Glossary · operations

Corporate resolution

Also called borrowing resolution, written consent of members, certificate of authority.

The signed document by which the entity's owners or directors authorise the transaction and name who may sign for it, making the signature binding on the company rather than only on the person holding the pen.

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What it means

The funder needs to know two things before it lends to a company: that the company had the internal power to enter the transaction, and that the human signing had authority to bind it. The resolution is the evidence of both.

What it looks like by entity

In a corporation it is a resolution of the board, recorded in minutes or a unanimous written consent. In an LLC it is a written consent of the members or managers, taken in accordance with the operating agreement. Funders call all of these a corporate resolution and hand you their own one-page form regardless of what your governing documents actually require.

What travels with it

  • The operating agreement or bylaws, so the funder can see who is permitted to act
  • An incumbency certificate identifying the officers or managers and their specimen signatures
  • A certificate of good standing from the state of organisation
  • Sometimes a certified copy of the formation documents

Together these are the authority package, and it is a standing condition precedent on any facility of size. Your bank takes an equivalent when you open the account, which is why the signature card and the resolution should say the same thing.

Where the funder's interest ends

The funder wants a document it can rely on. Whether your internal governance was actually followed is your problem, and the form it gives you is drafted to shift that risk onto the signer through a personal certification.

Where this one catches people

The resolution is where an unauthorised signature gets papered over rather than caught. If your operating agreement requires the consent of all members to incur debt above a threshold, and one member signs the funder's one-page form certifying that he alone is authorised, the company has a governance problem and the co-owner has a claim — against the member, not usually against the funder. The funder will typically hold a personal guarantee from the signer and an argument that it relied in good faith on an apparent authority it had no reason to doubt.

Two consequences. If you are a co-owner, understand that your partner can encumber the company's assets faster than your operating agreement suggests, and that a UCC filing does not ask for your consent. If you are the signer, read your own operating agreement before certifying anything about your authority, because nobody else in the transaction is going to read it for you and you are the one making the certification.

Where you will meet this term

Term Loan Business Line of Credit SBA Loan Equipment Financing Invoice Financing Asset-Based Lending

Read next

Beneficial ownerAn individual who owns a defined share of a business or exercises significant control over it, and who must b… Conditions precedent (CPs)The things that must be delivered or true before a lender is obliged to release money — the reason an approva… DBA (DBA)A trade name a business operates under that differs from the legal name on its formation documents or from th… Entity typeHow the business is legally organised — sole proprietorship, partnership, LLC, S or C corporation — which dri… Good standingConfirmation from the state of organisation that the entity exists, has filed what it was required to file an… Know your business (KYB)Verification of the business entity itself — that it legally exists, is in good standing, operates where it c… Know your customer (KYC)The identity verification a financial institution performs on the individuals behind an account or transactio… Limited liability company (LLC)An entity structure that shields owners from business debts by default — a shield that a personal guaranty vo… Operating agreementThe internal governing document of an LLC, requested to confirm ownership percentages, who has authority to b… Personal guarantee (PG)An individual's separate promise to pay the business's obligation out of personal assets, enforceable even af…

Corporate resolution — common questions

What does corporate resolution mean?

The signed document by which the entity's owners or directors authorise the transaction and name who may sign for it, making the signature binding on the company rather than only on the person holding the pen.

Where does corporate resolution catch people out?

The resolution is where an unauthorised signature gets papered over rather than caught. If your operating agreement requires the consent of all members to incur debt above a threshold, and one member signs the funder's one-page form certifying that he alone is authorised, the company has a governance problem and the co-owner has a claim — against the member, not usually against the funder. The funder will typically hold a personal guarantee from the signer and an argument that it relied in good faith on an apparent authority it had no reason to doubt.

Is corporate resolution the same as an interest rate?

Corporate resolution is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.

Which products does corporate resolution apply to?

Term Loan, Business Line of Credit, SBA Loan, Equipment Financing, Invoice Financing, Asset-Based Lending.

Is there a worked example of corporate resolution?

Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.

What else should I read alongside corporate resolution?

Beneficial owner, Conditions precedent, DBA, Entity type, Good standing.

Has this definition been checked?

Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.

Is this legal advice?

No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.

Can I suggest a term?

Yes — [email protected]. The glossary grows from what people are actually shown in contracts.