Corporate Resolution

A corporate resolution is a formal written document that records an official decision made by a corporation’s board of directors or shareholders. Because corporations are separate legal entities, important decisions cannot be made informally.

Corporate resolutions provide a paper trail of major decisions such as: 

• Bringing on new board members
• Changing the executive management team
• Acquiring a company
• Filing, purchasing, or licensing a patent
• Modifying employee benefits
• Issuing or selling shares
• Choosing corporate headquarters

A corporate resolution in these and other instances not only helps companies stay legally compliant with state law but also reduces liability and ensures proper recordkeeping. For instance, if a company is ever audited by the Internal Revenue Service, it may need to provide certain corporate resolutions.

How a corporate resolution works

A corporate resolution takes form when the board of directors or shareholders authorize a significant corporate action. The general process follows these steps:

1. Identify the action. Determine the corporate action requiring approval, such as opening a bank account, entering a major contract, or authorizing a loan.
2. Draft the resolution. Describe the approved action in clear terms and identify the individuals authorized to carry it out.
3. Approve the resolution. Present it for approval through a board meeting or written consent, as permitted by the corporation’s bylaws.
4. Document the decision. Record the outcome, including the vote, date, and signatures of the approving parties.
5. Maintain the records. Keep the resolution in the corporation’s minute book, along with its bylaws and meeting minutes, for future reference.

Some resolutions pass at annual or special meetings; others proceed through unanimous written consent, which allows directors to approve a decision without convening in person.

Why a corporate resolution matters

A corporate resolution provides evidence that the corporation properly approved an action.

Banks, lenders, government agencies, and other third parties may request a resolution before completing a transaction with a corporation. For example, a bank may request one to confirm that an officer has authority to open or manage an account.

Resolutions also protect directors and officers from personal liability. When a major decision is properly documented, it reinforces that the corporation, not an individual, is acting. This distinction is central to maintaining the liability protections that come with corporate status. Gaps in recordkeeping can expose the corporation to “piercing the corporate veil,” where courts disregard the corporate structure and hold individuals personally liable.

Common uses

Corporations use resolutions to formally authorize a wide range of significant actions. These are the most common decisions that require one.

• Opening a bank account. The resolution authorizes designated officers to open and manage corporate accounts.
• Authorizing a loan or line of credit. A corporate resolution approves borrowing and identifies authorized signatories.
• Approving a real estate transaction. The resolution authorizes the purchase, sale, or lease of property.
• Entering a significant contract. The resolution approves major business agreements.
• Issuing stock. The resolution authorizes the issuance of corporate shares.
• Electing or removing officers. The resolution records changes in corporate leadership.

Key characteristics

A corporate resolution typically contains the following information.

• Corporate details: The corporation’s legal name and the resolution’s adoption date
• Approved action: A clear description of the decision or transaction
• Authorized individuals: The names and titles of the people authorized to act
• Approval record: The vote or written consent used to approve the action
• Certification: Any signatures or certifications required by law, the corporation’s governing documents, or the recipient

Corporate resolutions are internal governance records and generally aren’t filed with the state. However, the approved action may require a separate state filing.

Corporate resolution vs. corporate bylaws

Corporate bylaws set the corporation’s ongoing internal rules, while a corporate resolution records a specific decision or action approved by the corporation.

Corporate bylaws act as the corporation’s internal rulebook. They usually explain how the corporation holds meetings, gives notice, counts votes, appoints officers, defines officer duties, and manages board and shareholder procedures.

Corporate resolutions document specific approvals made under those rules. A corporation may use a resolution to approve actions such as opening a bank account, entering a contract, appointing an officer, borrowing money, issuing shares, or authorizing someone to sign documents.

Related terms

• Meeting minutes: The official record of discussions, votes, and actions taken at a corporate meeting
• Written consent: A method for approving corporate action without holding a meeting when applicable law permits it
• Business dissolution: The formal process of closing a business, including a corporation, which may require approval from the board or shareholders
• Foreign corporation: A corporation operating outside its state of formation, which may need resolutions to authorize activities in other jurisdictions

FAQs about corporate resolution

Does an LLC need a corporate resolution?

LLCs are not legally required to adopt resolutions the way corporations are, but many do so voluntarily. Banks may require a similar document, sometimes called a membership resolution or LLC resolution, when an LLC opens an account or authorizes a major transaction.

Can a corporate resolution be approved without a meeting?

Most states and corporate bylaws permit approval through unanimous written consent. This method is only available when every director agrees; any dissent requires a formal meeting with a recorded vote.

Does a corporate resolution need to be notarized?

No. A corporate resolution is an internal governance document and does not require notarization to be valid. If the resolution authorizes a transaction that independently requires notarization, such as a real estate deed, those underlying instruments must meet that requirement separately.