Legal Opinion regarding operation of bank account A/c Company 1.

Mr. Z

Address….

Dear Sirs,

Re:      Legal Opinion regarding operation of bank account A/c Company 1.

We refer to your letter no. ……………….. dated 17 July 2007 on the above subject.

From perusal of your letter it appears that Company 1. (“Company 1”) has been maintaining current deposit account with Bank 1 (“the Bank”).

As per the Articles of Association of Company 1, the Bank account(s) would be operated under the signature of the Managing Director of Company 1 with the approval of the board.

At present, Mr. x, Managing Director of Company 1 is under the custody of the Police and is not able to operate the Bank Account(s) of Company 1.

The Board of Directors of Company 1 at their meeting held on 30.06.2007 has taken the decision that the Bank Account(s) would be operated under the signature of either Mr. x or by Mr. y, i.e. the Bank Account(s) would be operated singly by either of them.

In these circumstances, you have asked our legal opinion regarding the operation of Bank Account(s) of Company 1 under the present situation.

OUR OPINION:

Article 56 of the Articles of Association of Company 1 states as follows:

“56)     The Company shall open Bank Account(s) with any schedule Bank(s) Foreign Bank(s), Private Bank(s), Commercial Bank(s) as the Board of Directors shall think expedient and the cheques shall be signed and the persons shall operate the account(s) under the signature of Managing Director of the Company with approval of the Board.”

In light of the above provisions of the Articles of Association of Company 1, the Bank Account(s) of Company 1 can only be operated under the signature of the Managing Director with approval of the Board.

It appears from the minutes of the meeting of the Board of Directors held on 30 June 2007 that the Board of Directors of Company 1 have passed a resolution to the effect that the Bank Account(s) would be operated under the signature of either Mr. Mr. x or by Mr. y. The said resolution is not in conformity with the Article 56 of the Articles of Association of Company 1 and as such the Bank cannot allow operation of the Account in accordance with the said resolution without necessary amendment of Article 56.

However, Article 52 of the Articles of Association of the Company states as follows:

“52)     The Managing Director subject to the provision of the Companies Act, may in writing delegate all or any of his powers to any Director, to any Manager or to any responsible officer of the Company subject to the approval of the Board.”

In light of the above provisions of the Articles of Association of Company 1, Bank Account(s) may be operated under the signature of any Director or Manager or any responsible officer of Company 1, provided Mr. Mr. x, Managing Director, delegates his Account Operating power in writing in favour of that person and such delegation has been approved by the Board of Directors of Company 1.

If you have any further query, please do not hesitate to contact us.

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists”

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