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They are used for all types of decisions unless the Companies Act specifies the need for a different resolution. They are passed by 50%+ of board members’ votes. Types of Board Resolutionsįollowing are the three major types of board resolutions: Ordinary resolutions Board resolutions transpire by declaring the parameters approved for any debt financing if restrictions on the interest rate applicable to the loan in a board resolution document. If a company needs to obtain financing for an event, such as a project, expansion, or purchase of equipment, it may be necessary to obtain debt financing. Also, plans to exit bankruptcy protection in these types of board resolutions. Board resolutions transpire to outline the arrangements that may have been made with creditors before or after a bankruptcy filing. In addition to the witness, the organization’s top executives also sign corporate resolutions.Ī company must obtain specific provisions from creditors throughout a bankruptcy process if that business returns to solvency. Board resolutions related to real estate sales must also have some witnesses involved in filing the documents. The document acknowledges that the company has the necessary approval to proceed with the transaction. When a board of directors supports a company to sell specific properties or assets, it can create a corporate resolution. In contrast, day-to-day activities, such as hiring new employees or landing new clients, do not need to be recorded in a board resolution. Issuance of new shares on the stock market.However, it is not necessary for all actions of the board to be recorded in a board resolution, only the things that will significantly impact its direction. It means that the board is doing everything it can to make sure the company is profitable. The point is to hold the board accountable for their choices if someone tries to change their mind.Īdditionally, a board resolution is necessary to show state and federal regulators your company’s board and responsibilities. It is essentially a formal document that serves as a record of the critical decisions and actions that your company’s board of directors has taken.

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