A corporate resolution is a formal written decision or authorization made by a company's board of directors or shareholders to record and approve specific actions or policies within the organization.
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There are many ways to get the authority to make big decisions for your corporation. A corporate resolution is one of them. What does this corporate action involve? Read on for a brief and general summary of the corporate resolution definition.
The general corporate resolution definition is an agreement between agents or owners of a corporation to take on significant projects, make important decisions, or engage in certain activities. There are many reasons a corporation might enter into a corporate resolution. Examples include:
A corporation often enters into a written and signed resolution instead of having a shareholder meeting to approve a corporate action or decision. Typically, the board of directors enters into the resolution, but some laws require shareholders to enter a resolution for certain actions. The number of shareholders or corporate agents necessary for a valid resolution depends on your state’s law.
Corporate resolutions give corporations the flexibility to make decisions they didn’t anticipate at formation.
A corporation is a very formal legal entity with more rigid rules of operation than other business structures. Without having a shareholder meeting, there aren’t many moves a corporation can make outside of the rules it wrote in its articles of incorporation (its formation document) or bylaws. Corporate resolutions allow corporations to engage in activities that aren’t covered in their articles of incorporation or bylaws. Without entering a corporate resolution, your corporation could be vulnerable to a lawsuit from its shareholders.
A drawback of entering a corporate resolution is that it can be time-consuming. Under some state laws, the corporate board of directors has to enter into a resolution about a matter before presenting it to the shareholders for a vote. That’s a lot of steps to make a decision! But without specific rules in your corporation’s Bylaws or Articles of Incorporation, a corporate resolution might be the only way to engage in new activities.
A corporate resolution is a tool that allows a corporation to make decisions that are outside of its formation documents and bylaws without having a meeting. In some cases, a corporation’s bylaws or articles of incorporation might require a corporate resolution before shareholders can vote on a business matter. What makes a resolution valid and when it’s required depends on state law.
We know you want your corporation to run as smoothly as possible. We have the tools to help you achieve that. Our Corporation Formation Service can help you start a corporation quickly and easily. When you have your corporation up and running, business support services can help you run it well. We can help you keep track of your finances and invoices with ZenBusiness Money. And we can help your corporation stay in good standing with the state with our Worry-Free Compliance Service. We want your business ideas out in the world, and our services can make that happen.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
ZenBusiness has helped people start, run, and grow over 700,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.
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