Steps to be taken in Opening an Account

1) The Banker should ensure that the company is incorporated by looking into the certificate of incorporation granted by the register of Joint Stock Companies.

2) The banker should obtain copies of Memorandum and Articles of Association and inspect them carefully before he established the relation with the company. The banker should also get it duly certified by the Secretary that the copies are upto-date, since both the clauses in the Memorandum and the Articles can be altered from time to time. Where the Banker gets any doubt he can inspect these documents in the office of the Register of Joint Stock Companies.  He must not the borrowing powers, powers to give guarantees and other securities and the restriction if any on director’s powers to borrow.

3. The banker should also obtain the certificate to commerce business and return the same after recording the particulars. This is the certificate granted by the Registrar certificate that all formalities have been completed by the company and the company is entitled to commerce the business.   

4. The banker should also obtain copies of recent balance Sheet and Profit and Loss Account in the case of an existing company r in the case of a newly formed company  a copy of the Prospectus or a Statement in lieu thereof. If the company is not willing to give the Balance Sheet, adequate details regarding capital, liabilities, assets and statement of business must be sought.

5. In the case of a new Company the banker should scrutinize the Articles to see if the first director and Bankers of the Company are named therein. However it is not common to find these in the articles.

6. The banker should obtain a certified copy of the resolution of the Board appointing him as a banker of the company and usually such resolution embodies explicit instructions as to who shall draw cheque, draw, accept and endorse bills and deal with securities and safe custodies. The bankers should also obtain the specimen signatures of the officers who are authorized by the resolution to operate the account. Such a copy should be signed by the Chairman of the meeting and the Secretary of the Company.