Board resolutions are numerous issues to address as one creates and establishes a new company.
Addressing these issues early saves time and establishes the foundations for internal control within the company.
Furthermore, it also demonstrates to future investors a level of seriousness related to governance. By working on board resolutions, the effort will pay dividends to the company in the future during the due diligence process. The first four board resolutions below are typically included in formation documents such as the Operating Agreement of the LLC.
If they are not included in these documents, here is how to establish a board resolution:
- Appointment of a Manager
- Appointment of a Tax Management Partner, (TMP)
- Open a bank account
- Establish roles and define compensation for participants
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The next four board resolutions deal with issues the company will encounter as operations commence and authorization authority. Moreover, addressing these as part of the legal documentation process establishes the appropriate foundation for the startup. This will also permit the business to focus on operations as the entity develops, instead of being distracted by administrative issues.
Finally, here are the authorizations necessary for the following topics:
- Executing operations agreements and contracts
- Buying or selling assets
- Entering agreements to provide financing (equity and debt)
- Executing employee benefits plans.
Note: The author is not an attorney and FundingSage is not a law firm. FundingSage’s employees do not provide legal advice. We recommend that you seek the services of an attorney if legal advice is required.