What is it?
A resolution passed by the board of directors of your company (typically your startup’s topco) which approves the entry into of a convertible instrument (e.g. a SAFE, KISS or convertible loan note).
Clara Tip: Check the legal requirements in your topco's jurisdiction and your constitutional documents to ensure that a board resolution is sufficient to approve a convertible (in some circumstances, a shareholder resolution may be required).
What does it do?
Satisfies the requirement of your investor (or accelerator programme) in showing appropriate authority to sign the convertible.
Authorises one or more company signatory to sign the convertible instrument on behalf of the holding company as well as approving any actions such signatories may have already taken (this is called "ratification").
Passes the required authority to allow your holding company to enter into a convertible instrument and to ensure it is properly bound by its terms.
Clara Tip: Ratification means that even if you mistakenly sign the convertible instrument without first being properly authorised to do so by a board resolution, you can still sign this board resolution afterwards to cure any lack of authority (but we would always recommend you try and obtain authority to sign before signing any document).