BR Requirement to Rent Out portion of Building

This query is : Resolved

Vipul Acharya (Querist)
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23 November 2022 We are Pvt Ltd Co. we are going to "Rent Out" a portion of our building, is we need to pass a resolution in the board meeting to do the same.

Kindly advice

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 Yes, as a private limited company, it is advisable and often necessary to pass a resolution in a board meeting to rent out a portion of your building. Here’s why and how you should proceed:

### Reasons for Passing a Resolution:

1. **Legal Compliance:** The decision to rent out property involves significant financial and legal implications for the company. Passing a board resolution ensures that the decision is formally documented and authorized by the board of directors.

2. **Authority Confirmation:** Board resolutions serve as official proof that the board has approved the rental agreement and authorized specific individuals (like directors or officers) to execute the lease on behalf of the company.

3. **Protection of Interests:** Board resolutions help protect the interests of the company and its shareholders by ensuring transparency and accountability in decision-making related to property transactions.

### Procedure to Pass a Board Resolution:

1. **Agenda Setting:**
- Include "Approval for Renting Out a Portion of Building" as an agenda item for the board meeting.

2. **Discussion:**
- Present details of the rental arrangement, including the terms of the lease, rental amount, duration, and any other relevant conditions.

3. **Resolution Drafting:**
- Draft a resolution stating the decision to rent out the portion of the building, specifying the terms discussed during the meeting.

4. **Voting and Approval:**
- Conduct a vote among the directors present at the meeting.
- Obtain a majority vote approving the resolution.

5. **Documentation:**
- Once approved, document the resolution in the minutes of the board meeting. The minutes should accurately reflect the discussion, decision, and voting outcome.

6. **Execution:**
- Authorized officers or directors should sign and execute the lease agreement based on the approved resolution.

### Conclusion:

Passing a board resolution for renting out a portion of your building is not only a good practice but also ensures compliance with legal and corporate governance requirements. It provides clarity and authorization for the company’s decision-making process regarding property transactions. Always ensure to consult with legal and financial advisors if needed to ensure all aspects of the rental transaction are appropriately managed and documented.