RE: Legal Opinion regarding the closing of account of Company 1.
We refer to your e-mail dated 17 October 2006 on the same subject.
From perusal of your e-mail and the attached documents it appears that Company 1 (“COMPANY 1”) have been holding an account being no. 004-105540-011 with the Bank 1 (“BANK 1”). COMPANY 1 has not been maintaining a satisfactory account balance and BANK 1 now wishes to close the account. BANK 1 by a letter dated 03 October 2006 informed COMPANY 1 that BANK 1 for business reasons were no longer able to provide banking services to COMPANY 1 and requested COMPANY 1 to arrange to close the said account by 05 October 2006 or alternatively BANK 1 shall close the account on 05 October 2006 and will send a Cashier’s Order to COMPANY 1’s address for the remaining balance in the account. COMPANY 1 were also asked to return their unused chequebook.
On 04 October 2006, the legal advisor of COMPANY 1 gave reply to BANK 1’s letter asking BANK 1 to take back their letter. It was also conceded in that letter that if COMPANY 1 did any anti banking activities, COMPANY 1 would close the account as soon as possible but not within 05 October 2006.
COMPANY 1 by their letter dated 14 October 2006 informed BANK 1 that as the account in BANK 1, Chittagong Branch was opened by the decision of their general body, they will place BANK 1’s request to close the account in their next Annual general Meeting and inform BANK 1 of the decision of the meeting.
In these circumstances, you require our legal opinion regarding whether there are any legal reasons that would stop BANK 1 from closing the account and whether there are any standard notice period that has to be given for the closure of such an account.
The opening, the operation and the termination of a bank account depend on the contract between the bank and the customer. The terms and conditions of this contract are contained in the form filled up by the customer for opening the account and among these terms there is usually a term that stipulates in what situations the bank may close/terminate the account. It is our opinion that you should consult the terms and conditions of the contract to see whether there is a term that allows BANK 1 to close the account when COMPANY 1 has not been maintaining a satisfactory balance in the account. If there is such a term in the contract then BANK 1 could legally close the account. If there were any specific notice period mentioned in the terms of the contract then BANK 1 would have to give that period of notice but if there are no such requirements then BANK 1 should give a reasonable period of notice.
BANK 1 has already sent a letter dated 03 October 2006 to inform COMPANY 1 that BANK 1 for business reasons were no longer able to provide banking services to COMPANY 1 and requested COMPANY 1 to arrange to close the said account by 05 October 2006 or alternatively BANK 1 shall close the account on 05 October 2006.
Now BANK 1 should give a final written notice to COMPANY 1 asking them to close the account within the notice period specified in the terms of the contract and if there is no such notice requirement in the contract then BANK 1 should give a reasonable period of notice, minimum 15 days. If COMPANY 1 does not comply with the request, BANK 1 may close the account and send the outstanding credit balance to COMPANY 1 by way of a bank draft.
But please consult your terms and conditions.
If you have any further query, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”