What is Corporate Resolution?
The Short Answer
Corporate Resolution explained simply
A Corporate Resolution is a formal document that records a decision made by a company’s board of directors or shareholders. It serves as official proof that a specific action was approved by the company’s governing body. These resolutions are crucial for legal and administrative purposes, ensuring transparency and accountability in corporate governance. They are often required by banks, government agencies, and other third parties when a company undertakes significant actions.
Real-World Example
Selling a Company Asset
Imagine a company, "Venturu Inc.", decides to sell a piece of real estate it owns. To make this sale legally binding and official, the board of directors must hold a meeting and vote on the decision. Once approved, a Corporate Resolution is drafted, detailing the decision to sell the property, the terms of the sale, and the authorized individuals to execute the transaction. This document is then signed by the corporate secretary and kept in the company’s records.
Why this matters
Corporate Resolutions are important because they provide a clear, legal record of significant company decisions. They protect the company and its stakeholders by ensuring that actions are properly authorized and documented. Without them, major transactions could be challenged, leading to legal disputes and financial losses.
Always keep your corporate resolutions organized and easily accessible. They are vital for proving the legitimacy of your company’s actions, especially during a sale or audit.
Always keep your corporate resolutions organized and easily accessible. They are vital for proving the legitimacy of your company’s actions, especially during a sale or audit.
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