Consent Resolutions

Consent Resolutions

What Is A Consent Resolution?

Whether a company is an LLC or a Corporation, its owners regularly will need to make decisions on behalf of the company. Those decisions fall under two general categories: 1) day-to-day decisions; and 2) significant decisions. Day-to-day decisions, such as ordering supplies and equipment, paying the company’s regular and recurring bills, and even entering into smaller contracts, don’t need to be separately approved by the owners. Significant decisions do, however, need to be separately approved.

The approval of such significant decisions can, in some cases, occur through an oral agreement of the owners. In most cases, however, it’s preferable to have a written document signed by the owners verifying their approval. This document is what is referred to as a “Consent,” and each of the decisions within that Consent are referred to as “Resolutions.” A well-run company — from a legal perspective, at least — will regularly document all of its significant decisions in the form of Consent Resolutions. This is the case whether the company has one founder or multiple founders.

Common Significant Decisions

So, what are some of the most common significant decisions for which owners of LLCs or Corporations should consider drafting Consent Resolutions? It will depend on the specific company, and the terms of the Company’s Operating Agreement (if an LLC) or Shareholders’ Agreement (if a Corporation). Significant decisions typically are outlined in such agreements. Here are some examples:

– Amending the Articles of Incorporation (Corporation) or Articles of Organization (LLC).

– Deciding to Dissolve the Company.

– Making distributions to shareholders (Corporation) or members (LLC).

– Redeeming shares (Corporation) or Units (LLC).

– Issuing additional shares (Corporation) or Units (LLC).

– Admitting new members to an LLC or shareholders to a Corporation.

– Entering into debts or contracts outside the ordinary course of business.

– Deciding how the company will elect to be taxed — for example, making an S Corp election.

Importance of Consent Resolutions 

Consent Resolutions are important for a number of reasons. First, they provide evidence that the founders are, in fact, treating the corporate entity as separate and distinct from themselves. This helps to ensure that the corporate veil will not be pierced. Second, they help co-owners avoid potential disputes by ensuring that all significant decisions are documented.

Once the Consent Resolutions are fully signed, the originals should be kept in the Company’s official records (the “Minutes“), so that any of the owners may later have access to them in the case of any disputes or disagreements.

Author: Andrew Harris

Andrew Harris is an attorney in Portland, Oregon and he wrote this article about Consent Resolutions.

Learn More About Consent Resolutions

If you have questions about properly documenting any significant decisions on behalf of your Oregon corporation or LLC through consent resolutions, please contact us and we will get back to you as quickly as possible.