A Board resolution is a formal document that confirms the actions and votes taken by the Board of directors at a Board meeting. It outlines the duties of all corporate officers and the outcome of any decisions that were made.
It is signed by the chairperson and all Board Members present and can be found in the Board meeting minutes.
This legal document is also known as a corporate resolution and is used to put into writing the decisions made by the Board. The resolution authorises committees to take action on items that were voted on.
Primarily a Board resolution document is needed to keep a record of:
- Decisions concerning company affairs made in the Board of directors meeting.
- Decisions concerning company equity made by shareholders of the organisation.
How To Pass A Board Resolution
The Board of directors have the ultimate decision-making power in a company and usually only get involved with major operations that require their approval.
These resolutions are communicated throughout the organisation and are applied by the different departments. As a result, Board meetings and Board resolutions are not an ordinary, everyday occurrence.
Two aspects are needed to pass a Board resolution:
1. Quorum
An organisation’s regulations determine the number of directors necessary to assemble a Board meeting. This minimum number is called a quorum.
Quorum prerequisites vary and mostly depend on the size of the organisation.
2. Chairperson & Casting Vote
At Board meetings, one Board member is chosen as the chairperson to facilitate the proceedings. This individual is also granted the "casting vote," which is the decisive vote in the case of a tie while discussing a proposal.
The chairperson has the responsibility of certifying the finalised version of the Board resolution, and the resolution must be documented in the company's records within one month.
Companies are not required to send Board resolutions to any kind of governing body. They mainly keep them for internal recordkeeping or if shareholders want to check the decisions made by the Board.
Types of Board Resolutions
A major part of a Board resolution is voting. With Board meetings occuring online with increasing frequency, voting becomes a little more difficult.
However, with a Board portal like Convene that has features such as live voting, your organisation can continue to run seamless Board meetings anywhere.
With voting, in order for a decision to be made, the majority of people must agree to it. Some decisions may require a different majority, due to the importance of the issue.
Here are three types of resolutions that require different majorities:
1. Ordinary Resolutions
When a board resolution is passed by a simple majority, usually of just over 50%, it is called an ordinary resolution. Actions that might require an ordinary resolution include a director election, auditor appointment and more.
2. Special Resolutions
When Board resolutions require a higher majority, they need a special resolution. The percentage needed to pass will have been determined before the meeting, with it commonly being 75% or higher. Actions that might require a special resolution should be critically important to the organisation.
3. Unanimous Resolutions
Unanimous Board resolutions require 100% votes from the quorum, however these are exceedingly uncommon. Most resolutions will be ordinary or special, as a unanimous resolution is usually reserved for more dire circumstances for an organisation.
Why Are Board Resolutions Important?
In most organisations, Board resolutions are typically required for actions with significant financial consequences; a change in procedures, or a change in governance authority.
Board resolutions are important for an organisation to keep a record of these crucial decisions made by the Board of directors. There are many matters that should to be recorded by resolutions, such as:
- Entering a business contract
- Authorising any corporate loans
- Recording the decisions of the shareholders
- Entering a long-term lease agreement
- Delegating funds for specific projects
- Expanding the organisation
- Hiring a notable amount of employees
- Letting go a notable amount of employees
- Selling shares of the organisation
- Any major decisions that will drastically affect the day to day running of the organisation
How Convene Can Help
Software should simplify your Board meetings, not complicate them. Join hundreds of organisations around the world in embracing a smart, simple and secure future with Convene.
Convene’s Award Winning Board management software ensures that your organisation can communicate easily and efficiently, allowing your Board meetings to run smoothly.
This means that you can focus on the more important aspects of your meetings, like Board resolutions, knowing the Convene is here to help.
From creating an agenda to establishing a strong admin trail, every step of the process should be as streamlined as possible.
Convene also now comes fully integrated with Microsoft Teams, ensuring you an even more seamless meeting process.
To discover how you can benefit from Convene, read our customer success stories, find out more about our exclusive Board portal features, or book a free demo today.
