A Directors’ Resolution is a formal decision of a corporation’s board, recorded in writing, by which the board authorizes or approves a specific corporate action. It is the principal method by which directors exercise the management and supervisory authority given to them under Ontario and federal corporate law.

How is a resolution passed?

There are two general ways a resolution may be passed:

1. At a meeting: directors convene, whether in person or by electronic means, deliberate, and vote, with the outcome recorded in the minutes.
2. In writing, without a meeting: a resolution signed by all directors entitled to vote is as valid as a resolution passed at a duly constituted meeting.

What is the typical subject matter of a resolution?

• Adoption of the corporation’s by-laws, including By-law No. 1, the general operating by-law.
• Appointment of officers, the opening of bank accounts, and the authorization of signing officers.
• Issuance of shares, declaration of dividends, and approval of share transfers.
• Approval of material contracts, indebtedness, and other significant transactions.

Why is a Director’s Resolution significant?

A substantial proportion of corporate acts are legally effective only when the board has authorized them. A Directors’ Resolution is the documentary record of such authorization, gives protection to the directors who approved the action, and satisfies third parties, including financial institutions and purchasers, who require proof of corporate authority.

Record-keeping obligation

Every resolution, whether passed at a meeting or in writing, is required to be kept with the minutes of the proceedings of the directors, and the failure of a corporation to maintain proper corporate records constitutes an offence under section 258(1) of the Ontario Business Corporations Act (OBCA).

Illustration

When the sole director of an Ontario corporation wishes to open a corporate bank account, a meeting attended by that director alone is unnecessary; the director may instead execute a written resolution authorizing the account and designating the signing officers. That document constitutes the directors’ resolution and is retained in the minute book with the corporation’s other records.

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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