Learn What Corporate Actions Need Board Approval
As an entrepreneur, you will need to keep your corporation on track and follow good corporate governance practices. In particular, you will need to manage the Board of Directors and know which corporate actions and business activities will require formal Board approval.
As mentioned in the video, here is a list of typical corporate actions that may need Board approval:
- Issuing, selling or granting securities;
- Engaging in a financing transaction (debt or equity);
- Hiring C-level executives and senior staff;
- Issuing an equity incentive or stock option award;
- Amending key corporate governance documents, like the Certificate of Incorporation and the Bylaws;
- Selling the company, whether it is a merger transaction or sale of the company’s assets;
- Distributions or dividends to stockholders;
- Big business deals, such as executive compensation packages, long-term office leases, licensing IP, commercial contracts or exclusive deals to a third party;
- Creating a subsidiary or joint venture;
- Related party transactions with executives, Board members, etc.;
- Adopting or amending the company’s annual budget;
- Employee bonus or sales commission plans;
- Employee retirement, health and benefit plans; and
- Winding up or dissolving the company.
Although your company may not deal with all of the above situations, it is very important to know when Board approval is needed to step in and guide your company for proper corporate governance.
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Do you have any doubts about when Board approval might be required? Let us know!