Ltd Company and Bank Account questions

The authorisation comes from the Board, either at a Board Meeting, or by written resolution. (Either way, it looks something like: "It was resolved that ________ Bank plc, ________ branch be appointed Bankers of the Company.")

The signatories are set by a similar resolution. If you've a number of directors, it's worth putting in a condition limiting the maximum value of a single-signature transaction, and requiring that the signature of either or both of the Managing Director and Chairman must be present on cheques over a given sum.

Check that there's nothing funky in your Articles of Association that encumbers how bank accounts are managed.

If the Directors so resolve, yes. I'd not recommend it, though; there should be as few signatories as possible, so long as the conduct of normal business isn't impaired. If a shareholder's so influential that the Board believes they should be entitled to sign cheques on behalf of the company, the shareholder probably should be given an honorary non-exec directorship, maybe even remunerated.

For a small company, I'd expect that low-value cheques would need signatures of a Director or the Company Secretary, and high-value ones would need both. An extremely small company (just one Director and a CompSec, with total mutual trust) may just need the one signature.

(Caveat: I'm CEO of a limited company, but I'm not a corporate lawyer. If you need a canonical answer, pay for it! Some of the penalties for maladministration of a limited company can be severe.)

Jon

I have a limited company with an overseas partner. to avoid his own tax authorities caning him in advance for hypothetical directors salary, he is not an officer but only a shareholder. He is on the bank signatory list, together with the officers. The setting up of the account, as you say, must be done by the officers

John

I trust the foreign tax authority does not have the Shadow Director concept?

Ah, but how about a cheque signing machine?

The use of that would, again, have to be authorised by the Board, which would also set the necessary constraints on who could use it, in which circumstances, the amount limits and so forth. I daresay the bank would take a very close interest in how the company used the machine, too.

Jon

Does that mean the director can just write that or does the company secretary have to be involved too?

That's up to the Board, and how they set the conditions. Since the Company Secretary has responsibilities regarding filing accounts with Companies House, personally I'd want the CompSec as a co-signatory on high-value cheques, plus a senior Board member. That way, there's a non-Board person with oversight of large transactions, which has to help lower the risk of directorial fraud.

Jon

Something that's important to note is that a company can kill itself by being too strict on signing conditions. If, for example, the Company Secretary fell ill and wasn't in any fit state to sign, that could bring business to a halt unless there was the option to vary the conditions, for example for the Board to delegate the CompSec's signing authority to a deputy if the CompSec is incapable.

Jon

I my more recent experience, high-value payments have all been wire transfers. Or bankers' drafts. Nobody trusts cheques anymore -- irrespective of the reality -- because of stories, mythical or not, of having cheques bounce weeks and months later for real or imagined fraud. Bankers draughts. Ha ha.