Signing Authorities for Getting LOANS

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Abhinav Jain

Manager

93 Points Joined September 2008

Hi,

Please help to solve the position I am facing for my company. (family business).

The company has 5 directors (all related to each other and all are shareholders). (2 directors only when established 12 years ago. 3 more added 2 years ago).

We are in process of taking LOAN from our existing bank as packing credit against mortgage of MIDC property.

The loan is approved by the BANK. All paperworks from their side are ready.

The BANKERS insist that all documents franked and unfranked related to processing of this loan should be signed by all 5 directors.

Now, 1 director is out of town, and we do not know how much time it will take him to return back.

We want to avail the loan immediately now that its sanctioned. Is there any provisions / act by which we can pass a resolution or do something by which the 5th director is not required to sign any document and we can still avail the loan?

If so, please advise what are my options. After signing of the bank documents, a triparty agreement will be made for LEIN of property between the company, bank and midc. In that case also we don't proceedings to be hindered because the 5th director is not here.

Please can anyone guide me?

Thanks very much in advance.

Abhinav

Replies (3)

Avika, ACS

HR Legal and Management Consultant

172 Points Joined August 2008

You can pass a Board Resolution sanctioning the availment of loan from bank as well authorising some specific people (any of the Directors you want) to sign on behalf of the Company for completing the documentations and any other formalities.

The Bank should not have any objection if some of the Directors are signing the documents on the authority of a Board Resolution.

Thanks,

Kind Regards,

Avika Kapoor

Kapgrow Corporate Advisory Services Pvt. Ltd.

New Delhi

avika.kapoor @ kapgrow.com

karn

trainee

172 Points Joined May 2009

Dear Abhinav,

all you need is to pass is a board resoloution for the present time as approving loan facility thing automatically demanda the signing authority details and there is to be resoloution regarding the auth. person to sign shall be made generally any one of directors so i dont think that the suppressal of bank to get the doc. signed by all the 5 dir's shall be there.

regards,

karan gandhi

karangandhii @ gmail.com

Abhinav Jain

Manager

93 Points Joined September 2008

Thank you.

I had given the suggestion of Board Resolution to my bankers 3 days ago but they didn't accept it. Not being from a CA/CS background, I thought maybe I was wrong.

Yesterday, after speaking a bit roughly, the bankers asked their advocates and today morning they gave the same suggestion, i.e., to pass Board Resolution by MD to authorize to sign 2 Directors.

It's very frustrating to deal with bankers who either have lower knowledge or act that way to mold us to do whatever they want.