{"id":2190,"date":"2022-07-28T08:34:50","date_gmt":"2022-07-28T00:34:50","guid":{"rendered":"https:\/\/www.praxonomy.com\/blog\/?p=2190"},"modified":"2022-07-28T16:09:10","modified_gmt":"2022-07-28T08:09:10","slug":"a-guide-to-board-resolutions","status":"publish","type":"post","link":"https:\/\/www.praxonomy.com\/blog\/a-guide-to-board-resolutions\/","title":{"rendered":"A Guide to Board Resolutions"},"content":{"rendered":"\n<p>Although it isn\u2019t usually necessary for boards of directors to submit board resolutions to government agencies, regulatory bodies, or any other legal entities unless formally requested by these parties, writing board resolutions is a process that ensures board decisions are documented for good governance and compliance purposes. Shareholders may occasionally request for board resolutions to study how the board has acted on their behalf.<\/p>\n\n\n\n<p>In this post, we offer a basic guide to writing a board resolution. We also discuss its prerequisites, the different types, and provide a sample template that boards may use (after the review and advice of your legal counsel).<\/p>\n\n\n<style>.wp-block-kadence-advancedheading.kt-adv-heading_3ab22e-aa, .wp-block-kadence-advancedheading.kt-adv-heading_3ab22e-aa[data-kb-block=\"kb-adv-heading_3ab22e-aa\"]{font-style:normal;}.wp-block-kadence-advancedheading.kt-adv-heading_3ab22e-aa mark, .wp-block-kadence-advancedheading.kt-adv-heading_3ab22e-aa[data-kb-block=\"kb-adv-heading_3ab22e-aa\"] mark{font-style:normal;color:#f76a0c;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}<\/style>\n<h2 class=\"kt-adv-heading_3ab22e-aa wp-block-kadence-advancedheading\" data-kb-block=\"kb-adv-heading_3ab22e-aa\">WHAT IS A BOARD RESOLUTION?<\/h2>\n\n\n\n<p>A board resolution is a written record of an action or decision made by a company\u2019s board of directors. While it is not a legal document per se, the decisions expressed in the document are legally binding. It forms part of the meeting minutes and can act as proof of compliance as well. In the UK, the Companies Act 2006 stipulates that companies must keep the board resolution within the meeting minutes for a period of at least 10 years from the date of the resolution.<\/p>\n\n\n\n<p>Board resolutions are usually certified by the appointed Chair and signed by all members present at the meeting.&nbsp;<\/p>\n\n\n<style>.wp-block-kadence-advancedheading.kt-adv-heading_ab73e4-50, .wp-block-kadence-advancedheading.kt-adv-heading_ab73e4-50[data-kb-block=\"kb-adv-heading_ab73e4-50\"]{font-style:normal;}.wp-block-kadence-advancedheading.kt-adv-heading_ab73e4-50 mark, .wp-block-kadence-advancedheading.kt-adv-heading_ab73e4-50[data-kb-block=\"kb-adv-heading_ab73e4-50\"] mark{font-style:normal;color:#f76a0c;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}<\/style>\n<h2 class=\"kt-adv-heading_ab73e4-50 wp-block-kadence-advancedheading\" data-kb-block=\"kb-adv-heading_ab73e4-50\">REQUIREMENTS FOR PASSING A BOARD RESOLUTION<\/h2>\n\n\n\n<p>There are two primary components to passing a board resolution.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Quorum&nbsp;<\/h3>\n\n\n\n<p>A company\u2019s Articles of Association (or \u201cconstitution\u201d) sets the minimum number of directors to convene a board meeting. This required baseline figure or number is called a \u201cquorum.\u201d Note that quorums vary from one company to another. It is usually dependent on the size of the business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Chair &amp; Casting Vote&nbsp;<\/h3>\n\n\n\n<p>A Chair is appointed by the board of directors to ensure the flow and structure of the board meeting. The Chair is also given what is called a \u201ccasting vote.\u201d The casting vote is the decisive vote in the event that there is a 50\/50 split (or equal votes) amongst directors for or against a proposal. The Chair is also primarily responsible for certifying the final draft of the board resolution.