Board resolutions: A complete guide to writing one (free template included)
Resolution is a form of the word resolve, which means to settle or find a solution to a problem, dispute or contentious matter, or decide firmly on a course of action. Board resolutions are exactly that: a tool boards use to document important actions or policies.
The board is the governing authority responsible for making major decisions about the current and future state of the corporation. As such, boards need an avenue for making formal and legally binding decisions that can change the corporation's trajectory. Board resolutions are the answer, but only if you prepare and document them correctly. Here, we’ll explain how to write effective, compliant resolutions, including:
- What a board resolution is, and who signs them
- Common types of board resolutions
- What issues require a board resolution
- How to write, pass and store board resolutions
What is a board resolution?
Board resolution definition: A formal and legally binding document for boards to decide on significant corporate matters.
Sometimes, boards face pressing or urgent matters that require timely decision-making by the board. In such cases, the board may meet on an emergency basis to vote on an issue that can’t wait until the next regular meeting. These decisions are called board resolutions.
A good summation of a board resolution is that it's a formal document that identifies the roles of the corporate officers along with their board meeting decisions and results. Resolutions must be certified to be legal, meaning that the board secretary, assistant secretary or other designated person verifies the resolution and certifies it by having the board president sign the resolution. Certified resolutions document and preserve the board’s vote in writing, which is essential because the resolution typically authorizes a committee or person to take action on the matter.
The resolution then becomes part of the company’s record and is legally binding. For this reason, boards should document meeting resolutions in their meeting minutes and store them in their board portal.
Who signs board resolutions?
Multiple board members may sign the resolution, especially if the matter requires their specific approval. However, most board resolutions are only signed by two individuals:
- Chairperson of the board: The board chair will sign the resolution to affirm that the board approved it.
- Corporate secretary: The secretary will sign the resolution to attest that it’s been adopted and recorded in the board meeting minutes.
Types of board resolutions
Board resolutions fall into several categories depending on the decision or action the board needs to take. Most resolutions are:
- Ordinary resolutions: Boards can address routine matters using ordinary resolutions. These call for a simple majority vote and are often used to approve annual financial statements or make minor policy changes.
- Special resolutions: More significant matters often call for a special resolution, which typically requires a supermajority vote. A board might use a special resolution to amend the bylaws or introduce a corporate restructuring.
- Unanimous written resolution: These resolutions apply if all board members agree to the decision outside of a formal meeting, making them particularly useful for urgent issues. In that case, all directors will sign the resolution.
- Circulating resolutions: A board member drafts a circulating resolution and distributes it to other board members between scheduled meetings. The resolution passes once enough members have signed.
- Elective resolutions: Company bylaws often include elective matters, like decisions on share capital or buybacks, which require an elective resolution.
What issues require board resolutions?
There is no hard and fast set of circumstances that require a board resolution. Boards have much flexibility in deciding when to preserve a vote through a resolution. One of the most common situations that calls for a board resolution is when a new director gets voted onto the board. Board resolutions can be written for any other important matter:
- Expanding the company
- Hiring or laying off a significant number of workers
- Selling additional shares of the company
- Purchasing intellectual property rights
- Fire, terminate or lay off executives
- Determine whether to distribute corporate dividends
- Support executive duties
- Assist with branding goals
- Document shareholder decisions
The company may need a resolution before making any major decision that materially affects it. Boards can then use them internally, share them with shareholders on request or provide them to entities like banks, brokerage firms or asset managers. Resolutions also provide proof of compliance when a regulatory or legal authority needs to verify the choices that the shareholders or board directors make.
How to write board resolutions
Because board resolutions are legal documents, writing them should follow a structured process. To write a board resolution, include:
- Title: Use the title to state that the document is a resolution clearly.
- Date: This should be the date the resolution is being proposed.
- Resolution Number: Give the resolution a unique identifier according to your record-keeping system.
- Preamble: Include brief introductory text that explains the purpose of the resolution. Include any relevant background information or reasons why the resolution is important.
- Resolution statement: Clearly state the action or decision in question. Be concise.
- Authorization: Identify the approved signatories, often the board chair and the corporate secretary.
- Effective date: List the date the resolution becomes effective.
- Signatures: Create spaces for relevant board members or officers to sign.
- Certification: If needed, include a certification for the corporate secretary to attest that the resolution was approved.
How to pass board resolutions
Like writing the resolution, there’s also a formal process to pass it. Following this process ensures the decision becomes legally binding and property documented.
- Notice of meeting: Notify board members about the meeting, including the date, time, location and agenda.
- Prepare the resolution: Draft the resolution using the template below. Distribute it to all board members before the meeting.
- Convene the meeting: Gather for the meeting and ensure a quorum is present.
- Present the resolution: Propose the resolution to board members, explaining necessary information or details. Make time for discussion and questions.
- Move to adopt: A board member should move to adopt the resolution. Another board member should second the motion.
- Discuss the resolution: Board members can now openly discuss any concerns or questions about the resolution and suggest amendments.
- Vote: Hold a vote according to the organization’s bylaws. This could be a show of hands, a voice vote or a written ballot.
- Record the resolution: The corporate secretary should include the vote results in meeting minutes.
- Collect signatures: Appropriate officers should sign the resolution to verify the vote.
- Implement the resolution: Authorized individuals or committees can now take action related to the resolution, from making financial transactions to signing covered documents.
Storing board resolutions
The significance of board resolutions requires that board directors keep them safe and secure. Boards typically store board resolutions and the sample board resolution with the rest of their bookkeeping records. Resolutions should motivate boards to have backup copies. Paper resolutions may be subject to theft or destruction by natural disasters like fire, flood, earthquake or tornado.
Board management software systems, such as Diligent Boards, part of the Diligent One Platform, provide the safest storage system for corporate boards. The system offers high-level security using unlimited, cloud-based storage. The board portal provides a secure, online document storage system to preserve founding governance documents, board resolutions and other documents for the corporation’s life.
The Voting & Resolutions tool is part of Board & Leadership Secure Collaboration. The voting tool allows for quick voting, 'for' or 'against,' in one click. Board directors can also use the tool to vote 'yes' or 'no' or abstain from the vote without using a signature. Directors can also leave remarks in the comment box explaining their vote if they choose. Directors can add a feature that automatically tallies results and provides a real-time summary of the voting. Diligent also allows board directors to apply their signatures electronically across multiple boards on the same platform. Diligent’s voting tool is perfect for writing, voting and certifying board resolutions using a highly secure platform.
Sample of board resolution
Board resolutions may be long or short, depending on the nature of the resolution. It is important to identify the issue that the board voted on, the names and roles of those who voted, the results and the final certification.
Here is a sample of a very basic board resolution:
Board resolution template
BOARD RESOLUTION
At the meeting of the Board of Directors of (employment service organization) on (date of meeting), the following resolution was proposed and approved by the board: Resolved: WHEREAS the mission of the (employment service organization) is (describe mission); WHEREAS (describe project or business unit) supports the mission of (employment service organization); That the (employment service organization) Board is in full support of a grant proposal to the Virginia Department of Rehabilitative Services for (describe project).
(Names and roles of those who voted)
Signed: (President) or (Chairman)
(certification or official stamp)
Turn board resolutions into a tool for strategic action
Boards of directors make many important decisions while serving on the board. They must document those important decisions in writing and preserve them for use as needed. Board management software expedites the process of writing board resolutions without compromising compliance or quality. Diligent Boards, part of the Diligent One Platform offers all of the tools for streamlining voting procedures and securely storing and preserving important documents to retrieve them quickly and easily when boards need them.
