Board Resolution: Significant Commercial Contract Approval
(MA Corporation)

Summary

This template Board Resolution: Significant Commercial Contract Approval may be used by the board of directors of a Massachusetts corporation to approve of the corporation entering into a significant commercial contract. The template includes practical guidance, drafting notes, and alternate clauses. All corporate powers are exercised by or under the authority of, and the corporation's business and affairs are managed by or under the direction of, its board of directors. See ALM GL ch. 156D, § 8.01. When a corporation seeks to enter into a significant contract, such action must usually be authorized by its board of directors. If the board approves the contract, it will then issue a resolution approving the corporation's entry into the contract. This template is premised on the contract being approved at a board meeting. However, unless the corporation's articles of organization or bylaws require that the action be taken at a meeting, any action required or permitted to be taken by the board of directors can be taken without a meeting by the unanimous consent of all the members of the board. ALM GL ch. 156D, § 8.21(a). Some boards grant comprehensive authority to officers and directors to enter into contracts or agreements of every nature and dollar value (usually excluding contracts that would cause the corporation to merge with, acquire, or to be acquired by another corporation, or contracts to enter into corporate debt agreements). Other boards, however, prohibit officers and managers from entering into contracts (1) beyond a certain dollar value, (2) involving certain subject matters (such as, by way of examples, material leases or contracts regarding the corporation's intellectual property), or (3) that are "material" (a term that is often unspecified). While these factors will vary between corporations, they are usually set forth in the corporation's policies and procedures. Additionally, because federal securities regulations mandate that a corporation must presently disclose (in Item 1.01 of Securities and Exchange Commission (SEC) Form 8-K) the corporation's entry into a "material" contract "not made in the ordinary course of business," you should consider case law and SEC regulatory guidance in this regard if applicable to the client. For a full listing of key content covering Board Resolutions for Private Company Corporate Governance, see Private Company Corporate Governance Board Resolutions Resource Kit. For additional guidance, see Management and Indemnification (MA Corporation) and Corporation Resource Kit (MA).