Legal Opinion regarding operation of CA No. 8913 A/C Company 1.

Mr. Z

Address….

Dear Sirs,

RE:     Legal Opinion regarding operation of CA No. 8913 A/C Company 1.

We refer to your letter no. ……………. dated 23 October, 2007 and ……………………dated 28 October, 2007 on the above subject.

From perusal of your letter, it appears that, the Board of Directors of Company 1 (“the Company”), at different times, has passed the following resolutions relating to the appointment of authorised signatories for operating the CA No. 8913 (“the Account”) maintained with Bank1(“Bank1”):

1.      Board Resolution dated 26-12-06

2.      Board Resolution dated 20-05-07

3.      Board Resolution dated 01-08-07

4.      Board Resolution dated 15-08-07 and

5.      Board Resolution dated 20.08.07

You have requested us to give our legal opinion as to whether the Bank may allow operation in the Account with the signatures of the persons authorised through any of the above Board Resolutions.

OUR OPINION:

Generally, prior to opening an account for a company, a bank will be require to reviewing the memorandum and articles of association of the applicant and a copy of the resolution of the board of directors duly “certified by the chairman or secretary or any other principal officer of the company” to ascertain the authorization of account opening and operations of such account.

The Company opened the Account with the Bank in 1999 and vide various resolutions of the Board of Directors changed the authorised signatories who may operate the Account from time to time.

On 26 December 2006, the Board of Directors passed a resolution, whereby certain persons were appointed as the authorised signatories of the Account. Bank1 by relying on this resolution has allowed operation in the Account through such appointed authorised signatories.

Subsequently, dispute arose between Mr. x and Mr. y, the Directors of the Company and Mr. A, Chairman of the Company regarding the operation of the Account. Mr. x and Mr. y with others purportedly passed four resolutions of the Board of Directors of the Company whereby the powers of the old authorised signatories were revoked and new authorised signatories were appointed.

To clarify the situation, Bank1 had obtained the latest FORM XII (28 December 2005) and SCHEDULE – X (28 December 2005) of the Company from the Register of Joint Stock Companies and Firm (“RJSC”) and has come to know that as on 28 December 2005 the Company had only 2 (two) Directors – Mr. x and Mr. y.

According to Article 36 of the Articles of Association of the Company, 3 (three) directors present in person shall form the quorum for the meeting of Board of Directors of the Company.

Therefore, unless further directors were appointed at a later date, the Company does not have enough directors to satisfy the required quorum under Article 36 of the Articles of Association of the Company. And apparently the Company did have the necessary quorum in the meeting held on 26 December 2006 or any other subsequent Board Meeting.

However, as the minutes of the Board Meeting dated 26 December 2006 purported to be signed by the Chairman, the said minutes was receivable by Bank1 as prima facie evidence of the matters stated in such minute. There had been no cause at the time to doubt the genuineness, correctness and authenticity of the resolution. Therefore, regarding the operation after 26 December 2006, Bank1 may not be held liable by the Company and/or its directors. Bank1 has no duty to inquire whether the directors have been property appointed or not and Bank1 cannot be held liable for the internal irregularities of the Company.

Therefore, we are of the opinion that, under the present situation taking into consideration the internal disputes of the Company, the Bank may not allow operation in the Account with the signatures of the persons authorised through any of the above Board Resolutions. The Bank may advise the client to resolve their internal disputes and come back with a valid resolution of the Board of Directors which appoints the authorised signatories of the Account.

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

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists”

Disclaimer:

The information contains in this web-site is prepared for educational purpose. This site may be used by the students, faculties, independent learners and the learned advocates of all over the world. Researchers all over the world have the access to upload their writes up in this site. In consideration of the people’s participation in the Web Page, the individual, group, organization, business, spectator, or other, does hereby release and forever discharge the Lawyers & Jurists, and its officers, board, and employees, jointly and severally from any and all actions, causes of actions, claims and demands for, upon or by reason of any damage, loss or injury, which hereafter may be sustained by participating their work in the Web Page. This release extends and applies to, and also covers and includes, all unknown, unforeseen, unanticipated and unsuspected injuries, damages, loss and liability and the consequences thereof, as well as those now disclosed and known to exist.  The provisions of any state’s law providing substance that releases shall not extend to claims, demands, injuries, or damages which are known or unsuspected to exist at this time, to the person executing such release, are hereby expressly waived. However the Lawyers & Jurists makes no warranty expressed or implied or assumes any legal liability or responsibility for the accuracy, completeness or usefulness of any information, apparatus, product or process disclosed or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product process or service by trade name, trade mark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation or favouring by the Lawyers & Jurists. The views and opinions of the authors expressed in the Web site do not necessarily state or reflect those of the Lawyers & Jurists. Above all, if there is any complaint drop by any independent user to the admin for any contents of this site, the Lawyers & Jurists would remove this immediately from its site.