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Understanding Which Corporate Activities Need Resolutions

Aug 17, 2007
Since a corporation is under the management of the board of directors, several corporate activities need to be put to vote before they can be implemented. The board of directors and the shareholders decide upon and pass resolutions. The board of directors can pass some resolutions, the shareholders can pass some resolutions, and sometimes both the shareholders and the board of directors need to pass resolutions. The Board of Directors agrees upon these corporate activities and the shareholders pass them. The corporate activities can include stock splits, dividends, mergers, acquisitions, rights issues, spin offs, and restructuring, among other things.

Corporate Resolutions following Incorporation
The board of directors, in its first meeting, must pass several resolutions, once incorporation of a company is completed. These include the approval of the agent for service of process, approval of bylaws, appointment of directors, election of officers, adoption of the corporate seal and the stock certificate, selection of the tax year, selection of the time of board meetings and annual meetings of share holders, authorization of the treasurer to open and start using the account, authorization of the corporate account, authorization of a signer, filing of any state required forms, issuance of the shares, and whether to opt for the S corporation status.

The Board of Directors and the shareholders pass these resolutions after they make informed decisions for the betterment of the company.

A List Of Common Corporate Resolutions

1.Adopt a trade name.

2.Authorize a franchise agreement, borrowing on a line of credit, a sale or a leaseback transaction, or a contract to sell assets.

3.Approve a Chapter 11 Reorganization or Bankruptcy protection plan.

4.Appoint a purchasing agent.

5.Assign lease.

6.Acquire shares and assets of a business.

7.Borrow against accounts receivable, capital, from a designated bank, on inventory and equipment.

8.Commence litigation.

9.Convert excess depreciation to surplus.

10.Defend against a lawsuit.

11.Exercise option for extending lease.

12.Factor accounts-receivable.

13.File for chapter 11 reorganization and chapter 7 bankruptcy.

14.File for receivership.

15.Grant mortgage or security interest.

16.Indemnify and hold harmless.

17.Issue general release.

18.Issue option to purchase shares and issue a guarantee.

19.Lease equipment, motor vehicles and premises.

20.Loan funds.

21.Make assignment to creditors.

22.Mortgage real estates.

23.Negotiate a specific contract.

24.Obtain a corporate credit card license.

25.Open bank accounts.

These are some of the corporate activities, which need resolutions to be passed. Advances in the software industry have made it possible to print forms for these resolutions and several companies offer services to supply printed forms making the task of filing and documenting these resolutions easier for corporations.
About the Author
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
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