What is a board resolution?
A board resolution is a specific document that determines the roles of the corporate office and notes all of the decisions that a board makes at their board meetings. This is designed to facilitate transparency and offer an easy-to-locate, written record of these decisions. The board resolution is then used as a guiding document to enact the board's decisions. It is essentially an appendix for the meeting minutes but can be used as a standalone document to explain the board's decision to make any changes.
At meetings, boards are frequently required to vote on decisions that extend beyond their regular duties. These situations often call for a board resolution to identify the context, explain the action taken by the board, and document the vote. If the majority of the board vote for change, this is documented, and the board resolution is used as the foundation for this change. If the vote leans towards remaining with the status quo, this is also documented to prove the decision for remaining/inaction. By inputting all of this information into a board resolution template, the board can then share their decision with the rest of the company.
These documents do not need to be long. They are often short and only contain the necessary information about the meeting, suggested actions, and outcomes. These documents are always written in formal language. Although this can sometimes make the document appear confusing and hard to create, once you understand the components of the document, it is simple to duplicate and tailor to your own needs.
Where to find board resolutions?
Board resolutions are legally binding documents, so they should be stored somewhere safe, alongside other business documentation. These resolutions should also be noted in the meeting minutes they occurred in. However, many businesses will also keep a second copy separate. All board resolutions should be dated, numbered, and titled, making it easy to locate any specific resolution. Although these documents do not need to be publicly filed, they are still considered legally binding documents and can be audited by tax and other government authorities if necessary. This is another reason to ensure that the documentation is formatted appropriately, contains all the needed information, and is filed safely for future needs.
When should a board resolution be created?
Often, a board resolution is created when the company board makes any changes. This document is not required for decisions that relate to the day-to-day running of a business (e.g. hiring a single staff member), but rather they are designed to create accountability for larger changes that may have a more significant impact. These decisions to enact changes are then documented in a particular fashion, allowing others to understand the change. Here is a list of some of the reasons a board resolution would be created:
- When a board member resigns and a new person is being recruited
- When a corporation wants to make significant changes to its staffing (e.g. significantly expanding or decreasing the current workforce)
- When they want to sell shares in the company
- If there is a significant change to be made to funding (e.g. extra funds have been received, or investment needs to be made)
Components of a board resolution:
The date and resolution number
These should be annotated at the top of the page. Resolutions go in chronological order, so if this is the first resolution, it would be numbered 001.
The title of the resolution
This does not need to be a long title, but it needs to identify what the resolution pertains to.
- The final statement should be a sentence indicating the board's decision.
- This sentence often starts with "Now, therefore…"
- Acknowledgement from the board president that the board will honor the resolution and enact the decision
- If the resolution was approved, this should be dated and located
- A list of all of the board members who participated in the discussion and vote
- This list should include their name, board position, and position they voted
Use a board resolution template for efficiency and convenience
Any board will likely need to file a large number of board resolutions. Although these documents can be relatively short, it is still a time-consuming process to complete. To streamline processes as much as possible, a template is recommended.
Templates can be useful for several reasons, but ultimately enables the board to complete their administrative duties faster and aligned. With a template, all documents after it can follow the same format, allowing the corporation to easily find the correct document based on date, resolution number, etc.
Board resolution sample
Each company will have its unique formatting and style, but this is a standardized template that can be revised to suit your specific needs:
Date: [month/day/year] Resolution Number: [0000]
[Title of the Board Resolution]
Whereas, [this paragraph should contain details about the responsibilities of the board, that they are acting on].
Whereas, [this paragraph should contain details on the action the board is considering taking, to meet their responsibilities].
Now, therefore, [details on the board's action has agreed upon].
[Name of Board President], Board President, to act on behalf of [name of the company] in agreeing with [details of the agreed-upon resolution]; and to sign for and perform any responsibilities in relation to such agreement.
Approved: [Date] Location: [location of business meeting]
[Board member's signature]
[Board member's name] [yes/no vote]
[Board member's title]
[Board member's signature]
[Board member's name] [yes/no vote]
[Board member's title]
