Business Bank Account
Is it legal for one director of a close corporation to strike the signatures from the signatory card of the other two directors of a business checking account
without approval of the board of directors or shareholders of that corporation.(3 shareholder S-Corp)
2 Answers from Attorneys
Re: Business Bank Account
Generally, a bank will require a banking resolution at the time an account is opened. The resolution typically will contain the signatories authorized to sign on the account. A revocation or amendment would normally require a majority vote of the directors, unless a higher percentage is specified in the bylaws. Unilateral action by one director would normally not be valid. Theorizing from the circumstances you describe, the corporation likely has a claim for damages against the director who engaged in the unauthorized conduct, and possibly, the bank.
Business Bank Account Signatories
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Dear LawGuru User:
The documents signed with the bank (resolutions, signature cards), along with the Corporation's bylaws and resolutions (organizational and annual meetings or consents to action) must be reviewed to determine whether what was done is proper and legal. If the signature of any one of the directors was all that was required to make withdrawals, then any one of them can probably alter the account.
You have not provided enough information for me to form a definitive opinion, but I believe an attorney for the person or persons affected by the account change should write the bank, the Corporation and the director who gave new instructions to the bank. If this Corporation has value, then each person with an interest in it should assert their right to protect their share of its value and their power to affect its value.
Thank you for contacting LawGuru.
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