# Board Resolutions Playbook

Negotiation and drafting guidance for ADVISE mode. Delaware law focus.

Based on BK corporate governance standards and DGCL requirements.

---

## 1. Authority: Board vs Stockholder vs Committee

**Why it matters:** Wrong approving body = void or voidable action. Critical for enforceability.

### BK Standard: Approval Requirements

#### Board-Only Approval (no stockholder vote needed)
| Action | Statutory Basis |
|--------|-----------------|
| Stock issuance (within authorized) | DGCL §161 |
| Option grants (under approved plan) | DGCL §157 |
| Officer appointment/removal | DGCL §142 |
| Contracts/transactions | DGCL §141 |
| Dividends and distributions | DGCL §170 |
| Employee benefit plans (401k, health) | DGCL §141 |
| Employment decisions (senior mgmt) | DGCL §141 |
| Certain CoI amendments (name change, cleanup) | DGCL §241 |

> **BK Note:** Day-to-day matters such as purchases covered by board-approved budget, hiring rank-and-file employees, and routine operational purchases typically do NOT require board approval.

#### Stockholder-Only Approval
| Action | Notes |
|--------|-------|
| Election/removal of directors | Unless bylaws specify otherwise |
| Interested transaction "cleansing" | Disinterested stockholders approve to cure duty of loyalty |

#### Board + Stockholder Approval Required
| Action | Board | Stockholders | Statutory Basis |
|--------|-------|--------------|-----------------|
| Charter amendment | ✅ recommend | ✅ approve | DGCL §242 |
| Bylaws amendment | ✅ or | ✅ | DGCL §109 |
| Merger/acquisition | ✅ recommend | ✅ approve | DGCL §251 |
| Sale of substantially all assets | ✅ recommend | ✅ approve | DGCL §271 |
| Increase authorized shares | ✅ recommend | ✅ approve | DGCL §242 |
| Dissolution | ✅ recommend | ✅ approve | DGCL §275 |
| Conversion to another entity type | ✅ recommend | ✅ approve | DGCL §266 |
| Transfer of domicile | ✅ recommend | ✅ approve | DGCL §390 |
| Recapitalization | ✅ recommend | ✅ approve | DGCL §242 |

> **⚠️ BK Warning:** Delaware law does NOT provide a comprehensive list of matters requiring board approval. Certificate of Incorporation, Bylaws, and Stockholders' Agreements may provide special voting rights. Evaluate on case-by-case basis.

### Negotiation Positions

| Issue | Preferred | Fallback |
|-------|-----------|----------|
| Wrong body | Obtain correct approval | Board ratification + stockholder consent |
| Committee exceeded scope | Board ratification | Re-do through proper body |
| Unclear authority | Cite specific DGCL section | "Pursuant to Certificate and Bylaws" |

---

## 2. Director, Officer, and Shareholder Removal ⚠️ BK PROCEDURES

### Director Removal

**Step 1:** Check bylaws and Certificate of Incorporation for:
- Action by written consent requirements
- Types of actions permitted by written consent
- Special voting requirements

**Step 2:** If no limitations, use appropriate form:

| Scenario | Required Consent |
|----------|------------------|
| Director is NOT a shareholder | Unanimous Written Consent (Shareholders) |
| Director IS shareholder (<50% shares) | Majority Written Consent (Shareholders) + Notice of Action to non-consenting shareholders |
| Director is majority shareholder | ⚠️ Complex — may require special procedures |

> **BK Note:** Director appointment/removal is internal corporate governance — NO filing required. Report directors only on Annual Report.

### Officer Removal

1. Check bylaws/CoI for specific requirements
2. Board Unanimous Written Consent (or meeting resolution)
3. Review employment agreement termination requirements
4. Notify terminated officer per bylaws/agreements
5. Terminate related agreements (employment, indemnification, insurance)

> **BK Note:** No filing required; at least one officer must be listed on Annual Report.

### Shareholder Removal (Voluntary)

1. Letter of resignation from departing shareholder
2. Stock Repurchase Agreement + Board UWCD
3. If certificated stock: stock certificate transfer signed
4. Update stock ledger and cap table

---

## 3. Voting Thresholds

### Standard Requirements

| Action | Board Vote | Stockholder Vote |
|--------|-----------|------------------|
| Regular business | Majority of quorum present | — |
| Stock issuance | Majority of board | — (unless cert requires) |
| Charter amendment | Majority of board | Majority of outstanding |
| Merger | Majority of board | Majority of outstanding |
| Sale of all assets | Majority of board | Majority of outstanding |
| Preferred protective provisions | — | Class vote per certificate |

### Supermajority Triggers
- Check Certificate of Incorporation for enhanced thresholds
- Investor rights agreements may require consent
- Certain preferred protective provisions require class vote

### Negotiation Positions

| Issue | Preferred | Fallback |
|-------|-----------|----------|
| Threshold unclear | State specific threshold met | "In accordance with Certificate and Bylaws" |
| Class vote required | Obtain separate class consent | Combined consent with class breakdown |
| Supermajority not met | Additional consents | Delay until threshold achievable |

