Corporate Resolutions and Directors

By David Gass

Holding corporate meetings and keeping up with resolutions are fundamental to why you formed a corporation. Appropriate and timely corporate resolutions help protect the personal assets of its owners and officers. You can lose tax deductions and benefits if you do not conduct meetings that create the resolutions supporting the actions taken by the corporation.

Writing corporate resolutions should be simple and contain language adequate enough to show that the board of directors exercised its legal duty of care and loyalty. Resolutions should reflect the meetings and in black and white soon after the agreed upon actions have occurred.

An essential resolution a company address is the Appointment of Directors. Directors are obligated by law to manage the corporation on behalf of shareholders in good faith and in the best interests of the corporation. Here are three important factors regarding appointed directors:

• Directors are elected by a simple majority of the shareholders unless the Articles of Incorporation or a unanimous shareholder agreement states otherwise.
• Directors control the selection of the officers who run the corporation. Directors also define the capacity of the responsibility of its officers.
• Directors are commonly concerned with most of the major corporate decisions such as writing the business plan, selling or issuing stock shares, assume debts and liabilities allocate corporate profits and pay dividends to shareholders.

Statistics show almost 80% of the corporations in the United States do not keep up or maintain their corporate records. The IRS scrutinizes corporate minute books during an audit looking for discrepancies between the actions of the corporation and the resolutions adopted by the Shareholders and Board of Directors. The minute books include your company's Articles of Incorporation, Corporate Meeting Minutes, and Corporate Resolutions.

It is very important that all records, resolutions and minutes of your corporation should be kept in your Corporate Minute Book for a period of no less than six years.

Board members are required to act in a prudent manner on behalf of the corporation’s best interests. Generally the first Board of Directors meeting should typically include:

• Approving the corporate Bylaws
• Deciding on the corporation’s fiscal year
• Establishing procedures including record keeping
• Selecting or appointing the corporate officers
• Electing S Corporation status if appropriate
• Authorizing the sale of stock

Corporate Resolutions, Bylaws, Company Minutes and Stock Ledger information maintained properly are vital to the continued success and existence of a corporation. They are the unfailing protection of the company directors and shareholders.

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