Corporate Resolutions Explained (Including Banking Resolutions)

Board resolutions vs. shareholder resolutions

Under most state corporate laws, the business is managed by or under the direction of the board. That means most resolutions are board resolutions: approving contracts, opening accounts, electing officers, issuing shares and declaring dividends.

Shareholder resolutions are needed for matters the law, articles or bylaws reserve to owners — electing directors, amending the articles, approving a merger or sale of substantially all assets, and dissolution.

When do you need a resolution?

A resolution is appropriate whenever a decision is significant, is required by law or the bylaws to be approved by the board or shareholders, or will be relied on by an outside party. Banks, lenders, landlords, title companies and government agencies often ask for proof that a transaction was authorized.

Resolution format

Resolutions are short and precise. Optional "WHEREAS" clauses give background; "RESOLVED" clauses state the decision. A typical structure:

1. WHEREAS, the corporation wishes to lease office space at [address];
2. RESOLVED, that the corporation enter into the lease substantially on the terms presented to the board;
3. RESOLVED FURTHER, that the president is authorized to execute the lease and any related documents on behalf of the corporation.

Resolutions are adopted at a meeting and recorded in the minutes, or adopted by signed written consent. See annual board meeting minutes for how they fit into a meeting record.

Common resolution examples

Key resolutions, prepared

Stock issuance and banking resolutions are two of the first a new corporation needs.

Banking resolutions in depth

A banking resolution is a board resolution that authorizes the corporation to open and maintain accounts at a specific bank and identifies who can act on those accounts. Banks request it because a corporation can act only through authorized individuals, and the bank needs evidence that the person opening the account actually has authority.

What a banking resolution usually covers

• The name of the bank and the types of accounts authorized
• The officers or individuals authorized to sign checks, make withdrawals and transfers
• Whether one or more signatures are required, sometimes above a dollar threshold
• Authority to obtain debit cards, online banking access and treasury services
• Adoption of the bank's standard account agreement terms
• Statement that the resolution remains in effect until the bank receives notice of change

Many banks have their own form, which you may sign in addition to, or instead of, your own resolution. Keeping your own version in the corporate records book means the authority is documented in your records, not just the bank's.

Certificate of incumbency and secretary's certificate

A bank or counterparty may also ask for a certificate of incumbency (confirming who currently holds each office, often with specimen signatures) or a secretary's certificate (in which the secretary certifies that attached resolutions or bylaws were duly adopted and remain in effect). These are typically signed by the corporate secretary.

Unanimous written consent

Most states allow a board to adopt resolutions without a meeting if every director signs a written consent. For small boards, this is the most common way to adopt resolutions. Some states and bylaws also allow electronic signatures and consents. The initial organizational minutes are often done this way.

Tips for drafting clear resolutions

• Use one resolution per decision so each can be cited separately.
• Name the officer authorized to act, by title.
• Refer to the document approved (for example, a lease dated on a specific date) and attach it where practical.
• Include a general authority clause allowing officers to take related actions.
• Date and sign the minutes or consent promptly and file it in the records book.