Board resolutions are a formal means of recording and documenting decisions made during a board meeting. They ensure that the choices made are in compliance with local, state and federal laws and regulations. They also reduce any legal risks that could result from these choices.
The board must keep a record of all decisions, no matter how minor or significant they may be. The board also must be able to show the rationale for the decision so that anyone who doesn’t know the decision can understand why it was taken and whether it was the right decision.
The process of writing a board resolution can be an overwhelming task. By knowing the purpose behind these documents and utilizing the correct tools to create them and make it easier.
A Board Resolution: What it Is and How to Write One
When the board makes significant decisions that impact shareholders or the company, they must document these in a formal way. These decisions are referred to as resolutions by the board and aid to establish clear policies on matters such as governance, ethics, and risk management. Resolutions are also used as a means to demonstrate the board’s commitment to corporate transparency.
Board resolutions can be voted on in a meeting of the board or, in more recent times, they may be ratified through written resolutions. When a resolution is written, it must begin with the “WHEREAS” statement that highlights the subjects discussed at the meeting before moving on to the resolved statements. Once the board resolutions and governance features document is complete and signed by all directors present at the meeting.