
3. Association regarding board meetings.
4. A quorum; must be attended by enough members (majority number) capable of making decisions.
5. The meeting must discuss the business/issue valid to be transacted. A valid meeting that discusses an invalid issue is null and void.

Voluntarily obtained

The board resolution must not be obtained through fraud or duress.  It must be voluntarily and unanimously passed by the majority member.

Signed, certified, and stamped

The corporate resolution is signed by the chairman and the secretary of the board meeting passed that resolution.

Further, the secretary must certify that is a true copy of the resolution which was passed on at the meeting by the present members.

A company seal or stamp is not just for the resolution passed for internal use but also for external use.

Contents Corporate Resolution

The form and contents of corporate resolution are not a matter of the law but a matter of practice.

Most of the time, the form and contents vary according to the company’s house style.

The following is the common format and the basic contents of the corporate resolution.

1. Title or name of the document example Corporate Resolution of:
2. Name and address of the company [you may put the address on the footer]
3. Quorum i.e. Member (and their designation) passed the resolution
4. The date and place of passing a resolution
5. A clause stating what was exactly resolved (resolutions clause)
6. The intention clause
7. Name and Signature of a secretary and chairman of the meeting
8. The certification clause
9. The company seal/stamp

Corporate Resolution template

The following is a Corporate Resolution template

CORPORATE  RESOLUTION of

……………………..COMPANY  LIMITED

A MEETING OF THE BOARD OF DIRECTORS HELD AT ……………….

ON THE … … … DAY OF … … … … … 20.. AT … … … AM/PM.

PRESENT WERE:

1……………………………….

2……………………………….

3…………………………………..

4……………………………………

THE CHAIRMAN REPORTED THAT arrangements would be made with ……………………. Limited, to………………………….

IT WAS RESOLVED that the Company should…………………………………………….

IT WAS FURTHER RESOLVED that…………………………….. be and are hereby authorized to ………………. with …………………………. Limited……………………………… on behalf of the company.

The above is certified by the secretary of the meeting as a true copy of the Resolution of the Board of Directors.

Name___________________________                   _________________ Signature of Chairman        Date

Name____________________________                   _________________ Signature of Secretary        Date