Enhanced Dividend Declaration Resolution Workflow

You are tasked with drafting a comprehensive Dividend Declaration Resolution that serves as the official corporate record of a board of directors' decision to distribute company profits to shareholders. This critical governance document must demonstrate compliance with applicable corporate law, fulfill fiduciary duties, and provide clear documentation of the board's deliberative process and authorization. The resolution creates a binding legal obligation on the corporation and establishes the framework for dividend distribution, including critical dates and payment terms that affect shareholder rights.

Initial Information Gathering and Document Review

Begin by gathering all necessary information to draft a legally compliant and factually accurate resolution. Review any uploaded corporate documents, including the articles of incorporation, bylaws, recent financial statements, board meeting minutes, and any loan agreements or other contracts that may contain dividend restrictions. Extract specific details such as the corporation's exact legal name as it appears in the articles of incorporation, the authorized classes of stock and their respective dividend rights, the current number of outstanding shares, and any existing dividend policies or historical practices. Examine financial statements to identify the retained earnings balance, current assets and liabilities, and other metrics that demonstrate the corporation's ability to legally declare dividends without impairing capital or rendering the company insolvent.

If the corporation has previously declared dividends, review prior resolutions to maintain consistency in format and terminology while ensuring the current resolution reflects any changes in circumstances or legal requirements. Identify the applicable state law governing dividend distributions, typically the jurisdiction of incorporation, and confirm the specific statutory provisions that authorize dividend payments and establish restrictions on distributions. For Delaware corporations, this would be Section 170 of the Delaware General Corporation Law; for other jurisdictions, locate the equivalent provision. Verify whether any third-party consents are required, such as lender approval under loan covenants or preferred shareholder approval under protective provisions in the articles of incorporation.

Formal Header and Meeting Identification

Draft a formal header that establishes the document's authority and provides essential identifying information. State the complete legal name of the corporation exactly as it appears in the articles of incorporation, followed by a clear title such as "Resolution of the Board of Directors Authorizing Declaration of Cash Dividend" or the appropriate variant based on the dividend type. Include the full date of the board meeting at which the resolution is being considered, formatted in a clear and unambiguous manner.

Provide comprehensive meeting identification details including whether this is a regular or special meeting of the board of directors, the location of the meeting or the virtual platform used if conducted remotely, and the time the meeting was called to order. If this is a special meeting, confirm that proper notice was provided to all directors in accordance with the notice requirements specified in the bylaws, and reference the specific bylaw provision governing special meetings. Include a statement that a quorum of directors was present as required by the bylaws, and list the names of all directors in attendance. Note any directors who were absent and whether their absence was excused. Reference the specific provisions of the bylaws or applicable state law that authorize the board to declare dividends and establish the procedural requirements for board action.

Substantive Recitals Establishing Legal Foundation

Construct a series of "WHEREAS" clauses that establish the factual predicate and legal foundation for the dividend declaration, demonstrating that the board has fulfilled its fiduciary duty of care through informed deliberation. The recitals should tell a coherent story of the board's decision-making process and establish that all legal prerequisites for the dividend have been satisfied.

Begin with a recital affirming that the board has reviewed and considered the corporation's current financial statements, including the balance sheet and income statement as of a specified recent date, and has determined that the corporation possesses sufficient surplus or net profits from which dividends may legally be declared under the applicable state corporation statute. Reference the specific statutory provision by citation, such as "pursuant to Section 170 of the Delaware General Corporation Law" or the equivalent provision in your jurisdiction. Include a recital confirming that the proposed dividend will not render the corporation insolvent under either the equity insolvency test (inability to pay debts as they become due in the ordinary course of business) or the balance sheet insolvency test (liabilities exceeding assets), as required by applicable law.

Add a recital stating that the board has determined, in the exercise of its business judgment, that the declaration and payment of the dividend is in the best interests of the corporation and its shareholders, considering the corporation's current financial condition, future capital needs, business prospects, and overall financial strategy. If relevant, include recitals noting specific financial metrics that support the dividend decision, such as the current retained earnings balance, the corporation's debt-to-equity ratio, working capital position, or projected cash flows. These recitals serve to document the board's informed decision-making and provide evidence of compliance with fiduciary duties.

If any third-party consents or approvals are required, include recitals confirming that such consents have been obtained or that no such consents are necessary. For example, if loan agreements contain financial covenants that restrict dividend payments, include a recital stating either that the proposed dividend complies with all such restrictions or that the lender has provided written consent to the dividend. Similarly, if the articles of incorporation grant preferred shareholders approval rights over certain dividends, confirm compliance with those provisions.

Operative Resolution Provisions

Draft the operative "RESOLVED" clauses that constitute the actual dividend declaration with precision, clarity, and completeness. These provisions create the legal obligation and must be drafted without ambiguity. Begin with a primary resolution clause that declares the dividend and specifies all essential terms. State unambiguously the type of dividend being declared, whether cash, stock, or property. For cash dividends, specify the exact amount per share using precise numerical and written formats, such as "fifty cents ($0.50) per share of common stock, par value $0.01 per share." Calculate and state the total aggregate dividend amount based on the number of shares outstanding and entitled to the dividend.

