How do I write a corporate resolution giving officers signing authority?

As a company expands and reaches a certain size, and especially when making acquisitions, the number of signatories on a deal can get unwieldy, and it’s easy to end up in a situation where nobody is sure who’s authorized to make binding decisions for the company. It’s a bigger deal than you might think, so you’ll want to make sure you’re prepared.

It isn’t very common for small companies to run into this problem. In a small, long-running company, veteran employees will probably know who is authorized to do what. Existing rules are likely supported by old resolutions at the board.

A growing company may run into this issue. An authorized signer may leave the company before their successor has been appointed. The authorized signers may be only one or two officials. This slows down the business.

This article discusses how the company authority to enter into binding agreements or contracts can be delegated by resolution of the board of directors. Here are a few things you should consider and a sample resolution for your board to adopt.

Corporate Resolution

A corporate resolution is a formal statement, passed by the board of directors, recording decisions important to the business. The board passes the resolution, the corporate secretary records it, and the resolution is kept with the official records of the business.

A resolution giving signing authority to officers allows them to legally commit the company by signing a contract. Think about sales agreements, employment contracts, buying, selling or leasing real estate or other significant contracts.

These signing officers should be designated carefully. They are trusted to represent the company in entering legal contracts. Usually authority is given to trusted officers of the company. However, large companies sometimes give limited signing authority to employees. For example, a Human Resources director might get signing authority for employment contracts, and a Sales director might have signing authority for sales contracts.

Writing a Resolution

Writing a resolution is easy. You just follow a simple formula that will include every requirement and make sure the board’s decisions are carried out to the letter.

The board, or other authorized body, must agree upon and issue the resolution.

Another requirement is to clearly state the date and time of the board meeting where the resolution was passed.

Name and title of the person you’re authorizing must be included. There may be more than one.

The board resolution must explain exactly what kinds of contracts and agreements the authorized signer may make.

The effective date of the resolution must be stated.

Certification of the resolution must be signed by the corporate secretary or another officer. Never by the person being authorized to sign. The resolution must include the exact wording approved by the board of directors. Later contracts must be signed by the signing officers exactly as they are named in the resolution authorizing them.

If the corporation has an official seal, affix the seal to the resolution where appropriate. If the company does not have a corporate seal, then the letters LS may be circled next to where the secretary signs.

Sample Resolution

Here is a sample resolution for the board of directors to pass. There are many appropriate forms, and wording, so don’t treat this as the only way.

WHEREAS, the Board of Directors deems it in the best interests of [NAME OF COMPANY] that certain of its officers be authorized to execute agreements, contracts and other documents on behalf of the corporation in connection with business contemplated by the corporation;

RESOLVED, that [OFFICER’S NAME] as [TITLE OF POSITION] of the Corporation be, and hereby is, authorized and directed for and on behalf of the Corporation, as authorized signatory, to make, execute and deliver any and all agreements, contracts and other documents necessary or required to be entered into by the Corporation, including but not limited to, sales contracts, purchase contracts, employee contracts, leases, assignment of leases, security agreements, deeds, amendments to agreements or contracts, consents, resolutions, certificates and all other documents necessary or required for and on behalf of the Corporation.

(TYPE NAME & TITLE OF ALL PERSONS AUTHORIZED TO SIGN DOCUMENTS, AGREEMENTS OR CONTRACTS BELOW, WITH EACH NAME, TITLE AND SIGNATURE ON A SEPARATE LINE AS FOLLOWS:)

IN WITNESS WHEREOF, the undersigned as corporate secretary, do hereby certify that the foregoing is a true, accurate and complete copy of the resolution duly adopted by the Board of Directors of [NAME OF COMPANY] on [DATE], and that this resolution has not been amended or revoked. SIGNED by [NAME OF CORPORATE SECRETARY]: ____________ Corporate Seal of [NAME OF COMPANY], if one.

All resolutions should be done in accordance with the company bylaws and applicable laws. For a growing company, entity management is critical. It requires more than one person, probably more than a secretary or paralegal.