Agreement without Board Resolution

Par : | 0 Commentaires | On : décembre 24, 2021 | Catégorie : Non classé

Agreement without Board Resolution: A Guide for Companies

When it comes to making important decisions in a company, board resolutions are usually required. However, there are certain instances where agreements can be made without the need for a board resolution. In this article, we will discuss how companies can enter into agreements without board resolutions and the considerations to keep in mind.

What is a Board Resolution?

A board resolution is a formal document that records the decision-making process of a company`s board of directors. Board resolutions are used to document important decisions such as approving the company`s annual financial statements, authorizing contracts, and making changes to the company`s bylaws.

Why is a Board Resolution Needed?

Board resolutions are a requirement for certain decisions as they serve as proof that the company`s board of directors authorized the decision. Board resolutions also ensure that the decision-making process is transparent and in compliance with legal requirements.

Agreements Without Board Resolutions – When Can It Be Done?

Agreements can be made without the need for a board resolution if the decision is within the scope of authority of a company`s officers. For example, if a sales team member makes an agreement with a customer for a routine sale, a board resolution may not be required.

However, the scope of authority for officers varies depending on the company and the specific role the officer holds. Companies should have clear policies and guidelines regarding the scope of authority for officers to ensure that decisions are being made within the limits of their authority.

Considerations to Keep in Mind

While agreements without board resolutions can be made in certain circumstances, companies should take the following considerations into account before making any decisions:

1. Risk of Liability: Companies should carefully consider the potential risks and liabilities of any decisions made without board approval, as it could expose the company to legal risks if something goes wrong.

2. Policy and Procedures: Companies should establish clear policies and procedures that outline the scope of authority for officers, as well as any limitations or restrictions on their decision-making authority.

3. Consistency: Companies should ensure that decisions made without board approval are consistent with the company`s overall strategy and goals.

Conclusion

In conclusion, entering into agreements without board resolutions can be done if the decision is within the scope of authority for officers. However, companies should take into account the potential risks and liabilities and have clear policies and procedures in place. As always, seeking legal advice is recommended before making any important decisions.

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