By-law No. 1 constitutes the general operating by-law of a corporation, governing such matters as the calling and conduct of directors’ and shareholders’ meetings, the execution of documents on the corporation’s behalf, and the corporation’s financial year. A Directors’ Resolution adopting By-law No. 1 is among the earliest formal steps taken following incorporation.

When is the resolution required?

Immediately following incorporation, the first directors named in the Articles of Incorporation are required to organize the corporation. This organizational process ordinarily comprises a Directors’ Resolution adopting By-law No. 1, together with resolutions appointing officers, approving the issuance of shares, and, where used, approving a corporate seal or specimen share certificate.

What are the steps to prepare a resolution?

• Confirming that each named first director has executed a consent to act.
• Drafting the provisions of By-law No. 1, including notice periods for meetings, quorum requirements, execution of documents, the financial year-end, and borrowing powers.
• Preparing a Directors’ Resolution stating that the directors have reviewed and approve By-law No. 1 in accordance with the applicable statute.
• Because a written resolution under section 129(1) of the Ontario Business Corporations Act (OBCA) or section 117(1) of the Canada Business Corporations Act (CBCA), is valid only if signed by all directors entitled to vote, every director must execute the resolution adopting By-law No. 1.
• Corporate statutes generally further require that a newly adopted by-law be confirmed by the shareholders, whether at the next shareholders’ meeting or by written shareholders’ resolution, in order for the by-law to remain in force.

Contents of the Resolution

A typical resolution adopting By-law No. 1 states that the directors have reviewed the proposed by-law, resolves that it is adopted as By-law No. 1 of the corporation effective as of a stated date, and authorizes an officer to submit it to the shareholders for confirmation.

Illustration

The two directors of a newly incorporated OBCA corporation execute a written resolution adopting By-law No. 1, which fixes the fiscal year-end as December 31 and authorizes any one director to sign cheques not exceeding five thousand dollars. The executed resolution, together with the text of By-law No. 1, is placed in the minute book.

Getting the legal help you need

Incorporating a business is stressful but creating a formal Director’s Resolution to authorize or approve a specific corporate action reduces stress and assures the corporations wishes align with provincial corporate laws. Get your Director’s Resolution quickly and affordably with Legal Line Documents. Start now—it only takes a few minutes.

								
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