Corporate Resolution

What is a Corporate Resolution?

A corporate resolution is an official record of a decision made by a company's board of directors or shareholders. This decision could pertain to a wide range of matters, such as the authorisation of a specific financial transaction, the approval of a merger, or the appointment of company executives.

The resolution serves as a formal documentation of decisions that might be required by laws, regulations, or third parties like banks and other financial institutions.

What are the benefits of creating a Corporate Resolution?

1. Clarity and Formality: Corporate resolutions provide clear and formal documentation of decisions made by the company's leadership. This ensures that there is no ambiguity about what was decided and gives the decision a sense of formality and importance.
2. Compliance and Governance: Many jurisdictions require businesses to maintain a record of significant decisions, especially those that might affect shareholders or corporate governance. Corporate resolutions help companies comply with these requirements.
3. Authorisation: For certain actions, such as opening a bank account or entering into specific types of contracts, third parties may require proof that the individual acting on behalf of the corporation has been duly authorised to do so. A corporate resolution can provide this proof.
4. Conflict Resolution: In cases where there might be disputes or disagreements among shareholders or board members, a documented corporate resolution can serve as evidence of what was agreed upon, thus aiding in conflict resolution.
5. Strategic Direction: Corporate resolutions can also guide the strategic direction of a company by officially documenting and endorsing significant strategies and plans.
6. Accountability: By documenting decisions, corporate resolutions hold board members and shareholders accountable for their decisions and commitments.
7. Enhanced Communication: Making and documenting decisions through resolutions ensures that important decisions are communicated across the company. It ensures that all relevant stakeholders are informed and aligned.
8. Legal Protection: In case of lawsuits or legal challenges, corporate resolutions can provide evidence that the company acted properly and made decisions with the necessary authorisation.