When you hear tales of new business founders, there are lots of war stories about meeting with investors and the hard work and hustle to get their business off the ground. Those stories are fun - they make for good fodder for the media. But there are many "behind the scenes" business tools that are just as important as the famous stories. When you're launching your business, you can fill your social media feed with the share-worthy stories, but don't forget the foundational documents you need as well.
One of the most common documents that flies under the radar is a corporate resolution. It’s a document used when the company needs to make a decision (usually a large decision). That decision requires an agreement amongst the owners of the company. The way to do that? A corporate resolution. It’s a document that shows anyone reviewing the records of the company that the decision was made. In some instances, the resolutions need to be shown to regulators or licensing boards. Even if they don't need to be shown to anyone at the moment, you'll want to keep your corporate resolutions together with your other corporate documents.
What Are Some Common Corporate Resolutions?
When you are getting a business started, there are some common resolutions that you likely need. They are focused on some of the big decisions that you need to make as you launch your business, like,
- Approving officers and board members;
- Setting up a corporate bank account;
- Buying or selling real estate;
- Approving initial bylaws;
- Merging with another business or entering into a joint venture;
- Taking out a loan; and
- Relocating the business.
You should also be ready to create corporate resolutions when dealing with banks and other financial institutions. It is common that before they will authorize large transactions, they will want to see a corporate resolution from the company that demonstrates that the company has agreed to the transaction.
What’s in a Corporate Resolution?
The exact form of a resolution is governed by the state the company is governed by (so it’s a good idea to check with a lawyer to make sure you’ve got the right form). In general, the items that should be in a resolution:
- Name of the company and the state where it is incorporated;
- Purpose of the document;
- Date and place of the resolution; and
- Statement of the intentions of the board to enter into the resolution;
- A provision that the company consents and agrees to the resolution; and
- Signatures of the officers signing the resolution.
There may be additional items required by your state. And there is probably an accepted form that is used (so there’s no need to recreate the wheel). So talk to a professional to make sure you've got the right resolution for your business.
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If you are thinking of starting a business or already started your business and want to make sure your legal documents are in order, let's set up a Legal Strategy Session to discuss the best next steps for you and your business.