Writing legal documents can be a challenge, but fortunately, board resolutions aren’t as tough to write as they may seem. These documents are crucial for tracking important board decisions, especially in cases where decisions are legally binding.
After all, the board is the top of the chain of command and has ultimate governance authority and often legal responsibility to be involved in key decisions. That’s why board decisions often need formal documentation to record what the decision was, who voted, and what further actions are required.
In this article, we’ll cover how to write a board resolution, why it’s important, and how you can make the process easier. First, here’s a refresher on what a board resolution is.
What is a board resolution?
Board resolutions, also sometimes called directors’ resolutions,’ or ‘resolution of the board of directors,’ are records of the decisions the board of directors makes when they meet. The board resolution is a formal document used to track details of an organization’s specific decision including who voted, and their role. The board resolution is a legally binding record and is sometimes included in the board meeting minutes.
It can often seem intimidating to write a board resolution, primarily because of the highly formal tone of most legal documents and the language used to enact a resolution under Robert’s Rules of Order. But once you understand the different components of a standard board resolution document, you’ll see that they’re straightforward to fill in.
The board’s decision won’t always need a board resolution, but in many cases, these documents serve as an essential record for the organization.
See related: How to prepare more effective board packages
Why is a board of directors resolution required?
A resolution of the board of directors is not required for day-to-day activities like reviewing the organization’s financials or discussing strategic opportunities. Still, formal votes, approvals, and documentation are all needed for significant board decisions. In most organizations or corporations, board resolutions are typically required for actions with significant financial ramifications, a change in procedures, or a change in governance authority.
The board will typically only need board resolutions for the following actions. Here are some types of board resolutions:
- Entering a long-term lease agreement
- Creating a corporate bank account
- Entering into a business contract
- Appointing officers
- Authorizing corporate loans
- Changing the format of board meetings
- Recording shareholder decisions
- Changing the hiring strategy of the company
- Selling corporate shares
- Delegating non-profit funds
Board resolutions are particularly important for incorporated businesses. Upon adoption, a resolution is added to the official corporate book and becomes a permanent part of the corporate record. Government and tax authorities can audit board resolutions at will, despite the fact that they’re not officially filed (like articles of incorporation and annual reports).
How to fill out a resolution of the board of directors?
Since board resolutions are legal documents, they require specific language and follow a particular pattern. When you are just getting started, the layout and language may seem intimidating. Over time, recording these proceedings will become more and more familiar.
Below, we’ll explain the format of these documents, and what information resolutions include.
Board of directors resolution format: How to fill out the resolution of the board of directors
Filling out the board resolution often falls to the board secretary. You can expect to fill out the following when completing your resolution of the board of directors:
- Date, time, and location of the meeting
- Title that describes the board’s decision to be made
- Statement of majority or unanimous decision
- Resolution of the decision, including any necessary actions
- Officers responsible for carrying out the resolution
- Director names and signatures, along with their votes
- Secretary/chairperson’s name and signature.
When you are just getting started, the layout and language may seem intimidating. Over time, recording these proceedings will become more and more familiar.
One way to make board resolutions simpler is to use board portal software that helps you track and gather e-signatures and votes for all the board’s decisions.
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How to create your board resolution on a board portal
Aprio’s board portal allows you to create, share, and collect signatures for your board resolutions in real-time at a board meeting.
Simply upload a document with a summary of the resolution during the board meeting, then enable signatures. Board members can sign the document from any location, even if they’re joining the meeting remotely.
Once the document is signed, you’ll automatically have a date-stamped record of the resolution and members involved.
In addition to simplifying board resolutions, Aprio’s board portal software provides real-time online access to board materials, annotations, tasks, and voting, while keeping everything secure and in one place.
Resolution of the board of directors template
Need help getting started? Download a board resolution template, or if you are an Aprio portal user, reach out to our 24/7 support team for guidance from another experienced board administrator.
Archiving board of directors resolution forms
Having a backup copy of your resolutions is extremely important. A board of directors resolution should be retained in the same place as your board meeting minutes since it is a legally enforceable document.
With Aprio’s paperless board management software, you can store all your board governance documents in one place, keeping them secure and readily accessible to your distributed team,
What is the SBA Form 160, Resolution of Board of Directors?
Banks require directors’ approval before lending money. That means a company’s ability to borrow money depends on the board’s decision. The Small Business Administration (SBA) requires that the resolution of the board of directors is attached to the loan application as proof of the decision in the final step of the loan application process.
Most lenders require borrowers to complete and sign a standard resolution that signifies there was a meeting of the company’s board of directors and that they have approved the company’s debt.
There are two parts to the SBA Form 160:
- resolution;
- certification.
To comply with the form requirements, include the following information:
- Organization name
- Minimum and maximum loan amounts
- These officers’ names, titles, and signatures
- Where the meeting was held
- The exact date and time the resolution took place
- Signature of the board secretary attesting to the genuineness of signatures and names provided by officers.
SBA 160 can be filled out manually or electronically. Forms completed electronically must be printed, and signed by hand; e-signatures will not suffice. Once submitted, the lender will receive them with the other documents.
If you have questions, there are certified specialists on staff at local SBA field offices who can guide you in the right direction. You can find contact information for your local specialist on the SBA’s official website to book an appointment.
See related: Best practices for modern board governance in the digital age
Resolution of Board of Directors EIDL
Organizations that suffer financial setbacks resulting from a disaster can apply for an Economic Injury Disaster Loan (EIDL) from the SBA. The goal is to give the organization enough working capital to get back on their feet and resume normal business functions.
After the funds are disbursed, the organization has six months to submit the board resolution confirming the board’s decision to approve the loan. Within a year, the organization will have to provide proof of hazard insurance.
Make sure you are in compliance with these requirements by consulting your attorney or law firm, and an insurance agent.
Can a board resolution be signed by one director?
A resolution is generally only signed by one director if a formal meeting does not take place – but that’s rare. According to LawDepot, the resolution of the board of directors must be signed by all directors if the board meets formally to discuss the topics contained within minutes of the meeting. In some cases, the resolution may relate to a committee and a subset of directors. If the resolution is a certified corporate resolution then the president and board secretary are also required to sign off.
Takeaways
Remember, board resolutions are legally binding documents. Resolutions include key details of the meeting, signatures of all board members, and the date. They should also be stored and available if required for future reference or legal purposes. For many boards going paperless, board management software like Aprio can simplify resolution sign-offs, tracking, and archiving of legal documents ensures that resolutions are done right.
Ensure good governance and simplify board resolutions with Aprio
Aprio’s board portal software helps board members, executives, and board secretaries and administrators stay organized, make timely board decisions, and run meetings efficiently – all with good governance in place.
See how Aprio helps streamline board resolutions and other board responsibilities and keep information secure. Get in touch with our team to start the conversation.
