Bank entitled to take company document at face value

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Bank entitled to take company document at face value

Categories:

Account mandates,

Summary:

Jack was removed as managing director of two companies and his account operating authority for the companies’ bank accounts was withdrawn. However, the bank relied on a resolution in the minutes of a board meeting – rather than a properly executed shareholders' meeting – to withdraw Jack’s ability to use the companies’ bank accounts.

Published:

April 2022

Jack objected and two months later he was reinstated as a director. Six weeks after that, a new account operating authority was put into effect. Jack complained that the bank acted unreasonably by relying on the minutes of the 2019 meeting, and that the bank should have made further enquiries to ensure the minutes were valid before acting.

Our investigation

We found the document presented to the bank contained nothing on face value to indicate or suggest it was anything other than the minutes of a properly executed shareholder's meeting. We considered the bank was entitled to rely on this document, which a company director with the usual authority to issue such a document had presented, and it was not therefore obliged to check its accuracy before acting on it.