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Managing a company and its affairs is probably one of the hardest things to do. Based on the size and nature of a company, one single decision could impact the entire organisation in several ways, positively or negatively, based on how that particular decision pans out. This is why the shareholders of the company appoint directors (who constitute the Board) to look after and supervise the day to day operations and make relevant decisions as and when required. These decisions are made by passing board resolutions where the relevant issues are brought up during a Board Meeting, and based on the votes; the resolutions are passed.
A Board resolution merely certifies and documents a particular decision taken by the Board of Directors of a company. All the relevant decisions made by the Board are documented by the passing of the resolution for the same. However, for the passing of a particular resolution to stand valid, there are certain prerequisites that need to be satisfied:
A distinct feature of companies is the fact that they operate as a separate legal entity in the eyes of the law. This means that the company can hold property in its own name. In light of this, the bank account of the company is usually opened in the name of the company itself. However, in order to carry on the regular functioning of this bank account, at least one authorised signatory needs to be appointed.
The person appointed as the authorised signatory will require his signature to be provided for any bank-related work with regard to the company account moving forward.
Yes. A resolution is the simplest way for a company to authorise the opening of a company bank account. It is required to prove to the financial institutions that the person applying for an account opening is authorised to act on behalf of the company to do such an act.
The board resolution for opening a bank account can be used for opening the bank account of a private limited company, public limited company, Section 8 company or one person company.
Once the board resolution for opening a bank account is created, it must be printed on the letterhead of the business. It must be signed by the directors and the authorised signatories and provided to the bank in which the account is to be opened. One copy of the board resolution can be retained with the company while the original is to be provided to the bank for opening the account for the company.
It must be signed by two directors with the rubber seal/stamp of the company with a quorum at a Board Meeting. In the case of a one person company, the board resolution for the opening of a bank account can be signed by the sole director and shareholders.
Yes, the board resolution for opening a bank account is a formal and legal document binding on the company. The Board is not responsible for any acts done by the authorised signatory that is beyond the scope of the powers granted under the resolution. Any illegal, invalid acts and acts done beyond the scope of powers granted in the resolution will not bind the company against any third parties or before any authorities.
The board resolution for opening a bank account will be valid and effective until it is revoked by the Board. It will be valid until duly rescinded by the Board and a notice in writing is given to the bank of such revocation by the directors of the company.
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