What it means
Directors make key decisions collectively, and resolutions record them. Resolutions may be passed at a board meeting or in writing, if the company's constitution allows.
They state the decision, the date and who approved it, and are signed by directors or the company secretary. Banks usually require a resolution to open accounts or change signatories, and lenders require one for new loans.
Some decisions need shareholder resolutions instead, depending on company law and the articles, so some transactions need approval from the owners rather than, or as well as, directors. Keep approved decisions in a signed register, and get local legal or company-secretarial advice for a major transaction.
Start with the company's own constitutional documents and applicable company law, which define who may vote, the quorum, conflicts, whether written decisions are allowed and what majority is required. A bank's template cannot override missing corporate authority.
A usable resolution identifies the exact legal entity and the action approved, and if borrowing is authorised it should identify relevant facility terms or limits and who may sign documents, rather than simply saying the company may borrow. If bank signatories change, name the people and scope of their authority, and include the decision date, meeting or written-consent route, directors participating and any conflicts or abstentions as required.
Meeting minutes and the resolution work together: minutes show when directors met, attendance and quorum, what was considered and the action taken, while a resolution records the formal decision. Keep versions consistent, so do not circulate a certified resolution that claims a vote different from the approved minutes, and remember that a written decision may have different signing and circulation requirements from one passed at a meeting.
The approval-check arithmetic is only a quick illustration, not a legal test, and it should never be used to certify a decision. Four approvals where three are required may appear to exceed a threshold, but that says nothing about whether five directors received notice, there was a quorum or a conflicted director was counted improperly.
Check actual headcount and voting rules, because percentages can disguise the wrong denominator. A bank may require a certified copy, current directors register and specimen signatures, so check its form early and store the final signed decision securely because it may contain sensitive account details.
Record any signatory limit and joint-signature rule in an authority list, update it when directors change or mandates expire, and remember that approval does not let a signer act outside the resolution. Give directors the risk and alternatives before deciding, never backdate signatures or pretend a meeting happened (use a lawful urgent process if necessary), and keep final signed decisions with approved minutes and supporting papers while reviewing one-off authorities and retaining a clear record of who may act.
In practice
Real-world examples.
Example
A logistics company opens a new bank account after its board approves the named signatories and obtains the certified copy required by its bank. The resolution names the bank, the account type and the two people who may sign. The bank accepts the document without further questions.
Example
Directors of a property company approve a borrowing facility with a defined maximum and authorise two officers to sign jointly, subject to the company constitution. The resolution states the maximum amount and the facility term. The officers cannot borrow more than the approved limit.
Example
A director of a retail group with a potential conflict declares it before a decision. The board checks the applicable voting rules before recording the resolution. The minutes show the declaration and who voted.
Formula
Calculation
Board resolutions have no formula. A simple check before relying on one is: approval check = directors approving / directors required for approval, which should be 100% or more.
Worked example: the articles need a majority of 5 directors, so 3 approvals, and 4 directors sign. The approval check is 4 / 3 = 133%, which passes. The check says nothing about notice, quorum or conflicts, so it never replaces a review of the constitution and the minutes.Case study
Seen in the real world.
This illustrative and entirely fictional example follows Marina Logistics, an invented company that tried to open a new bank account. Marina's company secretary checked its articles, directors and approval requirements before convening a properly notified meeting. The board approved the specific bank account and named two joint signatories. The company recorded attendance, the vote and the approved wording, then gave the bank the certified copy it requested.
It also updated its internal authority list so staff would not rely on an old mandate. In this fictional example, the initial two-week delay could have been avoided by checking documents earlier. A template alone would not have made an unapproved decision valid.
Watch out
Common mistakes.
- Acting without proper board approval.
- Missing signatures or dates.
- Confusing board and shareholder resolutions.
Questions
People also ask.
What is a board resolution?
It is a formal record of a decision made by a company board under its governing rules. It should say exactly what was approved and who has authority to act.
When is one needed?
It may be needed for borrowing, bank mandates, major contracts and appointments, or when a counterparty asks for evidence. Actual legal and constitutional requirements govern.
Can it be passed without a meeting?
Some companies can use a written resolution, but the constitution and local law set the procedure. Check notice, voting and signature requirements rather than assuming every board can decide by email.
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