A board resolution is a written record of a decision made by a corporation’s board of directors. Companies use them for many decisions that go beyond everyday management decisions. However, it’s not always required for a board to meet and pass a formal resolution if it has unanimous written consent.
Below, we’ll explore what board resolutions are, including how they work, when they’re necessary, and what a simple resolution looks like.
Key takeaways
A board resolution is a formal, written record of a decision approved by a company’s board of directors.
Board members can adopt a resolution through a formal meeting, documented in meeting minutes, or through unanimous written consent.
Startups typically need board approval to raise capital, issue stock and options, appoint officers, open bank accounts, and approve major contracts.
Some decisions, such as amending the articles of incorporation and selling large amounts of assets, also require shareholder approval.
Many early-stage startups can pass resolutions with unanimous written consent, but formal meetings could be required as the company grows or if directors disagree.
What is a board resolution?
A board resolution is a formal decision made by a company’s board of directors, recorded in a legal document and held within the company’s corporate records. Startups need it for major corporate actions that require formal governance sign-off, rather than an informal agreement among founders alone. The company’s articles of incorporation will often determine when a board resolution is necessary, since it can also define the board’s powers.
For example, two founders might find an angel investor through a Simple Agreement for Future Equity (SAFE). The founders agree to the terms verbally and in an email. However, since the board of directors authorizes fundraising, it must formally approve the offer by voting at a board meeting and creating a resolution.
When do startups need board approval?
Startups need board approval for many major decisions, especially when approval affects fundraising, major financial commitments, and who can act on the company’s behalf. Here are some common examples:
Raising capital: The board is responsible for authorizing financing, including both SAFE rounds and priced rounds, before the company finalizes investment documents.
Issuing stocks and options: The board approves stock issuances, including shares issued to founders and stock options provided to employees and advisers.
Appointing officers: The board of directors is typically responsible for evaluating, choosing, and, when necessary, removing the chief executive officer (CEO) and sometimes other officer roles.
Approving major contracts: If the company plans to sign a significant contract or lease, or pursue an acquisition, a board approval is usually required.
Opening a bank account: Before the company opens a business bank account, the financial institution frequently requires a board resolution to authorize the account and determine who’s permitted to sign for it.
However, day-to-day decisions (e.g., signing routine customer or vendor contracts, purchasing software, hiring new employees) are often left to the company’s officers rather than the board.
What is the difference between a board resolution and unanimous written consent?
A board of directors can make a decision through a formal board resolution or unanimous written consent. A board resolution involves a formal meeting, documented in meeting minutes, where the board holds a vote. In contrast, unanimous written consent allows the board to make some of the same decisions without a formal meeting. Each board member receives the written resolution and can review and sign it without a formal discussion.
Unanimous written consent can be an appealing option in situations where the board is already in agreement and can pass the resolution quickly without scheduling a meeting. Examples include opening a bank account and approving option grants for new hires.
A board might choose to do a formal board resolution instead in situations where some members disagree. It can also be necessary for more significant decisions, such as priced fundraising rounds.
What must be documented with a board resolution?
A board resolution document must include the following:
A header: This section includes the name of the company, the type of resolution, and the date the directors adopted it.
Recitals: These paragraphs explain the context of and rationale for the resolution. Each recital begins with the term “whereas” to lay out the reasoning.
Resolutions: This section states the specific actions approved by the board to resolve the current issue. The first action starts with the phrase “Now, therefore, be it resolved,” and additional actions begin with “Further resolved.”
Certification: In some cases, the corporate secretary uses this section to attest that the resolution was adopted by the board.
Signatures: There’s a line for each director to sign the resolution. If the company has a corporate seal, it could also place it in this section.
Once the resolution documentation is completed, the resolution and the board’s minutes can be filed with the company’s other corporate records.
How is board consent different from stockholder consent?
Board consent refers to approval from a company’s board of directors, while stockholder consent is authorization from its shareholders. The board can make many decisions for the company on its own. However, some major decisions, such as charter amendments and major asset sales, require a stockholder vote before passage.
Here are a few examples.
|
Decision
|
Board approval
|
Stockholder approval
|
|---|---|---|
| Issuing stock or options within the authorized share count | Required | Not generally required |
| Approving a SAFE round | Required | Not generally required |
| Approving a priced round | Required | Required |
| Appointing officers | Required | Not generally required |
| Amending the articles of incorporation | Required | Required |
| Selling all or a substantial portion of the company’s assets | Required | Required |
In an early-stage startup, founders are often the only directors and primary shareholders, so they might be able to pass a board resolution and provide shareholder consent at the same time. However, as the business grows and adds more investors and an established board of directors, founders need to get sign-off from multiple parties before they make big decisions, especially those that change the structure of the business.
What does a simple board resolution look like?
No two board resolutions look exactly the same, but they all follow the same flow. They state who’s taking action and why, the steps the board is taking, and include signatures from each director.
Here’s an example of a short resolution for a startup that’s approving a SAFE round:
Resolution of Board of Directors by [Company Name]
[Date]
The undersigned, being the members of the Board of Directors of [Company Name], a [State] corporation (the “Company”), consent to the adoption of the following resolutions.
WHEREAS, the Board of Directors believes it is in the best interest of the shareholders to raise up to $[amount] through the sale of Simple Agreements for Future Equity (“SAFEs”);
NOW, THEREFORE, LET IT BE:
RESOLVED, that the Company is authorized to issue SAFEs in the aggregate amount of $[amount];
RESOLVED FURTHER, that the Officers of the Company are authorized to sign the SAFEs and take any other actions necessary to carry out this resolution.
_____________________ [Director name]
_____________________ [Director name]
The same basic structure repeats across most routine resolutions, whether you’re approving a SAFE round, a new hire’s option grant, or a bank account opening.
How Stripe Atlas can help
Stripe Atlas handles everything you need to legally launch your company—incorporation, employer identification number (EIN), equity setup, and tax filings—so you can fundraise, open a bank account, and start accepting payments in as little as two business days, from anywhere in the world.
Join 100,000+ startups incorporated using Atlas, including startups backed by top investors like Y Combinator, a16z, and General Catalyst.
Get started in minutes with Atlas
The application takes under 10 minutes. You’ll choose your company structure, confirm your name is available, add up to four cofounders, set your equity split, and e-sign. Then Atlas takes it from there, including notifying cofounders to sign their documents electronically.
Banking and payments before your EIN arrives
Atlas files your EIN application automatically after incorporation. You don’t have to wait—Atlas enables pre-EIN payments and banking so you can start accepting payments and making transactions right away. US founders with a Social Security number (SSN) are typically eligible for expedited IRS processing.
Automatic 83(b) tax election filing
Atlas files your 83(b) election for you—US and non-US founders alike—with US Postal Service (USPS) certified mail and tracking to reduce personal income taxes. You’ll get a signed 83(b) election and proof of filing directly in your Stripe Dashboard, with certified mail confirmation.
World-class company legal documents
Atlas provides all the legal documents you need to start running your company, drafted by Cooley, one of the world’s leading venture capital law firms, and stores them directly in your Stripe Dashboard. These documents are designed to help you fundraise immediately and ensure your company is legally protected, covering aspects like ownership structure, equity distribution, and tax compliance.
$2,500 in Stripe credits, plus $50K+ in partner discounts
Atlas startups get $2,500 in Stripe product credits for their first year, plus $50,000+ in discounts on essential tools—AWS, Google, Xero, Perplexity, and more. Delaware registered agent service is also included free for your first year.
Learn more about how Atlas can help you set up your new business quickly and easily, and get started today.
FAQs about board resolutions
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accurateness, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.