Corporate Resolutions – Why They are Needed

November 18, 2008 · Filed Under Small Business 

MoneyMoz.com presents you “Corporate Resolutions – Why They are Needed”, an article written by David Gass. We hope you’ll find a lot useful information in here.

MoneyMoz.com will present you every article we find interesting and educating, and which has no copyright protection. If available we’ll link the source.

A corporate resolution is a formal process adopted by the Board of Directors of a company that authorizes the officers or management of the corporation to undertake actions on behalf of the company. This corporate resolution has the intent of amending the corporations existing terms of reference, by-laws or regulations or to provide exact advice to the corporation’s management on specific matters regarding the operation of the business.

A corporate resolution can cover a wide range of topics and issues and can be used to hire or appoint the officers of the corporation, hire or dismiss employees, or refer a matter to a subcommittee of the Board of Directors for further study and review. It can also be used to approve a major transaction or merger involving the corporation to buy new equipment, property, land or facilities that are required by the company. A corporate resolution might also be required in order to approve the sale of company assets, to issue new stock in the company, or to alter the ownership structure of the corporation.

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Corporate resolutions can be placed before the Board of Directors by shareholders, the managers or management of the business, or by the Board of Directors or the officers of the corporation. All corporate resolutions must be passed by a majority of the Board of Directors meeting in session and any corporate resolutions which receive this approval have to be recorded in the minutes of that Board of Directors meeting.

These corporate resolutions have to be filed with the appropriate regulatory body in which the corporation has been registered and all shareholders must receive notice that the corporate resolution has been passed by the Board of Directors. All corporate resolutions which have been approved during the business year must be also presented to the Annual General Meeting of the corporation and the officers of the Board of Directors need to be available to answer questions to the shareholders at this meeting to answer any questions they may have about the corporate resolutions.

Sometimes the impact of a corporate resolution is so great that the company may choose to present the corporate resolution at the Annual General Meeting of the corporation for input by the shareholders before taking a final decision on the resolution of the corporate resolution. This allows the company to answer questions and build support for the corporate resolution before making a final decision.

A corporate resolution is not normally required for the general operation of the business since that has been delegated to the officers and senior management in the original articles of incorporation. It is usually reserved for those major decisions that either have an impact on the ownership structure of the corporation or to appoint new officers to positions within the corporation.

David Gass is President of Business Credit Services, Inc., founder of http://www.SmallBusinessConsulting.com and co-developer of the Corporate Manager Software which manages the records of a Corporation or LLC. For a Free Trial of the software visit http://www.corporateforms.net

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Keywords assigned to this article by MoneyMoz: Corporate Forms, Stock Certificates, Corporate Resolutions, Meeting Minutes, LLC, Corporation

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