When you’re running a company, you’ll make plenty of day-to-day decisions quickly. But some decisions are too important (or too formal) to just agree on in a chat, an email thread, or a quick meeting.
That’s where a directors’ resolution comes in.
This guide explains what a directors’ resolution is in New Zealand, when you need one, how it’s usually prepared and signed, and the common mistakes we see business owners make. We’ve also refreshed this article to keep it current and aligned with how companies are actually operating and recording decisions today.
What Is A Directors’ Resolution?
A directors’ resolution is a formal written record of a decision made by a company’s directors.
In most cases, the directors have the legal authority to manage the company’s business and affairs. A directors’ resolution is simply the documented proof that the directors have:
- considered a matter,
- made a decision, and
- authorised the company (or a person) to take specific action.
Think of it as the company’s “paper trail” (often digital these days) showing that decisions were made properly and with the right authority.
Why Does A Directors’ Resolution Matter?
Directors’ resolutions matter because they help you:
- stay compliant with the Companies Act 1993 and your company’s governance rules
- prove authority to third parties (banks, accountants, investors, suppliers, landlords)
- reduce disputes by recording what was decided (and when)
- protect directors by showing decisions were made deliberately and in good faith
If something goes wrong later, a properly prepared resolution can be a key piece of evidence that the company followed the right process.
Is A Directors’ Resolution The Same As A Shareholders’ Resolution?
Not quite. Directors and shareholders have different roles.
- Directors manage the company and make operational and strategic decisions.
- Shareholders own the company and usually vote on bigger “ownership-level” matters.
Some actions can be approved by directors alone. Others require shareholder approval (sometimes in addition to a directors’ resolution). Your Company Constitution and any shareholders agreement will often spell out when shareholder approval is required.
As your company grows, it’s also common to align governance documents like a Shareholders Agreement with your constitution and decision-making process, so you’re not guessing who needs to approve what.
When Do You Need A Directors’ Resolution In NZ?
There’s no single list that covers every company, because what you “need” depends on:
- your constitution (if you have one),
- any shareholder arrangements,
- your industry (and whether regulators expect certain governance records), and
- what third parties require (for example, a bank may insist on a resolution before opening an account or approving lending).
That said, there are common situations where directors’ resolutions are routinely used in New Zealand businesses.
Common Examples Of Directors’ Resolutions
You may want (or need) a directors’ resolution when your company is:
- appointing or removing a director (and recording the board’s decision)
- authorising a person to act on behalf of the company (for example, signing a contract or dealing with a bank)
- approving entry into a major contract such as a supply agreement, distribution arrangement, or high-value client engagement
- approving a loan (borrowing money or lending money), including security arrangements
- approving the issue or transfer of shares (often alongside shareholder approvals depending on the structure)
- approving a dividend (where permitted and after meeting the relevant solvency requirements)
- approving key operational decisions like acquiring assets, entering a lease, or changing the registered office address
Even when a resolution isn’t strictly required by law, documenting key decisions is often a smart “set and forget” risk management step.
Directors’ Resolutions And Contracts
A common real-world scenario is this: you’re about to sign a contract, and the other side asks, “Can you prove you’re authorised to sign for the company?”
That’s when a directors’ resolution can be extremely helpful, especially if:
- the signatory is not the sole director,
- the contract is high value, long term, or high risk, or
- the company is signing for the first time with a new bank, landlord, or investor.
It can also be important if you’re formalising who can sign agreements, including employment documents like an Employment Contract on behalf of the company.
How Do You Pass A Directors’ Resolution?
Directors’ resolutions can be passed in a few different ways, depending on how your company operates and what your governance documents allow.
Generally, you’ll see two main formats:
- board meeting resolutions (decisions made at a directors’ meeting and recorded in minutes), and
- written resolutions (decisions signed by directors without holding a meeting).
In practice, many small businesses use written resolutions because they’re quick, clear, and easy to store in your company records.
1. Directors’ Resolution Passed At A Meeting
If directors meet (in person or via video/phone) and vote on a decision, you’ll typically record:
- the date and time of the meeting
- who attended (and whether there was a quorum)
- the resolution wording
- the outcome (carried or not carried)
- any conflicts of interest disclosed
This is often set out in formal board minutes.
2. Directors’ Written Resolution (Without A Meeting)
A written directors’ resolution is usually a standalone document that states:
- the company name and NZBN / company number (if relevant)
- what the directors have resolved to do
- the date of the resolution
- director signatures
For companies where directors are busy (or based in different places), written resolutions help you keep governance tight without needing to schedule formal meetings.
Can A Sole Director Sign A Directors’ Resolution?
Yes, many New Zealand companies have a single director.
In that case, a “directors’ resolution” is often still the right record to keep - it just becomes a written record of the sole director’s decision. This is especially useful when you need to show a bank or investor that the company has properly approved an action.
If you want a deeper breakdown of how this works in practice, the Directors’ Resolution process for sole-director companies can be a little different in format, but the goal is the same: a clear record of a valid decision.
