A Directors’ Resolution records a decision of the board of directors, while a Shareholders’ Resolution records a decision of the corporation’s owners. Corporate legislation allocates distinct powers to each body. The two are not interchangeable, and the use of the incorrect resolution may render the resulting corporate action invalid.

Allocation of decision-making authority

Directors are generally empowered to manage, or supervise the management of, the business and affairs of the corporation, whereas shareholders vote on matters the statute reserves to them, including the election of directors, the appointment or waiver of an auditor, and the approval of fundamental changes, such as amendments to the articles.

Ordinary resolutions and special resolutions

An ordinary resolution generally requires a simple majority of the votes cast, whereas a special resolution, required for more significant matters such as amendment of the articles, requires not less than two-thirds of the votes cast at a meeting, or the unanimous written consent of shareholders entitled to vote where passed without a meeting.

Written resolutions in place of a meeting

• Directors: a written resolution is valid only where signed by all directors entitled to vote (section 129(1) of the OBCA and section 117(1) of the CBCA).
• An ordinary resolution of a non-offering OBCA corporation may be passed in writing where signed by shareholders holding a majority of the votes (section 104(1)(c) of the OBCA),
• Special resolutions in writing require the signatures of all shareholders entitled to vote, and the CBCA continues to require unanimous signature for written shareholder resolutions.

Illustration

A private OBCA corporation seeks to (a) appoint a new officer, and (b) change its corporate name. The appointment of an officer falls within the directors’ management authority and is approved by directors’ resolution. The change of corporate name requires an amendment to the articles, which necessitates a special resolution of the shareholders; a directors’ resolution alone is insufficient to effect it.

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.

								
You now have 3 options:
								

									
More answers about Business & Corporate Law
									
Master List: 2,500 Legal Answers
																													
																		
Government Links