Preparing a Corporate Approval Record for Counsel

What is a corporate approval record?

A corporate approval record connects a proposed or completed decision with the documents relevant to the company’s authority and decision-making process. It may include constitutional documents, notices, papers, resolutions, minutes and related agreements. The appropriate approval route depends on the entity, transaction and applicable requirements. An index of documents helps counsel assess that route; it does not establish that the decision was validly approved.

Start with the decision and the correct entity

Describe the transaction or action, the entity expected to undertake it and the commercial timetable. Identify the people giving instructions and the capacity in which they act. In a group, a decision by one company should not automatically be treated as an approval for another. Prepare a simple entity chart and identify any shareholder, financing or other agreement that the business believes may affect the decision.

Collect the governing and transaction documents

Locate the current memorandum and articles, relevant shareholder arrangements, prior approvals and the proposed transaction papers. Provide complete versions and amendments. Record whether a document is a draft, an executed agreement or a certified record. Counsel should be able to compare the proposed action with the documents actually governing it. An unexplained summary of an earlier approval is not a substitute for the underlying record.

Keep papers, resolutions and minutes distinct

An agenda paper describes a matter for consideration; a proposed resolution records wording put forward for approval; minutes record proceedings. Maintain the distinction in filenames and the document index. Where a record is incomplete or its status is uncertain, explain what is known. The Companies Act contains provisions concerning corporate records and minutes, but the applicable requirements and any additional rules must be checked for the particular decision.

Identify conditions and subsequent actions

An approval may be subject to matters that require further action. Record the responsible person, the supporting document and the current status. Ask counsel which additional approvals, filings, consents or execution steps are relevant rather than converting a generic checklist into a statement of mandatory requirements. Track changes to transaction terms after an approval, as those changes may require the advisers to reconsider the original analysis.

A fictional group-company example

A group plans for one company to provide support in connection with another company’s financing. The instruction should distinguish the borrower, the proposed support provider and the persons expected to sign. The record should include the relevant governing documents and proposed financing terms. A resolution from the borrower’s board does not, merely by being in the same folder, explain the separate company’s decision. No conclusion on the required approvals follows from this example.

Prepare a reliable handover

Use an index with entity, decision, document type, date, status and source location. Preserve the historical record when correcting an administrative description; do not recreate proceedings or backdate a document to fill a gap. Send counsel a clear account of what is missing and what the business needs to decide. The objective is a review based on the actual record and a documented route for resolving outstanding questions.

References

• Companies Act, 2013 — India Code

Related Insights

• Organising Corporate Records for an Advisory Discussion
• Preparing a Confidentiality Agreement for Review