Boards are responsible for steering the company and making significant decisions that affect shareholders and the organization. Beyond these crucial responsibilities, an overwhelming 95% of directors and executives consider it their foremost duty to cultivate and protect stakeholders’ trust.
Building trust among stakeholders significantly impacts how the board makes decisions. Thus, the resolution of the board of directors plays a pivotal role in boosting transparency, which, in turn, creates a more open and trustworthy environment.
Behind the scenes, the board secretary is often the one making sure this process runs smoothly. Secretaries draft these resolutions, ensuring they’re clear, compliant, and reflect exactly what was agreed upon.
To simplify it, in this article, we’ll provide a comprehensive guide on how to write a board resolution with efficiency and ease.
What is a board resolution?
A board resolution is a formal document that creates a paper trail for the decisions made by the board of directors’ during a board meeting. This document is also known as a certified corporate resolution or a resolution of the board of directors. It serves as an official record of the approved board decisions.
Board directors regularly adopt this formal document to record their actions when they anticipate the need for an additional review. Most often, board resolution should be written under the principles and processes outlined in Robert’s Rules of Order.
The task of drafting a board resolution is often associated with corporate secretary duties.
Types of board resolutions
Efficient corporate management includes understanding the various types of resolutions, their distinctive descriptions, and the fundamental differences between them. Those charged with directing an organization’s strategic goals must also be capable of creating well-structured resolutions and the board resolution format.
There are four main types of board resolutions, each serving specific purposes within the framework of corporate decision-making:
- Ordinary resolutions
These are also known as circular resolutions, which typically include everyday operating choices. They are frequently passed by a single majority vote, making them appropriate for day-to-day board decisions.
- Special resolutions
They address more serious concerns, such as modifying an organization’s documents of incorporation or name. This board resolution example requires a larger majority vote, sometimes 75% or greater, to be approved.
- Unanimous resolutions
When the board confronts significant choices demanding unanimous agreement, they invoke unanimous resolutions. If all board members agree, no disagreement is possible.
- Written resolutions
Written resolutions are a flexible alternative in instances requiring swift board decisions outside of normal meetings. Individual board members signal their acceptance in writing, making it an effective approach to resolving time-sensitive issues.
To help you understand the differences between various resolution settings, we’ve included a comparison chart below:
| Resolution type | Majority required | Use cases |
| Ordinary resolution | Simple majority | Routine business decisions |
| Special resolution | 75% or more | Significant changes, like altering articles of association |
| Unanimous resolution | Unanimous approval | Critical decisions with no room for dissent |
| Written resolution | Flexible | Time-sensitive matters, decided outside board meetings |
When is a board resolution required?
On many occasions inside of organization, board resolutions are necessary to proceed with further actions. However, there is no requirement to submit directors’ resolutions for corporate bank account matters, to a government agency or any other monitoring authority.
Board members commonly use resolutions to officially document vote outcomes and legally binding documents, such as:
- A board member’s appointment or removal
- Approval of financial statements
- Voting on new corporate officers onto the board
- Acquiring a new business
- Getting into long-term leasing arrangements
- Changing executive compensation, incentives, and additional benefits
- Assigning duties to senior officers, committees, or third parties
The company keeps it for self-evaluation or if any of the shareholders wish to verify the activities conducted on their behalf by the board of directors.
Alternatively, as part of their audits and verification procedures, banks, brokerage companies, the IRS, or the court may request copies of a directors resolution. This resolution board may be stored in a digital board book format for convenient access and review.
How to write a resolution for a board meeting
The board secretary is usually tasked with writing board resolutions, although any board director can also take on this responsibility. The effectiveness of these resolutions hinges on their structure, clarity, and official documentation. Hence, it is crucial to maintain conciseness and include only the necessary information.
There are four key considerations for board members learning how to write a resolution:
When writing a board of director resolution, it’s important to effectively implement and document meeting decisions. It includes the procedures that follow the board meeting and the creation of a resolution.
Here’s an overview of the key aspects involved:
- Execution and follow-ups
After passing a resolution, the board must ensure its execution. For this, assign officers or committees to carry out the directives and monitor progress regularly.
- Record-keeping and filing
Record and document all board resolutions meticulously, including the date, description, names of board members present, and outcome of the vote. It is vital for legal compliance, accountability, and historical reference.
- Accountability and reporting
As part of this process, it’s essential to ensure transparency through periodic progress updates and result reviews. To keep the board well-informed, proactively develop effective reporting methods.
For boards to save time on preparations, it’s preferable to use the standardized format for board resolution. We developed a customizable resolution template to make this process easier.
A comprehensive breakdown of what items should be included in a board of resolution letter is provided below.
Meeting date
The meeting date is critical in recording and coordinating board actions. It acts as a point of reference for all talks and decisions taken during the meeting. Here are useful tips concerning meeting day:
- Make a note of the date of each board meeting to have a chronological record of decisions and debates.
- Ensure that the meeting date is correct so board member could avoid any mistake or misinterpretation of the sequence of events.
Resolution numbering
Successful resolution management requires assigning distinct resolution numbers. Thus, every one can simply identify and retrieve certain resolutions.
