Directors’ resolution
A directors’ resolution is a written record showing that a company’s board of directors approved a specific decision, such as declaring a dividend, approving a sale, or appointing an officer. It can be passed at a meeting or signed by all directors without a meeting, depending on the company’s bylaws.
Corporations act through decisions made by their directors, and many of those decisions are only valid if a resolution documents that the board actually approved them. A directors’ resolution records what was decided, and often why, so there is a clear paper trail later.
When one is needed
- Approving a major transaction, such as selling substantially all the company’s assets
- Declaring dividends or approving share issuances
- Appointing or removing officers
- Approving loans, guarantees or significant contracts
- Authorizing someone to sign documents on the company’s behalf
Meeting resolutions versus written resolutions
A resolution can be passed at a formal meeting with minutes recorded, or, if the bylaws allow it, signed by all directors in writing without holding a meeting. Written resolutions are common in small companies where the same one or two people are directors. Either way, the signed resolution belongs in the minute book as proof the decision was properly authorized.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Treadstone LawLegal commentaryCorporate Law
- 02Treadstone LawLegal commentaryChecking Corporate Status and Good Standing Before Buying an Ontario Business
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