RE: Legal Opinion regarding opening of current account by Company 1.
We refer to your letter dated August 06, 2007 on the same subject.
From perusal of your letter and the provided documents it appears that Bank 1 have been approached by Company 1(“the Company”) for opening of a Current Account.
Article 49 of the Articles of Association states as follows:
“49. The company shall open Bank Account(s) with any Scheduled Bank(s) and shall operate the same under the single signature of the Managing Director of the Company or any other decision will be taken by the Board of Directors of the Company.”
The Company has submitted a Board Resolution dated 29.04.2007 (“the Board Resolution”). Resolution no. 2 of the Board Resolution states as follows:
“02. Either Mr. x (Managing Director) or Mr. y(Chairman) any one of them can operate the bank accounts, issuing cheque/s, receiving cash and cheques, receiving check books, deposit slips, making deposits, withdrawal any amount of cash with effect from May 12th, 2007. This resolution will override all past verbal or written instructions or letters if any issued by any banks or financial institutes by Avalon Developments Ltd.”
The Company has informed the Bank vide their letter dated August 05, 2007 that Mr. x, Managing Director of the Company has expired on June 20, 2007. A Death Certificate issued by HOSPITAL 1 was also submitted.
The respective shares of Mr. x, Managing Director remains unallocated and the Registrar of Joint Stock Companies and Firms (“RJSC”) have not been notified about the death of the MD yet.
Meanwhile, the Company wishes to open a Current Account with the Bank by relying on the Board Resolution.
In such situation, you have requested our legal opinion regarding whether the Bank may open the Current Account of the Company based on the papers provided.
According to Article 49 of the Articles of Association, bank accounts of the Company can either be operated under the single signature of the Managing Director or by any other person as decided by the Board of Directors of the Company.
The Board of Directors of the Company on 29.04.2007 passed a Board Resolution whereby it was resolved that “Either Mr. x (Managing Director) or Mr. y(Chairman) any one of them can operate the bank accounts…”.
Therefore, by virtue of the Articles of Association and the Board Resolution, Mr. x, Managing Director and Mr. y, Chairman of the Company were authorised to operate the bank accounts of the Company individually.
We are of the opinion that, notwithstanding the fact that, Mr. x, Managing Director of the Company has expired on June 20, 2007, by virtue of the Articles of Association and the Board Resolution, Mr. y, Chairman of the Company has the authority to operate the bank accounts of the Company individually. And the Bank may open the current account by relying on the Board Resolution.
However, we advise the Bank to ensure that, the Company appoints a new Managing Director as soon as possible and the Board of Directors of the Company passes a new board resolution to nominate the authorised signatories, who shall operate bank accounts, as one of the authorised signatories of the previous board resolution has expired.
If you have any further query, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”