The board is the decision-making body of a company or organization. The board’s role is critical to bringing value through your company’s core operations. Among the many responsibilities of the board is addressing essential company matters through making critical decisions during board meetings. On behalf of the whole business, how do board members come up with a decision? How should boards formulate their resolutions?
What are Board Resolutions?
A board resolution is a formal document that accounts for all the courses of action taken by the Board of Directors of your company on matters that affect your company significantly.
The purpose of the board resolution is to record the results of votes and legally binding decisions of the Board of Directors during the board meeting. This compliance document is part of your company’s corporate record and acts as evidence to prove that the Board of Directors has made decisions on the matters that your company needs to address.
There are many situations in your company where you need to write a board resolution. Major situations in your company, like voting in new board members, company expansion, hiring or laying off a large number of employees, financial matters, and selling of company shares, call for a board resolution.
Who Creates the Resolutions?
The members of the Board of Directors are appointed to oversee and govern the actions of your company, keeping in mind the best interest of the company and its shareholders. The Board of Directors meets to make overall decisions in your company and write the board resolution.
The board secretary of your company is the one who keeps copies of the board resolution. The board secretary must be able to share the board resolution with all parties involved in compliance.
Entities that Require Board Resolutions
Aside from your company’s shareholders, there are other entities that request information on board resolutions. Such entities include banks, asset managers, and relevant agencies, among others. For instance, you can create a board resolution to solidify the commitment of your company to asset transactions.
How are Board Resolutions Held?
Any member of the board may schedule a board meeting to discuss important matters of your company. The chairperson, a member of the Board of Directors, facilitates the meeting. It is ideal that all the members of the board are present when passing board resolutions.
A minimum number of directors present in the meeting or quorum is required for the board meeting to push through. However, there are times when the number of board members physically present is not enough to meet a quorum. As a solution, the board opts to hold the meeting virtually, so members can participate and engage even remotely.
Types of Board Resolutions
During board meetings, the Board of Directors cast their votes to make collective and data-driven decisions, which will be written in the board resolution. Each director usually has one vote. To come up with a resolution, you must consider which type of board resolutions to use:
- Ordinary Resolution – the majority (more than 50%) of the directors present at the meeting cast votes on the resolution. This is how decisions are usually passed in board meetings. For instance, when directors convene about selling company shares or hiring a large number of employees, ordinary resolutions are used.
- There are times where all the Board of Directors voted on the resolution. This is called an Unanimous Resolution. Drastic decisions, like closing the company, may consider a unanimous resolution.
The board resolution is typically certified by the chairperson or the board secretary. In some cases, it can also be certified by someone who is appointed by the board. Board resolutions are then signed by the Board of Directors who are present at the meeting.
How to Write a Board Resolution
Components of a Board Resolution
Having a background of the types of resolutions and situations that call for a board resolution, the next step is to create the document. Because of the formality of this document, your board resolutions should be clear and well-written. It should be composed of the following essential details:
- The board meeting date
- The resolution number (e.g. 001)
- A fitting title for the board resolution
- The resolution
- The names of the board of directors and their votes
- The chairperson’s name, signature, and date signed
Download our free board resolution template to help you craft articulated resolutions.
Best Practices in Writing a Board Resolution
Board members may think that writing the board resolution is a complicated process since it will address important company matters. The key is to be clear and complete, especially the details.
Here are some best practices to help you feel less intimidated when writing a board resolution:
Style of Writing
- Write your board resolution in a simple yet concise manner.
- The tone of the board resolution should be formal all throughout.
- For credibility and transparency, you must reference genuine and accurate sources.
- Do not mind the length of the board resolution, what is important is that you have covered everything that needs to be addressed.
Before Writing the Board Resolution
- Have an extensive knowledge of the issue you will write about. Research on the issue if you must.
- When you are writing the board resolution number, keep in mind all the past board resolutions and then write the number accordingly.
When Writing the Board Resolution
- When you are giving the board resolution a title, it should capture the essence of the issue the board meeting aims to address.
- Board resolutions are formal so you should start each paragraph with ‘WHEREAS’. At the beginning of the paragraph, you should state the Board of Directors’ responsibility. Keep this in mind when writing succeeding statements of the resolution for consistency.
- It is a good practice that you mention policies relevant to the issue.
- You should state the final resolution—the action which the board agreed upon—in the last statement of the resolution.
- You must list down all the names of the board members in a column and record their votes (‘yes’ or ‘no’).
- You need to provide a space at the end of the board resolution where the chairperson (or whoever was the authorized signatory) can sign the board resolution. It should also include the date when the resolution is approved.
Follow these general guidelines to make your board resolution writing a breeze.
Creating Better Board Resolutions with a Board Management Software
Board resolutions are one of the essential responsibilities a board member must be familiar with. With your hectic schedule, create better board resolutions with board management software.
A board management software gives you the necessary tools to collaborate and effortlessly create board resolutions. Having an embedded Video Conferencing feature with engaging live meeting tools to facilitate remote meetings is a must in a highly globalized market. Other board portal features like voting and resolutions allow board members to expedite decision-making by instantly casting votes during the meeting. It also allows you and other board members to decide on other important meetings through resolutions and sign and approve documents electronically.
Board management software like Convene will enable you to review, annotate, and make decisions anywhere, anytime, and on your platform of choice. Learn more about how Convene, a board meeting software, can streamline your board resolution process.