---

## 4. Conflicts of Interest

**Why it matters:** Interested director transactions are voidable unless properly approved. DGCL §144.

### Red Flags
- Director has financial interest in transaction
- Director is party to contract
- Related-party transaction
- Officer with dual roles

### DGCL §144 Safe Harbor Requirements
Transaction NOT voidable if:
1. Material facts disclosed + approved by disinterested directors, OR
2. Material facts disclosed + approved by stockholders, OR
3. Transaction is fair to corporation at authorization time

### Negotiation Positions

| Issue | Preferred | Fallback |
|-------|-----------|----------|
| Conflict undisclosed | Full disclosure + recusal | Disclosure + waiver by disinterested directors |
| No disinterested quorum | Stockholder approval | Fairness opinion |
| Fairness questionable | Independent valuation | Board resolution documenting fair value analysis |

### Required Documentation
- Disclosure statement from interested director
- Recusal noted in minutes
- Disinterested director approval
- Rationale for fairness (if applicable)

---

## 5. Mechanics: Director List, Quorum, Notice

### Director List Issues

| Issue | Preferred | Fallback |
|-------|-----------|----------|
| No director list | Preamble: "[Names], constituting all directors of the Corporation" | Attach board composition as exhibit |
| Quorum unclear | "A quorum being present" with director count | "Majority of directors present" |
| Vacancies | Note vacancies; confirm quorum despite | Fill vacancies first |

### Notice and Waiver

| Issue | Preferred | Fallback |
|-------|-----------|----------|
| No notice given | Waiver statement: "Each director waives notice of this meeting" | Unanimous written consent (no notice required) |
| Written consent timing | "Effective upon receipt of last signature" | Specific effective date |

### DGCL §228 (Written Consent Timing)
- Consent valid for 60 days from earliest signature
- Prompt notice to non-consenting stockholders
- Record date rules apply

---

## 6. Securities Issuance

### Required Elements (DGCL §152, §153)

| Element | Preferred Language | Fallback |
|---------|-------------------|----------|
| Authorization | "RESOLVED, that the Corporation authorize and issue [X] shares of [Class]" | Reference to prior authorization |
| Consideration | "for $[X] per share in cash" | "for consideration per [Agreement] dated [Date]" |
| Adequacy | "the Board determines consideration is adequate" | "consideration is not less than par value" |
| Certificate compliance | "shares to be issued pursuant to Certificate" | Reference authorized shares remaining |

### Stock Options (409A Compliance)

| Issue | Preferred | Fallback |
|-------|-----------|----------|
| No 409A valuation | "Exercise price: $[X] per share based on 409A valuation dated [Date]" | "At fair market value determined by Board" (⚠️ audit risk) |
| Stale valuation (>12mo) | Obtain fresh 409A before grant | Board resolution documenting FMV determination |
| Strike below FMV | ❌ REJECT — IRS penalties | Increase to current FMV |
| ISO vs NSO | Specify type | Default to NSO if unclear |

### 409A Red Flags
- Options granted without 409A valuation cited
- Valuation older than 12 months
- Material event since valuation (financing, acquisition offer)
- No safe harbor valuation method

---

## 7. Delegation

### Scope Issues

| Issue | Preferred | Fallback |
|-------|-----------|----------|
| No authority granted | "Each Authorized Officer is authorized to execute and deliver..." | Name specific officers |
| Overbroad ("any documents") | "...documents in connection with [specific Transaction]" | Add materiality qualifier ($X threshold) |
| No officers named | Define "Authorized Officers" (CEO, CFO, Secretary) | "Officers of the Corporation" |

---

## 8. Closing Checklist

**Always include in ADVISE output:**

### Immediate Post-Signing
- [ ] Signed consents/minutes filed in minute book
- [ ] Secretary certification prepared

### Securities-Related
- [ ] Cap table updated
- [ ] Stock certificates issued (or book entry confirmed)
- [ ] Stock ledger updated
- [ ] Form D filed with SEC (within 15 days of first sale)
- [ ] State blue sky filings (if required)
- [ ] 83(b) elections filed (within 30 days, if applicable)

### Corporate Maintenance
- [ ] Delaware franchise tax current
- [ ] Annual report filings current
- [ ] Update shareholder register
- [ ] Board composition records updated

### Transaction-Specific
- [ ] Third-party notices sent (banks, investors as required)
- [ ] Amended certificate filed (if charter amended)
- [ ] Investor rights compliance (information rights, etc.)
- [ ] Attorney opinion letters (if required by transaction)

---

## Output Structure (ADVISE Mode)

```
**Overall: 🔴/🟡/🟢**

**Summary:**
- Key issue 1
- Key issue 2
- Key issue 3

**Issues:**
| Priority | Resolution | Issue | Recommendation |
|----------|------------|-------|----------------|
| 🔴 | Res. X | Problem | Preferred: ... / Fallback: ... |

**Missing Terms:**
- Item vs baseline

**Questions:**
- Clarification needed

**Closing Checklist:**
- [ ] Signed consents → minute book
- [ ] Cap table updated
- [ ] Form D filed (if applicable)
- [ ] 83(b) elections (if applicable)
- [ ] [Transaction-specific items]
```