What board resolution means
A board resolution is the company saying, on paper, that it decided something.
A company cannot think. It acts through its directors, and when those directors make a decision, the resolution is the evidence that the decision was properly made. It names the meeting, the date, what was decided, and who agreed.
Without it, a bank has no way of knowing whether the person in front of them genuinely speaks for the company or is simply a director acting alone.
How it is used
The most common trigger in Nigeria is a bank. Opening a corporate account, changing signatories, applying for a facility or authorising a large transfer will all attract a request for a board resolution, usually on the company letterhead and signed by directors, often with the company secretary attesting.
The CAC wants them too, for filings such as changing the registered address, appointing or removing a director, or increasing share capital. Counterparties in significant transactions ask for one so they know the signature binds the company.
Key features
- Passed by the directors at a board meeting, or by written resolution where the articles allow it
- States the company name, the date, the decision, and who is authorised to act on it
- Signed by directors and often countersigned by the company secretary
- Kept in the company's minute book, and copied to whoever needs it
- Distinct from a shareholders resolution, which is passed by the owners rather than the board
How this works in Nigeria
Nigerian banks are strict about the format and will reject a resolution that does not clearly authorise the specific action, or that is signed by someone not shown as a director on the CAC file.
A practical trap: your bank checks your resolution against your CAC records. If you changed directors and never filed the change, the resolution will not match, and the transaction stalls until your filings catch up.
Board resolution vs shareholders resolution
A board resolution is a decision of the directors, who run the company day to day. A shareholders resolution is a decision of the owners, and it is needed for the bigger constitutional matters such as changing the company name, altering the articles or increasing share capital.
Ordinary operational decisions, including banking, contracts and appointments, generally sit with the board. If somebody hands you a board resolution for something that legally requires the members, it does not do the job.
Limits and risks
A resolution cannot authorise something the company is not allowed to do, and it cannot override the articles of association or CAMA.
It also proves only that a decision was recorded. If the meeting never happened, or the quorum was not met, or a director was never given notice, the resolution can be challenged, and in a shareholder dispute that is exactly what gets attacked first.
Worth knowing
Banks compare the signatories on your resolution against the directors on your CAC file. If your filings are out of date, the resolution fails at the counter.