Question 1

What is a corporate resolution?

Accepted Answer

A corporate resolution is a formal written record of a decision or action taken by a corporation's board of directors or shareholders. Because a corporation is a legal entity separate from its owners and officers, it can only act through the formal decisions of its governing bodies — and those decisions must be documented to have legal effect. Corporate resolutions record decisions like opening a bank account, approving a major contract, electing officers, declaring a dividend, authorizing a stock issuance, or approving a loan. Resolutions become part of the corporate minute book and serve as evidence that the action was properly authorized under the bylaws and applicable state corporate law.

Question 2

What is the difference between a resolution and meeting minutes?

Accepted Answer

Meeting minutes and resolutions serve different but related purposes in corporate governance. Minutes are the full written record of a board or shareholder meeting — they document who attended, what was discussed, any reports given, the text of motions made, and the results of votes. Minutes capture the narrative of the meeting. A resolution, by contrast, is the formal text of a specific decision that was approved at the meeting (or by written consent outside a meeting). Resolutions typically begin with recitals ('WHEREAS...') explaining the context and end with operative language ('RESOLVED, that...') stating the action taken. Most resolutions are incorporated into the minutes, but standalone written resolutions are also common — especially banking resolutions that a corporation provides to its bank as evidence of authority.

Question 3

When does a corporation need a resolution?

Accepted Answer

Corporations typically need written resolutions for any action that is significant, unusual, or outside the ordinary course of business. Common situations requiring a resolution include: opening or closing a bank account, taking out a loan or line of credit, buying or selling real estate, authorizing a major contract or lease, electing or removing officers, issuing stock, declaring dividends, approving a merger or acquisition, changing the corporate name or structure, authorizing legal action, and adopting an employee benefit plan. Routine operational decisions (buying office supplies, hiring an entry-level employee) generally do not require resolutions. Your corporate bylaws and state law will specify which actions require board approval, shareholder approval, or both.

Question 4

What is a banking resolution?

Accepted Answer

A banking resolution is a specific type of corporate resolution that authorizes named individuals (typically corporate officers) to open bank accounts, sign checks, make deposits and withdrawals, borrow money, and otherwise conduct banking business on behalf of the corporation. Banks require a banking resolution before they will allow a corporation to open an account, and many banks use their own standard resolution forms that they prefer the corporation to sign. The banking resolution identifies the corporation, lists the authorized signers by name and title, states the scope of their authority (which may be limited, such as 'any one officer' for checks under $10,000 or 'any two officers' for larger amounts), and is certified by the corporate secretary. Once executed, the banking resolution remains in effect until revoked by a new resolution — corporations should update their banking resolutions whenever an authorized signer leaves the company.

Question 5

Can directors act without holding a meeting?

Accepted Answer

Yes, most state corporate statutes allow directors to take action without holding a meeting through a procedure called 'action by written consent' or 'unanimous written consent.' Under this procedure, each director signs a written resolution stating the action being taken, and once all directors have signed, the resolution is effective as if it had been approved at a meeting. Written consent is convenient for routine matters and for corporations whose directors are geographically dispersed. The key requirement is that the consent be unanimous — if even one director refuses to sign or votes against the action, the resolution fails and a formal meeting must be called. Some states allow majority written consent for certain actions, but unanimous consent is the default. The signed consent is kept in the corporate minute book in lieu of meeting minutes.

Question 6

Do shareholders need to approve resolutions?

Accepted Answer

Most corporate actions can be approved by the board of directors alone, but certain fundamental actions require shareholder approval under state law or the corporate bylaws. Actions typically requiring shareholder approval include: amending the articles of incorporation, approving a merger or consolidation, selling all or substantially all of the corporation's assets, dissolving the corporation, issuing new classes of stock, entering into certain related-party transactions, adopting equity compensation plans, and (in some cases) electing directors. The specific threshold for approval (majority, supermajority, or unanimous) depends on the action and the bylaws. Shareholder approval can be obtained at an annual meeting, a special meeting called for the purpose, or by written consent (if permitted by the bylaws and state law). Public companies have additional proxy rules under the federal securities laws.

Question 7

Who signs a corporate resolution?

Accepted Answer

Who signs a resolution depends on how it is adopted. If the resolution is approved at a board or shareholder meeting and recorded in minutes, the minutes are typically signed by the corporate secretary (and sometimes the presiding officer). If the resolution is approved by written consent without a meeting, each director or shareholder whose consent is required must sign the consent document. For certified resolutions that the corporation provides to outside parties (such as banks, lenders, or title companies), the corporate secretary typically signs a certification stating that the resolution was duly adopted and remains in effect, and the certification is often notarized. The signing requirements should be consistent with the corporate bylaws and state law.

Question 8

Where are corporate resolutions kept?

Accepted Answer

Corporate resolutions should be kept in the corporation's official minute book — a physical or digital binder that contains the corporation's foundational documents and governance records. The minute book typically includes the articles of incorporation, bylaws, stock ledger, meeting minutes, written consents, and signed resolutions. Keeping a complete and organized minute book is essential for several reasons: it satisfies state statutory recordkeeping requirements, it protects the corporate veil (sloppy recordkeeping is one of the factors courts consider when deciding whether to pierce the corporate veil and hold shareholders personally liable), it allows new officers, directors, and auditors to review prior decisions, and it provides evidence of proper authorization if a contract or transaction is later challenged. Many small corporations neglect their minute book and end up in trouble years later when a lender, buyer, or litigant demands to see the records.

Question 9

Can a corporate resolution be revoked or amended?

Accepted Answer

Yes. A resolution can generally be revoked or amended by a later resolution adopted in the same manner as the original — meaning if a resolution was approved by the board, the board can revoke or amend it, and if a resolution required shareholder approval, shareholder approval is needed to change it. The revoking resolution should specifically identify the original resolution being revoked and state the effective date of the revocation. Some resolutions, however, create rights that cannot be unilaterally revoked once third parties have relied on them — for example, a banking resolution can be revoked by the corporation at any time, but transactions already completed under the resolution remain valid. Similarly, a resolution declaring a dividend creates a legal obligation to pay the dividend once declared, and that obligation cannot generally be revoked.

Question 10

Does an LLC need corporate resolutions?

Accepted Answer

LLCs are not corporations and technically do not adopt 'corporate' resolutions, but LLCs often use functionally equivalent documents called member resolutions, manager resolutions, or written consents. Whether an LLC needs formal resolutions depends on its operating agreement and the specific action being taken. Member-managed LLCs often operate more informally than corporations — major decisions are made by the members without formal resolutions. Manager-managed LLCs, by contrast, often use resolutions for actions taken by the manager on behalf of the LLC. Banks typically require an LLC to provide a banking resolution or equivalent authorization document when opening accounts. Even if not strictly required, formal written resolutions are a good practice for LLCs because they create a clear record of who authorized what, which can be critical if the LLC is later audited, sold, or sued.

Free Corporate Resolution Forms

What Is a Corporate Resolution?

Legal Authority

Protects the Veil

Clear Record

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Corporate Resolution

1. Corporation

2. Recitals

3. Resolution

4. Adoption

5. Certification

Types of Corporate Resolutions

How to Write a Corporate Resolution

Identify the Corporation and Body

Draft the Recitals

State the Operative Language

Obtain Proper Approval

Certify and File

Key Components of a Resolution

Identification

Recitals

Operative Language

Certification

Sample Corporate Resolution

CORPORATE RESOLUTION

Frequently Asked Questions

Official Resources

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