Businesses need flexibility at all times. Particularly when it comes to money. Opening a current account in the name of the company is one of the first procedures conducted after establishing a private limited company.
For this reason, a regular bank savings account cannot be used by businesses. This is because regular accounts have several transaction limits. Current account, on the other hand, have no transaction limits. All entrepreneurs open current accounts as soon as they start their business. Current accounts also do not earn any interest, unlike a savings account, recurring deposits, etc, and the charges for the same tend to be high. In this article, we look at the procedure for opening a current account and the documents required as a private limited company.
Documents for Opening a Current Account
As compared to the difficulties a sole proprietor would go through, a private limited company has it easy. As per Reserve Bank of India’s KYC norms, the following are the documents required to open a current account in the name of the company:
- Certificate of incorporation
- Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account
- Power of Attorney granted to its managers, officers or employees to transact business on its behalf (if applicable)
- Copy of PAN allotment letter
- Copy of the telephone bill
- Shops & Establishment Act Registration.
The following documents, however, may be required to be presented to your bank:
- Memorandum of Association (MOA) & Articles of Association (AOA)
- Latest list of directors as per the bank’s format
- Identity proof of all directors/authorized signatories
- PAN card of directors
- Shareholding pattern of the company as per the bank’s format.
Along with a current account, banks typically also offer debit cards, mobile banking and net banking facilities, as they do with savings accounts. A current account takes just a couple of days to open, provided you have all the documents ready and you’re creditworthy.
The most significant advantage of a current account is the easy access to an overdraft. A short-term loan on which a bank may or may not charge interest is known as an overdraft. Normal bank accounts, of course, do not provide this service (think of it as a credit card attached to a bank account).
Separate Professional & Personal
Even sole owners use current accounts, which are used by registered businesses such as private limited companies. This is because it helps them to keep their personal and company finances separate. This is also advantageous from a tax standpoint. Furthermore, because the account would be in the company’s name, it adds to the operation’s credibility.
Board Resolution Format for Opening Company Current Account
The following format can be used to create a board resolution for opening a private limited company’s current account.
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF (COMPANY NAME) HELD AT THE REGISTERED OFFICE OF THE COMPANY AT (ADDRESS) ON (DATE) AT (TIME)
A proposal to open a current account with the (Bank Name and Address) was placed before the Board for conducting its day-to-day financial transactions. After discussions, the Board unanimously:
“RESOLVED THAT Current Account in the name & style of ‘(COMPANY NAME)’ be opened with the (Bank Name and Address), for the operations of the activities of the Company and that the following Authorized Signatory(ies) of the Company be and are hereby authorized to open and operate the said account:
“RESOLVED FURTHER THAT the aforesaid power entrusted to the said official shall be valid and effective unless revoked earlier by the Board or shall be exercisable by him so long as he is in the concerned to the Company.”
“RESOLVED FURTHER THAT all acts, deeds, things, matters, etc. as aforestated shall be deemed to be valid and enforceable only if they are consistent with the instant resolution as may be relevant in this case and that the Board shall not be responsible for any acts beyond the scope of the aforestated powers done by (Name of the authorized person(s) and such invalid, illegal acts, and acts done beyond the scope of powers granted in this Resolution shall not bind the Company against any third parties or before any authorities in any manner and that the Board shall not be answerable in that behalf.”
“RESOLVED FURTHER THAT a certified copy of the resolution be given to anyone concerned or interested in the matter.”
For (COMPANY NAME)