What Is A Corporate Resolution?

Is your corporation facing a significant decision? If so, it is likely that a corporate resolution will be passed by the Board of Directors. A corporate resolution is an important document serving as a formal statement of the Board’s wishes.

A resolution is an official expression of the decision or opinion of an official body. Typically, resolutions are passed by one of two groups: a legislative body, such as Congress or a state legislature, or the Board of Directors of a corporation. In the corporate world, a resolution is a written decision passed by the Board of Directors.

Corporate Resolutions

A corporation’s Board of Directors is charged with making many significant decisions that will impact the future of the company. Each of these major decisions should be recorded formally as a corporate resolution. A resolution can be specific, covering a particular transaction, or broader, concerning several transactions. The resolution is legally binding, and must be agreed upon by a vote occurring at an official meeting of the Board of Directors.

Within Florida Corporations, corporate resolutions can serve many different purposes. Examples of corporate resolutions include statements giving consent to a real estate purchase or to the termination of a lease. Resolution can also approve the opening of a bank account or authorize the company to issue shares. These are just a few examples of the many possible reasons for passing a resolution.

Importance Of Corporate Resolutions

A resolution that has been passed by the Board of Directors gives assurance to other parties in a transaction that the transaction was properly authorized by the Board. A Director may be asked to show the resolution as proof in order to open a corporate bank account or conduct other transactions on behalf of Florida corporations. The resolution also indicates that the actions were taken on behalf of, and by, the corporation, rather than by a Director whose actions were not approved by the rest of the Board.

When Do You Need A Corporate Resolution?

When important decisions are made within a company, corporate resolution is needed. Given that a corporate resolution is a document that records decisions made by board members, it serves as a way to communicate the decisions and actions that the company will take.

Corporate resolution is binding, and should be done in order to ensure that all decisions and actions have legal backing to them. This holds the board of directors accountable and protects the best interests of the company. To know whether or not your company should create a corporate resolution, it is vital that you speak with an experienced and knowledgeable corporate resolution attorney about the situation.

Types Of Corporate Resolutions In Florida

In situations where a board of directors is making decisions that affect their company, a corporate resolution must be recorded. Acting as a safety and accountability tool for the decision-making process, corporate resolutions can be used in a variety of contexts.

Corporate actions that typically require a corporate resolution include:

• The approval of new officers and/or board members and officers.
• The acceptance of the corporate bylaws.
• Identifying which officers and board members have access to the company’s bank account.
• Hiring or firing employee approval.
• The documentation of a shareholder decision.
• The establishment of a corporate bank account.
• Alterations in the management department.
• Corporate real estate buying or selling.
• Adjustments in bonuses or salaries of anyone in the company.
• “Joint venture” decisions.
• Share selling approval.
• Business expansion.
• Financial decisions.
• And more…

How Is A Corporate Resolution Different From An Operating Agreement?

An operating agreement is the primary document used by LLCs to outline the business’ functional and financial decisions. This can include provisions, rules, and regulations. The purpose of an operating agreement is to control the internal operations of the business in accordance with the specific needs of the business owners.

Operating agreements are another way to identify corporate resolution in the context of an LLC. One of the key differences between LLCs and corporations is enhanced management flexibility, and thus, LLCs are not necessarily required to complete resolution forms.

More Information

• Corporate Transparency Act To Have Major Impact On Clients And Attorneys
• Piercing The Corporate Veil-What Is It?
• The Necessity Of Corporate Booklets And Share Certificates Even For One Owner

More formal than a verbal decision, a written and agreed upon corporate resolution can prevent later disputes between individual Directors or between the Board and a third party. All Resolutions passed by the Board of Directors of Florida corporations should be kept for at least 6 years in the corporation’s Corporate Minute Book. This written record can be useful in the event that the Board’s actions are challenged by shareholders or others.