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.
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.
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:
Board resolutions fall into several categories depending on the decision or action the board needs to take. Most resolutions are:
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:
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.
Because board resolutions are legal documents, writing them should follow a structured process. To write a board resolution, include:
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.
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.
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:
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)
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.