The Board Approval of Equity Incentive Plan is one of a group of documents that formally chronicles the approval of a “resolution” by your startup’s board of directors. A resolution is a decision or objective that has been voted on (and was agreed to) by your startup’s board members. The process of formal documentation is generally reserved for important or significant resolutions – examples of this sort are the approval of a Restricted Stock Award, and the issuance of stock options to a given individual. Many less-impactful decisions involving your startup will be discussed and voted on by board members (replacing a non-critical vendor or changing the appearance of your employees’ uniforms might qualify), however – while these should always be recorded – they do not require formal documentation.
A Board Approval of Equity Incentive Plan enables your startup’s board of directors to allocate shares of Common Stock for issuance (via the Equity Incentive Plan), and to ratify the agreements by which those shares may be disbursed. In the Board Approval of Equity Incentive Plan generated by SmackDocs, methods of disbursal include the Option Agreement and the Restricted Stock Purchase Agreement (Exhibits B and C respectively). The stock plan also allows your startup’s board to seek stockholder approval for the issuance of the shares, and to exempt such issuances from the registration requirements of securities laws that apply to publicly-traded equities (if necessary).