A board of directors is a very important part of a company, so knowing how to write a board resolution is very important to have and apply, as it is part of the execution of business operations. Resolutions are formal document that formally states the next actions of a certain group of people. In this article, we will take a closer look at what a board resolution is and how to write it correctly.
What is a board resolution?
The resolution of the board of directors is a legal paper that forms part of the protocol and holds information about the exact decisions and votes that were taken during the board meeting. This document serves to demonstrate the legally supported nature of a decision. In addition, the resolution helps to define the roles and responsibilities of all board members and is proof that all actions are carried out in accordance with policies and laws.
Each country has different company laws regarding the retention of board resolutions, but we recommend that absolutely all of them be retained, no matter how old they are. This will give you a guarantee of security and the integrity of your business in the event of any legal or judicial challenge.
When does the board use resolutions?
You require a board resolution to take major action that directly affects the fate of your company. Especially it should be used in the case of issues that can cause a lot of discussion and debate, so it will make it clear to everyone involved what the final decision was and what their next responsibilities are. So what kinds of cases might require the board to write a resolution?
- Purchase of intellectual property rights
- Mergers and acquisitions, business expansions
- Sale of new stock
- Optimization of employees
- Purchase of new real estate on behalf of the company
- Hiring or firing of board members
All board members are involved in the formation and certification of the resolution, they are responsible for the decision made, so it is important that each of them ensure that they are behaving correctly. If let’s say, a decision made is not to the liking of a minority of board members, they should still give the go-ahead to the decision made and take responsibility for it since it is a majority decision.
Tips for writing a board resolution template
So, to write the correct board resolution and serve as a template for future resolutions, we have prepared some tips for you as described below:
- Make the resolutions as short as possible. This document does not require any additional detail beyond the issues that are discussed, how these issues will be resolved, and the signatures on the agreement
- A resolution, like any other official document, requires clarity of explanation and maximum transparency. You have to make sure that the board’s decision is final, and formulate that decision as clearly as possible
- The use of business language is critical since this is a legal document and the rules state that it should be worded this way
- Assign a serial number to your resolution to help it be found more easily in the future
- Give the document a clear title that accurately describes the purpose for which the resolution is being made, this will also make it easier to find
- Take legal advice – Ask a current company lawyer to check your template for accuracy and correctness. Make sure you include all the details you need to achieve your goal as a corporate record
- Consider the unanimity of the decision; if many people are dissatisfied with the decision, take an additional vote