What are corporate resolutions?
Many of the businesses I help start up know that they need their initial documents, which are their operating agreements, the articles of incorporation, and get them all filed with the state. When we have them filed, we put them in your corporate binder that has all of your corporate documents in it. But that's not the end of the corporate documents. There's more that needs to happen, and one common way is by using corporate resolutions.
A corporate resolution is usually a short document that shows that the business is making a decision. For example, the owners are voting to approve new board members, approve officers or they're setting up a corporate bank account. They're buying property, they're approving their initial bylaws. And down the road, if you're merging with another business, if you're taking out a loan or maybe you're relocating, these are all some things that would be subject to a corporate resolution.
Now you may be thinking it's just me and a partner, we can just talk about it and make our decisions. That's true, but with some transactions, athird party will require a corporate resolution. A lot of times working with your bank, they're going to want to see a corporate resolution that says that the corporation has approved using the bank as the official bank for the company. Or if you're taking out a loan, the company is giving you a loan wants that corporate resolution to show that the company is in fact intending to take the loan and has approved it internally.
What Does It Look Like?
The exact form of your corporate resolution will vary, but basically, there's a few general items that need to be in there,
- The name of your company and where it's incorporated (what state did you form your company in)
- What's the purpose of the document? Why are you doing a corporate resolution?
- A date and a place for your resolution (the date the resolution has been enacted and usually the place where the corporate offices or the city where you're taking your action).
- A statement that the Board of Directors of the owners intends to take this action.
- A provision that the company consents to the action and agrees to the resolution.
- The resolution needs to be signed (the main stakeholders, your owners and shareholders need to be signing off on the document)
There can be other information that needs to be in this resolution depending upon what state you're in and what the requirements are. But this should give you a general idea of what your corporate resolution looks like. So when you get started out, you know your corporate binder won't necessarily have resolutions in it. But as you go on and your business continues to grow, your binder's going to fill up with more corporate resolutions, with your bylaws, with other documents that your company needs as you grow.
You can try to do the corporate resolution yourself, which chances are you can figure out if you try hard enough on the web, but the smarter way to do it is work with an attorney. We can help you put together the resolution. It's usually a short process, a couple of pages long. And most attorneys will even give you a nice format that you can use in the future so you have a nice basic resolution that you can fill in each time you need to make a major decision.
If it's time for you to add some corporate resolutions to your business, let's schedule a complimentary Legal Strategy Session to help you get started.