Board resolutions are an official way to record and document the decisions made at meetings of the board. They help to ensure that the decisions are in line with local, state and federal laws and regulations. They also help to minimize the legal risks that result from these decisions.
No matter if the decision is as minor as a change in the hours of work for employees or as major as shutting down a business the board should have a documented record of it. The board also must be able to demonstrate the reasoning behind the decision, so that any outsiders can understand why it was made and if it was the right decision.
As such, composing a board resolution can be an intimidating process. However, if you are educated about the significance of these documents and making use of the appropriate tools for composing them you can make the process much simpler.
What is a Board Resolution? And how do you create one?
The board needs to document important decisions that affect shareholders or the company in a formal manner. These decisions are referred as resolutions of the board. They help to establish clear policies on issues such as governance, ethics, and risk management. These resolutions can also be used as a means to demonstrate the board’s commitment to transparency in the corporate world.
Board resolutions are passed either in a formal meeting of the board or more recently, through written resolutions. If resolutions are written, it must begin with an “WHEREAS” statement that outlines the subjects discussed at the meeting, before moving to the resolved statements. Once the document is finished, it must be signed by all directors who were present at the meeting.