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Resolution authorising MD to sign on behalf of the company

Sumit Jaiswal (Company Secretary) (818 Points)

02 February 2011

A Pvt. Ltd. company (say A) is getting incorporated with authorised share caital of 50000 shares of Rs. 10 each. The three promoters of the company are B (a public Ltd. company) who is subscribing for 25000 shares, M (Managing Director and one of the shareholder of B) who is subscribing for 100 shares and S (son of M and also one of the shareholder of B) who is subscribing for 24900 shares.

Can anyone show me a draft resolution of the board meeting of B authorising M, MD of B, to sign on behalf of the company (i.e. B) in the MOA and AOA of the new company A.

Thanks in advance.

Sumit Jaiswal

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3 Replies

SANTOSH SHAH (Company Secretary) (754 Points)
Replied 03 February 2011

Originally posted by : Sumit Jaiswal
	A Pvt. Ltd. company (say A) is getting incorporated with authorised share caital of 50000 shares of Rs. 10 each. The three promoters of the company are B (a public Ltd. company) who is subscribing for 25000 shares, M (Managing Director and one of the shareholder of B) who is subscribing for 100 shares and S (son of M and also one of the shareholder of B) who is subscribing for 24900 shares. Can anyone show me a draft resolution of the board meeting of B authorising M, MD of B, to sign on behalf of the company (i.e. B) in the MOA and AOA of the new company A. Thanks in advance. Sumit Jaiswal

Hi Sumit

In my Opinion, 'A' pvt ltd is a separate entity, where the 3 promoters are "B" LTD ( A public Co) , MD & His son S.

So the 3 promoters are initial subscribers to A pvt ltd, and sign the MOA & AOA.

As the 'B'ltd ( Public Ltd) is a company cannot sign the MOA/AOA as entity, it has to issue a letter of authority to one of the reprsentative (Authorized Signatory) of 'B' ltd to sign MOA & AOA of 'A' Pvt Ltd.

Also as MD is one of the Promoter ( Initial Subscriber) signing the MOA/AOA, he again signing on behalf of 'B' ltd will not be correct.

I dont think there is any such resolution required , as its new company and promoters are inital subscribers to sign MOA/AOA.

Dear Experts,

Need your advice, on the above.Correct me if i am wrong..

regards

Santosh Shah

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Sumit Jaiswal (Company Secretary) (818 Points)
Replied 05 February 2011

Dear Santosh,

I agree with your view but this same situation has happened before. 2 years ago when a company got incorporated the same B Ltd. and M (its MD) were one of the initial subscriber and promoter of the company and at that time M had signed twice in the MOA and AOA, one in his individual capacity and one on behalf of the company 'B' ltd. That time the ROC did not raise any objection.

I request the experts to give their advise on the given issue, whether this is a good practice or not?

Regards

Sumit Jaiswal

Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 10 February 2011

M in his individual capacity as the promotor of Company A, can sign the MOA/AOA for incorporation of Company A. In addition he can, on being authorised by Company B, sign the MOA/AOA as representative of Company B. There shouldn't be any problem.