Draft Board Resolution Credit Facility

---
name: board-resolution-credit-facility
task_id: corporate-governance/draft-board-resolution-credit-facility
description: Board resolution authorizing entry into a senior secured revolving credit facility, with a cover memorandum identifying observer-versus-director classification issues, signing authority gaps, stockholder consent requirements, and financial covenant discrepancies.
activates_for: [planner, solver, checker]
---

# Skill: Board Resolution for Senior Secured Revolving Credit Facility

## 2. Failure modes the skill is correcting

- Treating a board observer as a director for quorum calculation or vote counting purposes, which can make the resolution procedurally defective
- Authorizing only the initial commitment amount in the resolution without separately addressing any expandable commitment feature, leaving future borrowing capacity without clear board authorization
- Missing a stockholder consent requirement in the governing equity or stockholder documents and failing to flag it as a condition to closing the facility
- Failing to align the board action with the actual meeting record, including who was present, who abstained, and what prior actions were taken or ratified
- Omitting separate approvals required for subsidiary guarantors or other obligors that must sign transaction documents
- Allowing inconsistent covenant or leverage figures to remain unreconciled across the source set, which can undermine the board materials and closing package

## 3. Legal frameworks / domain conventions that apply

- Board observer versus director: a board observer has the contractual right to attend and observe board meetings but has no voting rights, does not count toward quorum, and cannot make or second motions; any internal memo or communication that characterizes an observer as a board member or includes the observer in vote tallies is incorrect and produces a defective record
- Signing authority under governing corporate documents: review the bylaws and any prior board authorizations to determine which officers may execute agreements on the corporation's behalf and whether board authorization is required for transactions above any applicable threshold; where the transaction documents identify a specific officer as the signatory and that officer's authority is not otherwise confirmed, the board resolution should expressly authorize execution on the corporation's behalf
- Stockholder consent rights: stockholder agreements negotiated in connection with preferred equity or similar financings may require consent from one or more classes or holders before the company may incur indebtedness above an applicable threshold; if the facility amount crosses that threshold, treat consent as a pre-closing condition and confirm the required approving parties and timing
- Quorum calculation with abstentions: where a director has indicated an intention to abstain due to a potential conflict or other reason, assess whether the remaining directors satisfy the applicable quorum standard under the governing organizational documents; if the standard is based on the entire board rather than those present, an abstention may affect both quorum and vote counting
- Expandable commitment authorization: a revolving credit facility may include an incremental or expandable commitment feature permitting the borrower to increase the facility size subject to lender consent; because the feature permits additional indebtedness beyond the initially contemplated amount, the board resolution should specifically address the feature and any maximum expanded commitment contemplated by the transaction documents
- Subsidiary guarantees: where subsidiaries of the borrower are guaranteeing the facility, each guaranteeing subsidiary typically requires its own governing-body authorization; the parent company's resolution should authorize the parent's entry into the transaction and note that separate subsidiary approvals will be needed as part of the closing process
- Defined financial covenant metrics: credit agreement financial covenants are typically calculated using defined metrics that may include specified addbacks and exclusions; where different source documents state different covenant inputs for the same period, identify the discrepancy and reconcile the figures against the operative credit document before finalizing the board materials
- Prior board authorization ratification: where the board took preliminary action or approved preliminary steps at an earlier meeting, the formal resolution should reference and ratify those prior actions to create a complete and internally consistent authorization record

## 4. Analytical scaffolds

- Start by identifying the operative transaction set: the credit facility, any guaranty or collateral package, the signatories, any expandable commitment feature, and any corporate or stockholder approval documents
- If multiple source documents address the same topic, compare them document-by-document and resolve the conflict in favor of the operative transaction document or governing organizational document
- For meeting mechanics, verify the composition of the board, the presence of any observer, any abstention, the quorum rule, and the exact vote authorization actually available at the meeting
- For authority issues, confirm whether each intended signatory is expressly authorized by existing documents or must be authorized in the resolution itself
- For consent issues, compare the debt incurrence limit or consent trigger in the equity documents against the facility size and any expandable feature, then determine whether consent is a pre-closing condition
- For covenant issues, extract the operative defined terms and numerical inputs from the source documents, reconcile inconsistencies, and anchor the resolution to the final operative figures rather than drafts or summaries
- For guarantor issues, identify each obligor or subsidiary expected to sign and flag any separate approvals that must be obtained before closing
- For prior actions, determine whether the board previously approved term sheets, diligence steps, or negotiating authority, and if so, include a ratification clause that captures that history

## 5. Vertical / structural / temporal relationships

- Treat board authorization as the gateway action and stockholder consent, if required, as a closing condition that must be satisfied before execution or funding
- Distinguish the initial facility size from any expandable commitment feature; if the documents contemplate future increases, the board materials should authorize that feature expressly and not by implication
- Treat subsidiary approvals as parallel prerequisites, not as assumptions carried by the parent resolution
- If the board record contains an observer or abstaining director issue, resolve the procedural defect before relying on the resolution as a final authorization
- If the source set contains inconsistent covenant or borrowing-capacity figures, treat the operative credit agreement as controlling and note the discrepancy in the cover memo before finalizing the resolution text

## 6. Output structure conventions

- Draft the board resolution in conventional RESOLVED form with recitals that identify the facility, the purpose of the borrowing, and the board’s determination that entry is advisable
- Include express authorization for execution and delivery of the credit documents, related certificates, and ancillary financing documents by the named officers or by officers holding designated titles
- Include express authorization for any guaranty or collateral package that the parent is permitted to approve, while noting that separate subsidiary approvals may be required for subsidiary obligors
- Include express authorization for any expandable commitment or incremental feature described in the source documents, if applicable
- Include a ratification clause covering prior board actions taken in contemplation of the transaction
- Draft the cover memo as an issues-and-gaps memorandum that identifies each material discrepancy, the governing document that controls, the consequence for closing or enforceability, and the recommended fix
- State the status of each issue with a clear severity assessment and keep the memo tied to the source documents rather than general background law
- End the memo with concise recommended next steps directed to the relevant officers or counsel, with timing tied to the signing or closing process
- Before completing the work, ensure the resolution is the primary deliverable and the memo is secondary, and confirm that both intended files are populated with operative text rather than placeholders or summaries