Drafting Reserved Matter Schedules for Venture Capital Shareholders
Effective venture capital reserved matter schedules require clear voting thresholds, cascading subsidiary covenants, and fallaway provisions to prevent deadlock.
Corporate Resolution Ratification
Meaning
A formal procedure through which a board of directors or shareholders retroactively approves and validates actions previously taken by company officers without proper prior authorization. While the original act might have been technically deficient, a corporate resolution ratification cures the defect by expressing the formal intent of the governing body to be bound by it. This process secures the position of the company against claims that the act was unauthorized.
Remedial Procedure
The board reviews the previous action to ensure it aligns with the current strategic objectives. By passing a corporate resolution ratification, directors confirm they have evaluated the risks and benefits associated with the unauthorized transaction. The board minutes must detail the specific act being approved.
Contractual Security
External parties often demand this evidence when a contract was signed by an officer whose power of attorney had expired. A corporate resolution ratification prevents the company from later attempting to void the agreement on the basis of a lack of authority. It protects the integrity of the commercial relationship.
Governance Correction
Errors in administrative filing or meeting notices often trigger the need for this measure. The procedure ensures that the corporate records remain accurate and defensible during a due diligence review.