What Is a Corporate Resolution?

A corporate resolution is a formal document used by a company’s board of directors or shareholders to record decisions about significant corporate actions. Think of it as a written agreement that confirms and authorizes specific business decisions.

These resolutions are especially common in corporations and are essential for maintaining proper corporate governance. While not always required by law, they serve as proof that a decision was made with the proper authority and in the best interest of the company.

When Is a Corporate Resolution Used?

Corporate resolutions are used for actions that go beyond the day-to-day operations of the business. Common scenarios include:

• Opening or closing a business bank account

• Appointing officers or directors

• Authorizing a loan or large purchase

• Entering into contracts

• Approving mergers or acquisitions

• Amending the corporation’s bylaws or articles of incorporation

For example, if a corporation wants to enter a lease agreement, the board may pass a resolution approving the lease and naming an officer authorized to sign the lease on behalf of the company.

What Does a Corporate Resolution Include?

A typical corporate resolution includes:

• The date of the meeting or decision

• The name of the corporation

• A statement of the decision or action being approved

• The names and titles of those who approved the resolution

• Signatures of the directors or officers

In some cases, resolutions can be written and signed without holding a formal meeting. These are called "resolutions in writing" and are valid as long as they are signed by all required parties.

Why Do Corporate Resolutions Matter?

Corporate resolutions provide legal protection. They show that decisions were made properly and with accountability. They also help keep internal records organized, which is crucial during audits, legal disputes, or when the company is seeking funding or selling the business.

In summary, a corporate resolution is a powerful tool for documenting and authorizing key business decisions. It reinforces transparency and legal compliance in how a company is managed.

The business lawyers at JODE LAW assist business owners across Ontario in drafting resolutions tailored to their business needs. Contact the business lawyers today via email at lawyers@jodelaw.ca

The articles published by Jode Law are intended as general information only and do not serve as legal advice. By reading, the reader understands there is no solicitor-client relationship established. If you have a legal question, you may consult one of our lawyers via email at lawyers@jodelaw.ca