Director resolutions across jurisdictions

A cross-border closing is mostly an exercise in time-zone arithmetic. The lawyers in New York want signatures by close of business. The lawyers in Cayman or BVI want signatures by London close. The buyer wants confirmation that everything is signed before the wire goes out. The seller wants the wire to go out before the next quarterly tax measurement date.

Somewhere in the middle of this calendar problem is the director resolution. A short document, easy to write, hard to get countersigned across three time zones inside a single business day.

What a director resolution actually does

The resolution is the corporate authorization for a transaction. The board, or the sole director, approves the deal, authorizes the officers to sign the operative documents, and approves any ancillary actions like distributions or amendments to the constitutional documents. Without a properly executed resolution, the operative agreements may be voidable for lack of authority, which is exactly the kind of latent problem that makes deal lawyers nervous.

In a domestic Delaware deal the resolution is a piece of paper. The board signs it by written consent, the secretary attests, the closing book includes a copy. In a cross-border deal the resolution becomes a logistical problem.

Why two jurisdictions disagree

The format requirements are not the same. Delaware accepts written consents signed in counterparts, including by electronic signature, in almost every circumstance. Cayman accepts written resolutions but the form of execution and the witness requirements vary by entity type. BVI accepts written resolutions but the governing instrument controls who can sign and how.

The substantive requirements are not the same. A Delaware corporation can authorize a merger in a single resolution. A Cayman exempted company often requires separate resolutions to amend the articles, declare a distribution, and approve a sale of substantially all assets, with each potentially needing a different threshold.

The timing requirements are not the same. Delaware filings can be made by the Secretary of State within hours of submission. Cayman registry actions take a business day at minimum. BVI registry actions take longer.

How to plan around it

The fix is to start the resolution drafting at signing, not at closing. The list of required corporate actions is knowable on signing day. The form and threshold for each is knowable. The list of signatories is knowable. The only thing that is not knowable at signing is the precise closing date.

Drafting the resolutions a week before closing, with bracketed dates and a single bracketed closing reference, lets the parties run them through corporate counsel in each jurisdiction in parallel. By the day before closing every resolution is ready to execute on a final date insertion. By the morning of closing every resolution is ready to be signed in counterparts as soon as the parties confirm the closing time.

The alternative is to draft the resolutions in the closing week. This is the default in many deals and it is the source of most cross-border closing delays. By the time the offshore counsel has reviewed the first draft, the time zones do not work.

The signature pages

Counterpart signature pages are the standard mechanic and they work fine in most jurisdictions. A clean approach is to circulate fully executed counterparts in escrow before closing, with a release instruction that the resolutions are not effective until the parties confirm closing. This is the same mechanic used for the operative documents and the lawyers running the deal can manage it without inventing anything new.

The trap is that some jurisdictions require physical signatures or witnessed execution for certain corporate actions. For those, electronic signature in counterparts is not enough. The fix is to identify those resolutions early and arrange physical or witnessed execution in advance, not on closing day.

What goes in the closing book

The closing book should contain the operative resolution from each entity, plus a certificate from the secretary or registered agent confirming that the resolutions were properly adopted under the law of the entity's jurisdiction. The certificate is what survives the closing and is what counsel rely on in any post-closing review.

Skipping the certificate is the single most common cross-border diligence shortcut. It is also the single most common item that gets flagged in a future financing or sale of the same entity, sometimes years later.

The cleanest cross-border closings I have worked on share one habit. The lawyers treat the resolutions and the certificates as primary deliverables, drafted and circulated on the same calendar as the operative documents, not as last-minute closing-week paperwork. The deals where that did not happen are the ones I remember.