Essential Board Resolutions
Before raising a Series A funding round, Delaware C-Corps must ensure that their corporate governance documents are complete and approved by the board.
Investors conduct detailed due diligence, and missing or improperly documented board resolutions can delay or jeopardize the investment.
This guide explains the key board resolutions every Delaware C-Corp must pass before closing a Series A round in 2025.
Step 1: Understanding the Legal Role of Board Resolutions
Under the Delaware General Corporation Law (DGCL), the Board of Directors has the authority to make major business and financial decisions on behalf of the corporation.
Board resolutions serve as the official written record of those decisions.
They protect the corporation by showing that actions were properly authorized and approved according to state law.
Example:
Approving the issuance of preferred stock without a valid board resolution can invalidate investor equity and expose the company to legal risk.
Step 2: Adopt a Stock Option Plan
Most Series A investors expect a company to have a formal Employee Stock Option Plan (ESOP) in place.
The board must pass a resolution to:
- Approve the plan document.
- Set aside a specific number of shares for employee grants.
- Authorize officers to issue options within the approved pool.
Example:
A Delaware C-Corp with 10 million authorized shares may reserve 1 million shares for its ESOP before a Series A.
This resolution ensures compliance with IRC §83(b) and §409A valuation rules.
Step 3: Approve the Series A Preferred Stock
The board must authorize the issuance of Series A Preferred Stock under the Certificate of Incorporation and DGCL §151.
This includes:
- Determining the number of shares and price per share.
- Approving the terms such as liquidation preference, voting rights, and conversion ratios.
- Authorizing officers to execute the Stock Purchase Agreement.
Form to File:
Amended Certificate of Incorporation reflecting the new share class must be filed with the Delaware Division of Corporations.
Step 4: Approve Amended Bylaws and Shareholder Agreements
Before Series A, companies often revise their bylaws and shareholder agreements to align with investor requirements.
Board resolutions are required to approve:
- Amended bylaws.
- Investors’ Rights Agreement.
- Voting Agreement.
- Right of First Refusal and Co-Sale Agreement.
These ensure that corporate governance and investor protections are documented and enforceable.
Step 5: Appointment of Officers
The board should confirm or update the company’s officers before funding.
Common positions include:
- Chief Executive Officer (CEO)
- Chief Financial Officer (CFO)
- Chief Technology Officer (CTO)
- Secretary
The resolution should specify titles, authority, and compensation terms, ensuring that all officers are officially recorded for state and IRS compliance.
Step 6: Authorize Bank Accounts and Signatories
Investors typically request that the corporation maintains separate business accounts for transparency.
The board should pass a resolution to:
- Authorize new bank accounts for the Series A funds.
- Designate approved signatories, such as the CEO and CFO.
- Specify transaction limits and approval requirements.
Maintaining separate accounts helps during audits and future funding rounds.
Step 7: Approve Independent Valuation (409A Report)
Before issuing new stock options, a 409A valuation must be obtained to determine the fair market value of the company’s common stock.
The board resolution must:
- Approve the independent valuation firm.
- Accept the final 409A report.
- Approve option pricing based on the valuation.
This protects both the company and its employees from IRS penalties under IRC §409A for improperly priced stock options.
Step 8: Authorize Due Diligence and Fundraising Documents
To proceed with a Series A round, the board must authorize officers to:
- Engage legal counsel for due diligence.
- Execute financing and investor documents.
- File required notices with the SEC under Regulation D, Rule 506(b) or 506(c).
This ensures that all fundraising activities comply with securities regulations.
Step 9: Approve Delaware Franchise Tax and Annual Reports
Before closing a Series A, confirm that the company’s Delaware Franchise Tax and annual report are up to date.
The board should pass a resolution authorizing the payment of franchise taxes and the filing of the Delaware Annual Report (Form 09-11) with the Division of Corporations.
Timely filing protects the company’s good standing and reassures investors that all state compliance is current.
Conclusion
Passing the correct board resolutions before a Series A round ensures legal compliance, investor confidence, and operational readiness.
Delaware C-Corps that maintain complete and properly executed board minutes face fewer legal and tax complications during funding rounds and audits.
Corporate discipline and documentation are vital for any AI or tech founder scaling their business in 2025.
Call to Action
For help drafting or reviewing Delaware C-Corp board resolutions before your next funding round, contact Anshul Goyal, CPA EA FCA, a U.S.-licensed Certified Public Accountant, Enrolled Agent authorized to practice before the IRS, and cross-border tax expert assisting startups and venture-backed founders with Delaware compliance and Series A readiness.
Disclaimer
This article provides general information only and should not be treated as legal or tax advice. Always consult a CPA or attorney before executing board resolutions or corporate amendments.
Top 5 FAQs
- Are board resolutions required for every action?
Yes. Major business and financial actions must be approved through formal board resolutions. - Do I need to file board resolutions with the state?
No. They are internal corporate documents but must be kept for legal compliance. - How often should the board meet?
At least annually, and before any major transaction such as a funding round. - Can board resolutions be signed electronically?
Yes, Delaware law allows electronic signatures under DGCL §141(f). - What happens if board approvals are missing?
Missing resolutions can invalidate transactions or delay investor funding.
About Our CPA
Anshul Goyal, CPA EA FCA is a Certified Public Accountant licensed in the United States, Enrolled Agent authorized to practice before the IRS, and cross-border tax expert assisting Delaware corporations with Series A compliance, financial structuring, and investor readiness.