Resolution Definition

A resolution is a formal decision or action approved by a company's board of directors or shareholders to address specific matters, often used to make important choices or changes within the organization.

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At some point or another, you’ve probably heard the word resolution. But as a small business owner of a corporate legal entity, you may have heard it in a different context entirely. 

So, what are corporate resolutions? And when they might come up in the course of business? Use our guide below to learn more. 

Definition of Corporate Resolution: What You Need to Know

As a small business owner, there are a seemingly endless number of things you need to know. But we’re here to help you make things feel less overwhelming. 

Thus, if you’re not quite sure what the definition of corporate resolution is, that’s okay! Here are a few important things to keep in mind.

General Resolution Definition vs. Resolution Business Definition

First and foremost, it’s important to recognize that a company resolution is different from the standard definition of a resolution. 

According to Merriam-Webster, a resolution is “the act or process of resolving” something. While a similar idea at its core, a corporate resolution is something more specific. A corporate resolution refers to an official confirmation of a proposed action or decision made by the board of directors on behalf of the company. The document confirming this decision reflects a binding decision that usually deals with major company issues like voting in new board members, issuing more stock, getting loans for the company, or changing ownership. 

Company Resolution Process, Procedures, and Considerations 

Generally speaking, a corporate resolution starts with a proposal to take a particular course of action. Next, a vote is taken at a board meeting. Voting members will typically be shareholders or members of the Board of Directors. If there are a sufficient number of votes to pass the resolution, the requisite individuals will sign the formal document, thereby making the resolution an official and binding company action. 

Keep in mind, however, that the specific procedures and requirements will vary from business to business. So be sure to check the rules and procedures outlined in your corporate governing documents before attempting to pass any resolutions for your business. 

Corporate Resolution Examples

There are several scenarios where you may need to propose a resolution for your corporation. For example, you might need a company resolution to: 

  • Make changes to your corporate governing documents
  • Approve the hiring or firing of an employee
  • Approve a new board member
  • Document a shareholder decision
  • Approve the selling of shares or other company property
  • Expand the business
  • Approve raises and executive compensation
  • Revise corporate management structure or policies
  • Open new corporate bank accounts or take on additional business loans and other debts

As always, don’t forget to refer to your business’s governing documents to verify when a formal resolution is necessary and the process for making such a resolution. 

Business Resolution Definition Recap

In short, a corporate resolution is a legal document detailing and confirming a formal decision made by the board of directors. However, the process and requirements for approving a resolution may vary depending on your business’s particular rules and regulations. Thus, always check your governing documents before proposing or approving a resolution for your business.   

We Can Help

There’s no question that running a business is hard work. Fortunately, you don’t have to navigate the process alone. 

From understanding business definitions to forming your corporation to helping with ongoing compliance and everything in between, we have a variety of products and services to help your business succeed. When you have questions about your small business, feel free to browse our website and check out our numerous resources. Then, see how we can help you start, manage, and grow your business today. 

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

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