Board Resolutions
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.