Corporate resolutions record principal board decisions, supplementing bylaws for major decisions. An LLC operating agreement legally details member relationships, describing management, voting rights, and budget allocations.
- Role of Operating Agreements: Operating agreements outline member financial and functional decision structures and profit sharing. Without one, default state rules apply. Agreements may cover ownership percentage, duties, voting rights, and profit and loss distribution.
Resolutions document an LLC’s important member decisions, aiding business with third parties and legally binding corporations.
- Resolution Procedures: States require resolutions to document significant corporate board decisions and actions, demonstrating a corporation’s independence from shareholders and preventing potential conflicts of interest.
Corporate resolutions execute contracts and lease equipment or facilities. Bylaws document how a corporation is governed, including director elections, numbers, term lengths, and removal.
- Clarifying the Distinction: How is a corporate resolution different from an operating agreement or bylaws? A corporation’s bylaws or an LLC’s operating agreement detail regular operations, while resolutions are adopted for every major decision as needed.
Once a corporate resolution is signed, the secretary of the corporation will file the resolution in the corporate records book.
Meanwhile, in Canada, resolutions include both directors’ and shareholder resolutions.