Board resolutions are a formal method of recording and documenting the decisions made during a meeting. They can help ensure that these decisions are in line with the federal, state and local laws and regulations. They also limit the legal risks that may result from these choices.
No matter if the decision is something as minor as a change to the hours of work for employees or as major as shutting down an enterprise the board needs to keep an official record of the decision. The board must also demonstrate the reasoning of the decision so that everyone outside can comprehend the reasons behind the decision and determine if it was a correct choice.
Making a resolution for a board is an arduous task. However, by learning about the purpose of these documents and making use of the appropriate tools to create them it can make the process much simpler.
The board must document important decisions that affect shareholders or the company in a formal manner. These are referred to as resolutions of the board, and they provide clear guidelines regarding ethics and governance. They are also used to demonstrate the board’s commitment to transparency of the corporate structure.
Board resolutions may be passed in a meeting of the board or, in more modern times, they may be approved through written resolutions. When a written resolution is created it should begin with the wording “WHEREAS” which is a statement of the issues that were discussed during the board meeting. Then, the resolutions are added. Once the document is complete it has to be signed by all directors who were present at the meeting.
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