<\/p>\n\n\n<style>.wp-block-kadence-advancedheading.kt-adv-heading_b4c06f-c4, .wp-block-kadence-advancedheading.kt-adv-heading_b4c06f-c4[data-kb-block=\"kb-adv-heading_b4c06f-c4\"]{font-style:normal;}.wp-block-kadence-advancedheading.kt-adv-heading_b4c06f-c4 mark, .wp-block-kadence-advancedheading.kt-adv-heading_b4c06f-c4[data-kb-block=\"kb-adv-heading_b4c06f-c4\"] mark{font-style:normal;color:#f76a0c;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}<\/style>\n<h2 class=\"kt-adv-heading_b4c06f-c4 wp-block-kadence-advancedheading\" data-kb-block=\"kb-adv-heading_b4c06f-c4\">WHEN ARE BOARD RESOLUTIONS NEEDED?<\/h2>\n\n\n\n<p>Major decisions that impact the affairs of the organisation merit the passing of a board resolution. This can include the following:<\/p>\n\n\n\n<ol><li>Company expansion plans<\/li><li>Hiring or the lay-off of a significant amount of employees<\/li><li>Appointment of key executives<\/li><li>Granting signing authority (such as the ability to sign legal documents or transact with banks on behalf of the company)<\/li><li>Selling or purchasing major assets<\/li><li>Opening bank accounts<\/li><li>Entering into contracts, etc.<\/li><\/ol>\n\n\n<style>.wp-block-kadence-advancedheading.kt-adv-heading_6717f4-37, .wp-block-kadence-advancedheading.kt-adv-heading_6717f4-37[data-kb-block=\"kb-adv-heading_6717f4-37\"]{font-style:normal;}.wp-block-kadence-advancedheading.kt-adv-heading_6717f4-37 mark, .wp-block-kadence-advancedheading.kt-adv-heading_6717f4-37[data-kb-block=\"kb-adv-heading_6717f4-37\"] mark{font-style:normal;color:#f76a0c;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}<\/style>\n<h2 class=\"kt-adv-heading_6717f4-37 wp-block-kadence-advancedheading\" data-kb-block=\"kb-adv-heading_6717f4-37\">WHAT ARE THE DIFFERENT TYPES OF BOARD RESOLUTIONS?<\/h2>\n\n\n\n<p>Directors cast their vote on a proposal with either a \u201cyes\u201d or \u201cno\u201d. The passing of the resolution usually requires a majority vote. However, depending upon the criticality of the proposal, a percentage of the majority may be required to pass the board resolution. This percentage defines the different types of board resolutions:<\/p>\n\n\n<style>.wp-block-kadence-advancedheading.kt-adv-heading_7dfa99-49, .wp-block-kadence-advancedheading.kt-adv-heading_7dfa99-49[data-kb-block=\"kb-adv-heading_7dfa99-49\"]{font-style:normal;}.wp-block-kadence-advancedheading.kt-adv-heading_7dfa99-49 mark, .wp-block-kadence-advancedheading.kt-adv-heading_7dfa99-49[data-kb-block=\"kb-adv-heading_7dfa99-49\"] mark{font-style:normal;color:#f76a0c;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}<\/style>\n<h3 class=\"kt-adv-heading_7dfa99-49 wp-block-kadence-advancedheading\" data-kb-block=\"kb-adv-heading_7dfa99-49\">1. Ordinary Resolution<\/h3>\n\n\n\n<p>Board resolutions passed by a simple majority are called an ordinary resolution. A resolution with more than 50% of the quorum casting their votes in favor is considered passed. Although jurisdiction-dependent, some matters that require ordinary resolutions are:<\/p>\n\n\n\n<ol><li>Director election<\/li><li>Auditor appointment<\/li><li>Dividend declaration<\/li><\/ol>\n\n\n<style>.wp-block-kadence-advancedheading.kt-adv-heading_76c703-38, .wp-block-kadence-advancedheading.kt-adv-heading_76c703-38[data-kb-block=\"kb-adv-heading_76c703-38\"]{font-style:normal;}.wp-block-kadence-advancedheading.kt-adv-heading_76c703-38 mark, .wp-block-kadence-advancedheading.kt-adv-heading_76c703-38[data-kb-block=\"kb-adv-heading_76c703-38\"] mark{font-style:normal;color:#f76a0c;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}<\/style>\n<h3 class=\"kt-adv-heading_76c703-38 wp-block-kadence-advancedheading\" data-kb-block=\"kb-adv-heading_76c703-38\">2. Special Resolution<\/h3>\n\n\n\n<p>Should a board resolution require a greater majority, it is no longer an ordinary resolution. The company\u2019s Articles of Association typically sets this majority percentage number, but it is often set at 75% (of the quorum) or higher. The following can be subject to special resolutions:<\/p>\n\n\n\n<ol><li>Change in the company\u2019s registered office<\/li><li>Reduction in the company\u2019s share capital<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\">3. Unanimous Resolutions<\/h3>\n\n\n\n<p>While rather uncommon, unanimous resolutions, as the name implies, require 100% of the quorum to vote in favour of a proposal for it to be passed. One extreme example would be the resolution to close the company.