Certified resolutions: Overview, definition, and example
What are certified resolutions?
Certified resolutions are official documents that confirm decisions made by a board of directors, shareholders, or other governing bodies of an organization. These resolutions typically relate to significant corporate actions, such as approving a new policy, authorizing a financial transaction, or appointing officers. A certified resolution includes the formal text of the decision, as well as the signatures of those authorized to verify the decision, typically a corporate secretary or other officers. The certification ensures the resolution is official and legally binding.
In simpler terms, a certified resolution is a written record of a decision made by a company’s leadership, formally verified to ensure it’s legitimate.
Why are certified resolutions important?
Certified resolutions are important because they provide legal documentation of a company’s official decisions, ensuring transparency and accountability. They are often required for corporate actions such as opening bank accounts, entering contracts, or authorizing significant financial moves. By certifying these resolutions, businesses ensure that decisions are made according to the company’s bylaws and governance processes, protecting the company and its leaders from legal disputes or challenges to the decision-making process.
For SMB owners, using certified resolutions helps maintain proper legal and financial records and ensures that important decisions are documented in compliance with corporate laws.
Understanding certified resolutions through an example
Imagine your business is seeking financing from a bank, and the bank requires proof that the company’s board has approved taking on the loan. The board of directors holds a meeting and votes in favor of accepting the loan offer. To formalize the decision, the corporate secretary prepares a certified resolution documenting the decision, which is then signed and sealed by the appropriate officers. This certified resolution is then provided to the bank as official proof of the board’s approval.
In this case, the certified resolution serves as proof that the loan was authorized by the company’s leadership.
Example of a certified resolution clause
Here’s an example of what a certified resolution clause might look like in a corporate governance document:
“The Board of Directors of the Company hereby resolves that [specific decision, such as the approval of a loan, agreement, or policy] is officially authorized. This resolution is certified by the undersigned as a true and accurate record of the decision made during the Board’s meeting on [date]. This resolution shall be in effect as of [date].”
Conclusion
Certified resolutions are essential for documenting and formalizing decisions made by a company's governing body. For SMB owners, creating and certifying resolutions ensures that important business decisions are officially recognized and legally valid. By maintaining certified resolutions, businesses can protect themselves from legal challenges, maintain compliance with corporate governance standards, and create a clear record of decision-making processes.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.