Establish the three critical dates that govern dividend rights and payment with clear definitions and appropriate spacing. The declaration date is the date of board approval, which is the date of the meeting at which the resolution is adopted. The record date is the date on which shareholders must be holders of record to be entitled to receive the dividend, and should be set sufficiently in the future to allow for proper notice to shareholders and administrative processing by the transfer agent, typically between ten and thirty days after the declaration date. The payment date is the date on which the dividend will actually be distributed to eligible shareholders, and should be set after the record date with sufficient time for the corporation or its transfer agent to prepare and process payments, typically between two and four weeks after the record date.

Include a resolution clause specifying which classes and series of stock are entitled to participate in the dividend, and explicitly exclude any shares that should not receive the dividend, such as treasury shares held by the corporation or shares subject to forfeiture restrictions. If the corporation has multiple classes of stock with different dividend rights, ensure the resolution respects the preferences, priorities, and participation rights established in the articles of incorporation. For corporations with preferred stock, confirm that all accumulated dividends on preferred shares have been paid or provided for before declaring dividends on common stock, if required by the terms of the preferred stock.

Add a resolution clause authorizing and directing the appropriate corporate officers, typically the Chief Executive Officer, Chief Financial Officer, and Corporate Secretary, to take all actions necessary and appropriate to effect the dividend payment. This authorization should include engaging or instructing the corporation's transfer agent to process and distribute the dividend, making all necessary accounting entries to record the dividend liability and subsequent payment, preparing and filing any required regulatory notifications or reports, and executing any documents or instruments required to implement the dividend distribution. Include language confirming that such officers are authorized to make technical or ministerial changes to the implementation process as may be necessary or advisable, provided such changes do not alter the material terms of the dividend as declared.

Approval Documentation and Voting Record

Document the board's formal approval of the resolution with sufficient detail to demonstrate compliance with all corporate governance requirements and create a clear record of board action. State the specific vote count, indicating the number of directors voting in favor, against, and abstaining. If the bylaws or applicable law require disclosure of individual director votes, or if any director dissented or abstained, record how each director voted by name. Note any conflicts of interest disclosed by directors pursuant to the corporation's conflict of interest policy or applicable law, and describe how such conflicts were addressed, such as through recusal from discussion and voting.

If the corporation's articles of incorporation, bylaws, or applicable state law require shareholder approval for the particular type of dividend being declared, such as stock dividends that would significantly alter the capital structure or dividends payable in property other than cash, include provisions for obtaining such shareholder approval or confirm explicitly that shareholder approval is not required for this dividend under applicable law and the corporation's governing documents. Reference any required consents from third parties and confirm that all conditions precedent to the dividend declaration have been satisfied or waived.

Include a statement that following the vote on the resolution, the board concluded its consideration of the dividend matter and proceeded to other business or adjourned the meeting, as applicable. This creates a clear record of the board's action and the conclusion of the dividend authorization process.

Certification, Execution, and Authentication

Conclude the resolution with formal certification and execution provisions that establish the document's authenticity and authority as an official corporate record. Include a certification paragraph in which the Corporate Secretary attests that he or she is the duly elected, qualified, and acting Secretary of the corporation, that the foregoing resolution was duly adopted by the board of directors at a properly noticed and convened meeting held on the specified date, that a quorum of directors was present throughout the meeting, that the vote was accurately recorded as stated in the resolution, and that the resolution remains in full force and effect as of the date of certification without amendment, modification, or rescission.

Provide signature blocks for both the Corporate Secretary, who certifies the resolution's adoption and authenticity, and the Chairperson of the Board or presiding officer of the meeting, who confirms the meeting's proper conduct and the board's action. Each signature block should include a line for the handwritten signature, with the signer's typed or printed name and title beneath the signature line. If the corporation maintains a corporate seal, include an indication of where the seal should be impressed or affixed, typically near the Secretary's signature.

Consider including a notation regarding the resolution's filing and retention, such as a statement that the resolution has been filed in the corporation's minute book or a direction to the Secretary to ensure proper filing and retention in accordance with the corporation's record-keeping policies and applicable legal requirements for corporate records retention.

Document Formatting and Professional Presentation

Produce a complete, professionally formatted Dividend Declaration Resolution that adheres to standard legal document conventions and is suitable for immediate execution without further editing. Use appropriate spacing, margins, and typography to ensure readability and professional appearance. Number or letter the recital clauses (WHEREAS clauses) and resolution clauses (RESOLVED clauses) sequentially for easy reference. Employ consistent formatting for defined terms, using initial capitalization for terms that are defined and used throughout the document, such as "Corporation," "Board," "Dividend," "Record Date," and "Payment Date."

Ensure that all language is formal, precise, and free from ambiguity, using legal terminology appropriately while avoiding unnecessary jargon that might obscure meaning. Maintain consistency in terminology throughout the document, using the same terms to refer to the same concepts and avoiding synonyms that might create confusion about whether different things are intended. Draft complete sentences with proper grammar and punctuation, and organize the document logically so that each section flows naturally from the preceding section.

The completed resolution should serve as a comprehensive legal record that would withstand scrutiny in any subsequent legal proceeding, regulatory examination, or audit. It should provide clear guidance to corporate officers responsible for implementing the dividend payment and serve as definitive evidence of the board's authorization and the corporation's obligation to pay the declared dividend to eligible shareholders. The document should reflect the gravity and formality appropriate to a binding corporate action that creates legal rights and obligations affecting the corporation and its shareholders.