Board Resolutions in Singapore

A board resolution (also known as a directors’ resolution) is a formal document that records the decisions or intentions of board members on behalf of the corporation.

Section 157A of the Companies Act states that the business of a company shall be managed by, or under the direction or supervision of, the directors. This management, direction and supervision often requires making major decisions from the board of directors. Board resolutions record these decisions, such as the changing of ownership structure, voting in of new board members, or the sale of company shares.

A huge responsibility is placed upon the board of directors when they make major decisions. Board resolutions are important because they record these decisions and ultimately serve as a reference point for directors as they go about managing the business.

This is in line with other company resolutions made, all of which are subject to the constitution of the company. Find out what normally goes into a board resolution and how you can write one for your business.

What Goes Into a Board Resolution?

The Companies Act does not specify the exact details of what management action requires a board resolution. It is up to the company constitution, which varies across companies, which determines the specific requirements of a board resolution and when one is needed. Therefore, companies are likely to have different board resolutions.

However, there are some common issues most directors face that require the passing of a board resolution. These include:

• Appointment of company officers e.g. auditors, company secretary
• Borrowing of money and to mortgage company property
• Opening a bank account for the corporation
• Sale of company assets
• Approve mergers and acquisitions
• Issue of stock

This list is not exhaustive, and varies across different companies.

Quorum of the Board Resolution

Section 179(1)(a) of the Companies Act states that at least 2 members will form the quorum of a meeting in a company.

However, the exact number of board members required to form the quorum of the meeting depends on the company constitution. Some companies will use 2 as their quorum (see e.g. paragraph 51(2) of the Model Constitution for private companies) while others may not.

In addition, the key personnel required to be present at the meeting is also stipulated by the constitution of the company. For example, some companies require all appointed officers in charge of the management of the company’s affairs, and the directors, to be present in a board meeting.

Hence, different companies will have different quorums and different attendance requirements for board meetings, subject to their constitution.

How Do You Write a Board Resolution?

A board resolution is a rather straightforward document only with key details, so the format of the board resolution being passed depends very much on the issue(s) resolved by the company.

Here are 2 recommended ways to structure your board resolution:

1. Issue-specific board resolution

The first way would be to structure your board resolution according to the issue being resolved by board members.

For instance, if your board of directors’ is seeking approval for an annual budget for the company, your board resolution will have the following heading:

“Board Resolution of [your company] seeking the approval of a budget for [financial year] passed on [date of resolution]”

Any sub-issues, say the personnel handling the budget, that have been resolved at the board meeting would have to begin with “RESOLVED”. An example of a line in your board resolution could be:

“RESOLVED, that the personnel handling the budget would be…”

Other key decisions and information will then be recorded in the board resolution. Structuring your board resolution by the issue being resolved would be especially useful if the specific issue carries with it a substantial amount of details. It would also be useful if there are only a few major issues that require discussion at the board meeting.

2. General board resolution

The second way would be to structure your board resolution as a general one, with many different issues resolved or decided upon by board members in a single document.

For instance, you would have the following heading:

“Board Resolution of [your company] passed on [date of resolution]”

The different issues that the board of directors will seek to resolve at the meeting will then appear as the points that form the board resolution. Again, all issues that have been resolved will begin with “RESOLVED”. An example of what your board resolution could look like would be:

Appointment of [name of personnel]

“RESOLVED, that [name] will be appointed to…”

Sale of assets

“RESOLVED, that [asset] will be sold…”

Other key decisions and information will then be recorded in the board resolution. Structuring your board resolution as a general one would be especially useful if each issue is not information-heavy and the board has many issues to cover.

Board Resolutions and Directors’ Duties

Although board resolutions are not submitted to any legal body in Singapore (as compared to Annual Returns), they are still in line with the directors’ duties of a business. Board resolutions can show whether directors are fulfilling their duties to the business.

For instance, section 156(1)(a) of the Companies Act states that directors are required to disclose their interest in transactions with the company at a directors’ meeting. They can do so through verbal or written means, such as via a form. The board’s meeting minutes will record such important intentions or decisions when they are disclosed.

Subsequent actions in reaction to this disclosure, such as allowing the director to be involved or refrained from performing the particular work or transaction, can then be possible resolutions of the board. Hence, through the meeting minutes and subsequent board resolutions, this then allows shareholders to see if directors have fulfilled this duty of declaration of interest.

Directors are also fiduciaries to the business and have a duty to avoid any potential conflicts of interest. Board resolutions, which document directors’ decisions, will be important for shareholders to see that directors have fulfilled these duties. Board resolutions could even potentially be of use in court cases as forms of evidence.

The constitution of each company will affect the different ways directors make decisions for their companies. From the example above, we can see that board resolutions are crucial in ensuring that directors fulfil their respective duties. Well-documented board resolutions go a long way to helping the board of directors remain accountable to the business and its shareholders.

If you need assistance preparing board resolutions, consider engaging a professional corporate secretarial firm.