Do Directors’ Resolutions Need To Be Witnessed?
Usually, directors’ resolutions do not need to be witnessed to be valid. Most are simply signed by the director(s).
However, witnessing might be required or recommended if:
- a specific transaction document requires it (for example, certain deeds),
- the bank or counterparty requests witnessed signatures for their internal requirements, or
- you’re dealing with documents being executed as deeds.
If you’re unsure what’s required, it helps to check who can witness signatures in New Zealand and whether the document is being signed as an agreement or a deed. The practical rules around witnessing a signature can vary depending on the document and context.
What Should A Directors’ Resolution Include?
A good directors’ resolution should be clear enough that someone reading it later (including someone outside your business) can understand exactly what was approved.
While formats vary, a well-drafted directors’ resolution usually includes:
- Company details (full legal name and company number)
- Date the resolution is passed
- Names of directors who are passing the resolution
- The resolution wording (the specific decision)
- Authority to act (who is authorised to sign or do what)
- Any conditions (for example, “subject to signing a final agreement”)
- Signatures of the director(s)
Keep The Resolution Wording Practical
The most common issue we see is resolutions that are too vague, such as:
- “The directors approve the agreement.” (Which agreement?)
- “The director is authorised to sign documents.” (Which documents? For what purpose?)
Instead, your resolution should ideally identify:
- the counterparty (who you’re contracting with),
- the type of agreement (service agreement, lease, loan), and
- any key limits (for example, up to a maximum value).
This doesn’t mean it needs to be long or overly legalistic. It just needs to be specific enough to be useful later.
Do You Need To Attach The Contract To The Resolution?
Not always, but it can be helpful.
Sometimes companies attach a copy of the final form contract (or a term sheet) to the resolution, especially if:
- the transaction is significant,
- the board wants clarity on what they approved, or
- there are multiple versions floating around.
Just be mindful of confidentiality and data handling if you’re storing resolutions in shared folders or systems. If the attachment includes personal information (like customer or employee data), you should handle it in line with the Privacy Act 2020 and your Privacy Policy.
Common Mistakes To Avoid With Directors’ Resolutions
Directors’ resolutions are meant to reduce risk, not create confusion. A few small errors can make them less useful (or, in some situations, raise governance issues).
1. Not Recording Major Decisions At All
If you’re moving quickly, it’s easy to skip documentation. But if there’s a later disagreement between founders/directors (or a dispute with a shareholder), the lack of written records can become a real headache.
As a rule of thumb: if the decision is important enough that you’d be annoyed to “re-decide it” later, it’s important enough to document.
2. Using The Wrong Type Of Resolution
Some decisions need a shareholders’ resolution, not just a directors’ resolution (or they may need both).
This can come up with:
- major changes to company structure
- certain share issues or buybacks
- changes to governance rules
It’s worth getting advice early, particularly if you’re updating your share structure, bringing in investors, or changing control of the business. It can also be important to ensure your constitution is fit-for-purpose, not just something you downloaded years ago - which is why businesses often formalise it through a Company Constitution.
3. Ignoring Conflicts Of Interest
Directors have duties to act in the best interests of the company. If a director has a personal interest in a transaction (for example, the company is contracting with a business owned by the director’s family), you should handle that properly.
In practical terms, this usually means:
- disclosing the interest,
- recording it in the minutes/resolution, and
- ensuring the decision-making process is appropriate.
This is one of those areas where tailored advice is important, because the right process can depend on your constitution and the nature of the transaction.
4. Not Matching Your Resolution To Your Actual Process
If you have two directors, but only one signs “for convenience”, that can create uncertainty about whether the decision was properly approved.
Similarly, if your constitution requires a certain quorum or voting threshold, but your records don’t show this, that can raise problems later (especially during due diligence if you sell the business or bring on investors).
5. Relying On Generic Templates Without Checking The Details
Templates can be a starting point, but they don’t always reflect:
- your constitution,
- your actual director structure, or
- the specific transaction you’re approving.
If the resolution is being used to approve something high-stakes (like lending, share changes, or signing a long-term commercial agreement), it’s worth having it reviewed so you’re protected from day one.
Key Takeaways
- A directors’ resolution is a formal record of a decision made by a company’s directors, and it helps prove authority and good governance.
- You’ll often use directors’ resolutions for major decisions like approving contracts, authorising signatories, borrowing money, issuing shares, and appointing directors.
- Directors’ resolutions can be made at a meeting (recorded in minutes) or as a written resolution signed by the director(s).
- A strong directors’ resolution should clearly state what was approved, who is authorised to act, the date, and any key conditions.
- Common mistakes include vague wording, missing records altogether, using a directors’ resolution when shareholder approval is required, and failing to manage conflicts of interest properly.
- If you’re unsure what approvals you need, it’s worth getting advice early so your governance documents and decision-making process stay consistent as the business grows.
If you’d like help preparing or reviewing a directors’ resolution (or making sure your company decisions are documented properly), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
