Board Resolution Format For Authorised Signatory And Opening of a Bank Account

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.

Passing of the Board Resolution

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:

• The minimum number of directors must be present in order to constitute a Quorum.
• The resolution has to be passed on the letterhead of the company.
• The company files must contain the said resolution within 30 days of the Board Meeting.
• A chairperson will be appointed for the meeting.

Authorised Signatory and Opening a Bank Account

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.
 

Frequently Asked Questions

Is the board resolution mandatory to open a bank account?

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.
 

Which companies need to pass the board resolution?

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. 
 

When should the board resolution be submitted to the bank?

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.
 

Who should sign the board resolution?

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.
 

Is board resolution a legal document?

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.
 

What is the validity of the board resolution?

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.
 

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

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