To ensure clarity and organization, it’s essential to assign resolution numbers. These numbers should align with either the chronological sequence in which the resolutions are passed or follow a thematic structure, depending on the context.
- To maintain clarity and order, assign resolution numbers consistently and methodically.
- Number the resolutions in a way that corresponds to their chronological or thematic order.
Title designation
The title of a resolution communicates the subject and purpose of the resolution to the directors. A well-crafted title helps them understand the context quickly.
- When creating effective resolution titles, keep them concise, clear and reflective of the resolution’s essence.
- Avoid using vague or excessively lengthy titles, as they confuse and cause misunderstandings.
Resolution documentation
Keeping a clear and accurate record of board resolutions is essential for tracking decisions and actions. Each resolution should clearly outline its purpose, objectives, and the steps to be taken. To provide full context, include any supporting documents, such as reports, data, or relevant materials
Director votes
To support clarity and ethical practices within the boardroom, it’s important to record how each director votes on every resolution. Note “for,” “against,” or choose to abstain. Then, provide a summary of the voting results to indicate the resolution’s approval status.
Tech integration
Using modern board meeting tools, like a consent agenda, can make managing resolutions much easier and help your board run more smoothly. Digital solutions, such as board portal software, facilitate tracking resolutions, organizing important documents, and keeping everyone connected. Just make sure the technology you choose is secure and accessible for all board members.
Steps to amend a board resolution
Understanding how to amend a board resolution is just as important as knowing how to create one. When changes are needed after a resolution is passed, it’s crucial to handle them properly to keep records accurate and up to date.
Amending a resolution usually involves a board chair bringing it back to the board during a meeting, proposing specific changes, and holding a vote on the updates.
Once approved, the amendment should be documented with the same attention to detail as the original resolution, including updated vote records and an explanation of why the changes were made.
How to pass a resolution at a board meeting
After drafting a resolution, the board directors must approve it verbally during a meeting and keep a written record of it afterwards. Most likely your company’s policy explains how resolutions at the director level can be passed. In addition, there are usually two requirements: a quorum for board meeting and a certain number of votes in favor of the motion.
The main reason for requesting more discussion is to give any objectors a chance to explain why the board decides that way. This may even sway the votes of other directors. Finally, the board meeting minutes should state whether the resolution was approved or rejected, as well as the number of voices. If you ever wondered how to write meeting minutes as a secretary, please read our dedicated article.
The steps in the infographic below will assist you through the process:
Preparing resolutions for board meetings
Here’s a step-by-step guide on how to prepare a board resolution, along with a checklist of essential documents and information to include.
- Confirm the exact date of the meeting.
- Ensure the resolution aligns with the meeting agenda and objectives.
- Write a concise title that summarizes the resolution’s purpose.
- Provide a brief explanation of the issue or need for the resolution.
- Define the specific goal or action the resolution seeks to address.
- Gather all relevant financial, contextual or legal documents.
- Include space to document each director’s vote (e.g., “for,” “against,” “abstain”).
- Identify who will be responsible for carrying out the resolution.
- Check the resolution for accuracy and compliance with organizational policies.
Who signs a board resolution?
The number of directors required to sign a board resolution can vary depending on the organization’s bylaws, the nature of the resolution, and jurisdiction-specific legal requirements. Here’s an overview to clarify how many directors should sign a board resolution and who typically takes on this responsibility.
- In the United States, many organizations follow a simple practice where either the chairperson or the secretary signs the resolution to certify its approval. However, the Sarbanes-Oxley Act (SOX) requires signatures from specific officers, such as the CFO or CEO for financial commitments.
- Similarly, in the United Kingdom, resolutions often need signatures from at least three directors, depending on the nature of the decision.
- In India, under the Companies Act, 2013, a resolution must be signed by all directors who approved it during the meeting or, in some cases, solely by the chairman if the board authorizes them to do so.
- Nonprofit organizations and private corporations may also have their policies, with some requiring all directors present at the meeting or a specific percentage to sign off on resolutions.
Common challenges in board resolutions
The board of directors’ function has gotten substantially more difficult in recent years. The clarity, accuracy, and legal compliance of these documents are crucial whether the board is dealing with major strategic choices, compliance difficulties, or day-to-day operating issues. Writing board resolutions presents three major challenges:
Conflicts of interest
| Challenge | Solution |
| These problems may arise when a board member’s personal interests or affiliations may compromise their ability to make impartial decisions. This raises concerns about the transparency and fairness of the board’s decision-making process. | The conflicted party should disclose their conflicts of interest clearly, and they must withdraw themselves from relevant discussions and votes. |
Dissent and disagreement handling
| Challenge | Solution |
| Dissent and disagreement among board members can impede decision-making, leading to delays and compromised outcomes. | Create an organized debating procedure that includes time limitations, courteous language, and possibilities for compromise. |
Ensuring compliance and mitigating risks
| Challenge | Solution |
| To avoid legal and reputational problems, it’s crucial to follow rules and regulations. Equally important is identifying and addressing potential threats to the organization’s success. It includes financial, operational, or reputational risks. | Appoint a compliance officer or committee to supervise compliance activities and evaluate and update risk assessments regularly. |
Board resolution examples and user cases
The scenarios from real life provide insight for board decision-making, especially in complex situations that impact a company’s success. Below are some of the situations that require board resolutions.
