As a business owner your responsibilities are enormous – you are responsible for the day to day running of your business, your company’s growth, making important decisions on behalf of the company, your employees’ well being and seeking new customers.
However, your position as a business owner does not give you the leeway to make decisions without consulting your directors and shareholders.
What this means is that you need to involve your directors and shareholders in some of the decisions you make on behalf your company as you are not the only person involved in the decision making of the company.
Your directors and shareholders have a say.
The decisions made by the board of directors in a board meeting are documented as board resolutions.
At first glance, we admit it, it sounds a bit stuffy and legal. But it’s actually quite easy to write especially if you get our free template.
So…What is a board resolution?
A board resolution is simply a record of an important decision made on behalf of the company by the board of directors.
That’s it.
It is used to identify the results or any decisions that have been made by the board regarding the company. There are a few cases where a board resolution is usually needed:
- If a new member of the board has been appointed
- To record an important decision at a board meeting
- If a company decides to hire new employees
- When the company decides to sell some shares
To backtrack a little bit, we have made mention of the board multiple times already! So we’ll explain:
It is made up of a group of individuals who have been elected to represent shareholders.
The board usually represents the management and shareholder interests. It consists of people involved in the day to day administration of the company and those that are not.
A very valid question, If we have Minutes why do we need Board Resolutions? We’ll explain:
Minutes is the legal recording of the meeting of the board of directors. It is a clear and accurate report of the wishes and actions of the board. It records who introduced a motion, who seconded it, if a vote was taken etc.
The board resolution, on the other hand, records a decision made by the board of directors on behalf of a company. For instance, appointing a new director can be one of the decisions.
To note: The board resolution is not supreme. If it contradicts the memorandum and articles of association of the company, the latter prevails.
Legal instances you would need a board resolution
- To open a corporate bank account: All banks require a board resolution authorizing the opening of the account. The signatories to the account are also expected to be approved and present in the resolution
- If the company wants to use a company seal, then it must have the backing of a board resolution.
- If you want to change company directors, you need to submit two documents to the CAC, one of which is the board resolution.
Ready to draft your board resolution? We have a free template for you.