Board resolutions are a formal way of recording and documenting the decisions taken at meetings of the board. They can help ensure that these decisions are in line with the federal, state and local laws and regulations. They also limit any legal risks that might result from these choices.
The board must keep a record of every decision, regardless of how small or significant they may be. The board must also be able of demonstrating the reasoning for the decision so that anyone who isn’t on the board can understand the reasoning behind it and whether or not it was the right choice.
As such, composing a board resolution can be an intimidating process. By knowing the purpose behind these documents, and utilizing the right tools to write them you can make it much easier.
A Board Resolution: What it is and How to Write One
The board needs to document important decisions affecting shareholders or the company in a formal way. These are referred to as resolutions of the board. They assist in setting clear guidelines in areas like governance and ethics. These resolutions are also used as a way to demonstrate the board’s dedication to transparency within the company.
Board resolutions may be passed at a board meeting or, in more modern times, they may be ratified through written resolutions. When the resolution is written, it must begin with a “WHEREAS” statement that highlights the topics that were discussed during the meeting prior to moving on to the resolved statements. The document must be signed by every director who attended the meeting.
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