What Is a Corporate Resolution?
A corporate resolution is a document produced by a company's board of directors that details a legally enforceable corporate action. A board of directors is a group of persons who control a corporation on behalf of its shareholders. The board assists in the development of policies, the appointment of executives, and the monitoring of the corporation's direction. A corporate resolution is significant because it is the legal document that establishes the norms and framework for how the board of directors might respond in certain situations. Although the form and format of a corporate resolution might vary, it is usually contained in the minutes of a board meeting.
How Corporate Resolutions Work
A corporate resolution explains a company's board of directors' decisions and actions. A corporate resolution can be used by a corporation to establish itself as a separate legal entity from its owners. A corporate resolution helps the company maintain its independence from its owners by ensuring that the board of directors and corporate executives make choices that do not clash with the owners' interests.
A corporation's board of directors is in charge of making major decisions and defining company policies for management to follow. Every public business must have a board of directors, which is responsible for assisting the firm in establishing broad goals, supporting executive functions, and ensuring the company has enough, well-managed resources. Many important decisions are documented as company resolutions in board meeting minutes.
Corporate resolutions enable the board comply with numerous rules and regulations while also ensuring that the board fulfills its fiduciary responsibility to the shareholders. Corporate resolutions serve as a record of the board of directors' and senior management team's decisions. Regulators, the Internal Revenue Service (IRS), shareholders, and corporate officials can evaluate these resolutions later to ensure that the board and management are following rules, tax laws, and the corporation's bylaws.
Types of Corporate Resolutions
A corporate resolution outlines a variety of choices taken by the board of directors of a firm, including substantial financial decisions and ownership changes.
A resolution may specify the officials who are allowed to act on behalf of the corporation (trade, assign, transfer, or hedge securities and other assets). The resolution would spell out who may create a bank account, withdraw funds, and issue checks. This is a typical sort of resolution since many banks, brokerages, and asset managers, as well as some title agencies, require this information to identify the legal owner of a property.
Any modifications to the company's dividend distribution policy, including dividend hikes or suspensions, must be made by a resolution. Dividends are payments made to shareholders in the form of cash or shares as a return for their investment in the firm.
Other common actions that are likely to need a corporate resolution include the following:
Purchase of real estate
Applying for loans or credit
The issuance of debt to raise capital or money, such as corporate bonds
Vote in new board members
Changes in the executive management team, such as firing or appointing a new chief executive officer (CEO)
Executive compensation including salary and bonuses paid to executives
Issuance new equity shares for the corporation
File for a new patent
Mergers and acquisitions, which involve combining two companies
Joint ventures, which are arrangements or strategic partnerships with other corporations
Retirement plan changes such as the issuance of stock options to employees
Changes in the health benefits of the employees
Leasing equipment or the purchase of major assets, such as a factory
The corporate resolution acts as formal paperwork after a vote. It normally does not need to be filed to a government or monitoring organization.
Real-World Example of a Corporate Resolution
The National Company Law Tribunal (NCLT) extended the deadline for Electrosteel Steels Limited to complete its corporate insolvency resolution procedure in December 2017. Beginning on January 17, 2018, the extension was extended for another 90 days. Electrosteel Steels Limited, situated in Kolkata, was saddled with a debt of Rs 10,274 crore, which it owed to a consortium of banks led by SBI.
ESL was accepted to the insolvency procedure after facing insolvency proceedings. The recommendation for entry was made during a meeting of the Committee of Creditors (CoC) on December 6, 2017. Meeting minutes showed the CoC accepting the resolution by 99.82 percent, according to NCLT executive members.
Apostilles for Corporate Resolutions
The documents required to achieve a smooth shift or establish more company is one of the most crucial components of working overseas or starting a branch or representative office.
Remember that working in a foreign country is different, and keeping your documentation organized might be challenging. The particular specified in your documents, the sequence and consecutiveness of the authorities and obligations, and the appropriate production of all corporate documents will be the main considerations considered. Apostille is necessary if the destination country recognizes the 1961 Hague Convention, which established a streamlined paperwork process that many nations follow. The sole stipulation is that your final destination country must be familiar with the convention. Otherwise, consular legalization will be employed if the country does not accept the pact.
There is no margin for error with the authentication or apostille process. If mistakes are made, both your time and money will be wasted and you'll have to start all over again. If you want to look into outsourcing this part of preparing to studying abroad to someone with experience, please email me at jared@apostillellc.com or call 848-467-7740 to request my services or learn more.