<\/p>\n\n\n<style>.wp-block-kadence-advancedheading.kt-adv-heading_8e61bc-84, .wp-block-kadence-advancedheading.kt-adv-heading_8e61bc-84[data-kb-block=\"kb-adv-heading_8e61bc-84\"]{font-style:normal;}.wp-block-kadence-advancedheading.kt-adv-heading_8e61bc-84 mark, .wp-block-kadence-advancedheading.kt-adv-heading_8e61bc-84[data-kb-block=\"kb-adv-heading_8e61bc-84\"] mark{font-style:normal;color:#f76a0c;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;}<\/style>\n<h2 class=\"kt-adv-heading_8e61bc-84 wp-block-kadence-advancedheading\" data-kb-block=\"kb-adv-heading_8e61bc-84\">WHAT IS A \u201cWRITTEN RESOLUTION\u201d?<\/h2>\n\n\n\n<p>Directors\u2019 \u201cwritten resolutions\u201d are decisions that a board of directors make in writing, outside of a board meeting. They hold the same authority and are just as valid as decisions made at board meetings.<\/p>\n\n\n\n<p>Boards can resort to written resolutions when proposals:<\/p>\n\n\n\n<ol><li>Are time-sensitive<\/li><li>Are routine matters that do not require lengthy deliberation<\/li><li>Are anticipated to likely garner the board\u2019s approval&nbsp;<\/li><li>Need to be passed, but geographical or physical constraints make it impossible for the board to meet or convene at an agreed upon time<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">TIPS FOR WRITING A BOARD RESOLUTION<\/h2>\n\n\n\n<p>A sample board resolution template can be downloaded <a href=\"https:\/\/www.northwestregisteredagent.com\/pdf\/board%20of%20directors%20resolution.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a> or customised <a href=\"https:\/\/www.lawdepot.co.uk\/contracts\/corporate-resolution\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>.&nbsp;<\/p>\n\n\n\n<p>Some suggestions when writing a board resolution:<\/p>\n\n\n\n<p>1. <strong>Use formal language<\/strong>. Board resolutions are legal documents and should be drafted in the same style and manner.<\/p>\n\n\n\n<p>2. <strong>Assign a reference number<\/strong> for easy look-up in case it needs to be retrieved in the future.<\/p>\n\n\n\n<p>3. <strong>Use a descriptive title<\/strong>. Identify the purpose of the board resolution in the title for quick identification.<\/p>\n\n\n\n<p>4.<strong> Be clear<\/strong>. The matters taken up in the board resolution should reflect clarity of thought and explain the passed resolution with sufficient detail.<\/p>\n\n\n\n<p>5. <strong>Use<a href=\"http:\/\/www.praxonomy.com\/board-portal\" target=\"_blank\" rel=\"noreferrer noopener\"> board management software<\/a> or board portals<\/strong>. Securely store all board resolutions in a board portal for easy reference and organisation. With board portal software, board members can <a href=\"https:\/\/www.praxonomy.com\/board-portal-features\/voting-and-approvals\" target=\"_blank\" rel=\"noreferrer noopener\">cast votes<\/a>,&nbsp;<a href=\"https:\/\/www.praxonomy.com\/board-portal-features\/esignatures\" target=\"_blank\" rel=\"noreferrer noopener\">e-sign<\/a> board resolutions and access them at any time and from anywhere.&nbsp;<\/p>\n\n\n\n<p>6. <strong>Ask for legal advice<\/strong>. As a final point: company lawyers should review your board resolution template or, whenever possible, the contents of your board resolutions as they are official corporate records. This helps ensure they are as detailed as they need to be to serve their purpose.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p><em>Digitise and manage the circulation, voting, and approval of board resolutions with <a href=\"http:\/\/www.praxonomy.com\" target=\"_blank\" rel=\"noreferrer noopener\">Boardlogic<\/a>. Schedule a demo to see the solution in action <a href=\"http:\/\/www.praxonomy.com\/schedule-a-demo\" target=\"_blank\" rel=\"noreferrer noopener\">today<\/a>.<\/em><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>A board resolution is a document that records the decisions of the board. In this post, we discuss the different types of board resolutions and the prerequisites needed for them to pass. We also provide some tips on how to write board resolutions. 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