The Role of Corporate Resolutions in Business Decision-Making
Corporate resolutions are necessary for business decisions, since they provide a written record of the decisions the Board has approved. Corporate resolutions often provide evidence of a company’s decisions when presented before a court of law or when applying for a loan. The corporate resolution is also an important tool for formalizing and authorizing organizational transactions. Corporate resolutions can also be used to ensure that appropriate policies and procedures are followed within the company.
Examples of Situations Requiring a Corporate Resolution
In most situations where a corporate decision must be formally documented, or a policy must be followed, a corporate resolution should be used. Examples of decisions which must be documented with a corporate resolution could include: appointing a company director or executive; authorizing the sale of a company’s stock; authorizing a loan; approving a company’s budget; creating or changing corporate bylaws and authorizing the transfer of corporate funds.
Steps to Create a Corporate Resolution
Creating a corporate resolution is a formal process. It typically involves the following steps:
- Role of the Enacting Body: The Board of Directors must agree to enact the corporate resolution before it can be created.
- Writing the Resolution: The Board must draft the corporate resolution, including all relevant details such as the duration of the resolution, date of enacting, and any other relevant information.
- Review and Finalize the Resolution: The Board must carefully review the resolution before it is signed and agreed upon by all Directors.
- Sign and File the Resolution: The corporate resolution is signed by the Board of Directors and filed with the relevant government or corporate agency and maintained in the corporate records.