- Dividend declaration
A company has a pile of profits, and now the board needs to decide how much of it to distribute as dividends to shareholders. This decision requires a delicate balance, as it’s important to reward the investors while also retaining sufficient funds for future growth. In this case, the resolution outlines the company’s financial decision.
- Corporate governance policies
An organization is committed to ethical conduct and transparency. In this case, board resolution outlines how the board and the company should operate. It’s like setting the rules of the game, ensuring everyone plays fairly.
- Board committee formation
A board realizes that handling all responsibilities directly is too complex. To address this, they create specialized committees such as audit, compensation, and nomination committees. These committees function as problem-solving teams that focus on specific areas.
- Mergers and acquisitions
A company is considering a merger with another firm. The board resolution outlines the terms, benefits, and impact on business. This decision will determine the future of both organizations.
- New product launch
A technology company is ready to launch a game-changing product. In the resolution, the board has approved the budget, timeline, and marketing strategy. This resolution serves as a green light for innovation and growth.
Tips and best practices for board resolution
Understanding how to draft a board resolution may appear a challenging task since it addresses crucial corporate matters. However, it matters most to ensure that the resolution is clear and full, especially in terms of the specifics.
Follow these best practices to make the writing process less intimidating:
- Building consensus is the first step toward successful board resolution management. Open and productive conversations ensure that resolutions represent the board’s collective wisdom and competence.
- Stay informed on legal updates to maintain compliance with resolutions. The board must be diligent in comprehending shifting legal requirements and rules. Also, tap into the expertise of business attorneys to analyze your board resolution template or, where feasible, the text of your board resolutions.
- Communication must be open and transparent since it promotes trust among stakeholders, which is critical for a resolution to pass successfully.
- Use board management software to securely store documents, submit votes, e-sign board resolutions, and access them at any time and from any location.
Additional tools: templates and technologies for board resolutions
Having access to a reliable board resolution template and a secure storage solution simplifies the process of managing board decisions and documents. We suggest downloading our customizable template which includes all the necessary components to suit your organization’s specific needs:
- Resolution title
- Date of the meeting
- Statement of the decision or action
- Names of directors present
- Voting outcomes (e.g., “for,” “against,” or “abstain”)
- Space for signatures.
Digital solutions offer a convenient way to organize and access resolutions while keeping them safe. Here are some recommendations:
- Cloud storage platforms enable document storage and sharing. However, it’s worth noting that free platforms have known security risks, including data leaks and stolen credentials, making them less suitable for sensitive information.
- Board management software simplifies the document management process, saves time for meeting preparation, and keeps communication channels secure. With everything in one place, they save time and make access to board materials much simpler.
Whichever storage option you choose, ensure it complies with any applicable regulations, like GDPR for data protection or HIPAA for sensitive information.
How Ideals Board can help in drawing board resolution
The market for board portals has grown 70% from 2020-2023. It is unsurprising that over half of the 400 surveyed companies are seeking technological innovations, given the current trend. Moreover, Deloitte identifies three main advantages of board portals: improved information access, centralized communications, and enhanced data protection.
Ideals Board comes with a set of features that simplify the process of drafting and passing board resolutions:
- Document drafting and collaboration. Multiple participants can collaborate in drafting and editing documents related to resolutions, ensuring that they create well-structured and up-to-date board materials.
- Top-notch security and reliability. Multi-factor authentication and single sign-on provide robust protection against unauthorized access to sensitive board documents and resolutions.
- Document management. Drag-and-drop uploads, bulk file handling, and support for over 50 file formats make managing board meeting minutes and resolution-related documents effortless.
- Granular access controls. Advanced document access capabilities allow administrators to assign specific permissions for viewing, editing, or commenting.
- Board book. The board book viewer offers search capabilities, digital signing, and tools for annotations, highlighting, and commenting.
- Global search. A powerful document search tool allows quick retrieval of resolutions, meeting agendas, and notes.
- Integrated communication. Automatic time zone detection and customizable notifications keep all participants aligned.
- The agenda and board book builder. These capabilities allow attaching relevant documents, pre-setting agenda items, and adding voting sessions directly.
- Easy voting. Supports unanimous and individual voting with real-time results display and handles multiple motions within a single voting session.
- Version control. Tracks all changes to resolution documents, ensuring users always work with the latest version while retaining access to previous drafts for reference.
- Digital signatures. Enables board members to sign resolutions electronically, eliminating the need for physical signatures or scanned documents.
- Custom workflows. Offers tailored processes for drafting, reviewing, and approving resolutions, complete with task assignments, automated notifications, and reminders for streamlined execution.
Key takeaways
- Board resolutions are necessary for formalizing and recording major decisions taken during board meetings.
- Understanding the format for board resolution is crucial, as it applies to the four primary forms of board resolutions: ordinary, special, unanimous, and written
- Effective resolution management necessitates precise record-keeping, open reporting, and the application of technology to speed the process.