Can someone voted off a board of directors still draw funds from the company account?

[Lorrymac]

[Old_Geezer]

I'm no expert but I'd have thought it depended on the circumstances. Aren't non-board members able to draw funds ? Especially in the FInance department ?

[buildersmate]

Draw funds in what way?
If someone is no longer a Director of a company, the company is going to have to advise their bank that the individual is no longer an authorised signatory. Otherwise I don't see how the bank is automatically expected to know. They work off a list of authorised signatories.

[Lorrymac]

We advised the bank, but it's possible that it arrived today. It was posted on Tuesday. However, isn't the ex-director committing theft? Or fraud?

[buildersmate]

Possibly. It depends on what basis and for what purpose the funds have been withdrawn.

[Teleph0ne]

Any employee can have access to company funds for a variety of reasons. If they remove funds for any purpose other than an autherised and legitamate transaction then it is theft and if they know that they shouldnt have access to the funds ie they have been told that their access has been removed then it is fraud as well or possiblt obtaining money by deception

[Lorrymac]

Wages and expenses. Not authorised as far as I'm concerned.

[buildersmate]

........ which is what we were hoping to elucidate from Lorrymac.

[buildersmate]

Wages and expenses up to the date of removal from Office?
Would such a claim not be counter-authorised by a second Director normally?
Starting to sound like fraud.

[Lorrymac]

This person was requesting wages and expenses, but the funds weren't there and the person had not been working anyway, therefore they weren't paid. However that person has called the bank today and asked for a payment to be made into their account.

[fredpuli47]

It's theft if he draws any money when he's not permitted, not authorised, to do so and he knows that.Then he's being dishonest, which is obviously a key ingredient of the offence.Otherwise, in the absence of dishonesty, he's simply done an act of conversion of the money, which is a civil matter (and one in which he has no defence)

[Lorrymac]

We've since spoken to the bank and they've agreed that it's fraud and said they'll take it on. They will have to pursue the ex-director. The call was made today to make the payment, but they've said that they can't recall it. Should we trust the bank?

[joggerjayne]

This is getting very confused.

There is no direct correlation between (1) directorship, and (2) ability to draw on the account.

1. The people who can draw on the account are any people who are named on the bank mandate.

2. Whether or not being a director is a pre-requisite of exercising the mandate is determined by (i) the Articles of Association, and (ii) the director's contract of employment (if there is one).

3. Any person who is entitled to access the account under the bank mandate can still only withdraw funds to which they are entitled.

4. If a director's removal does disqualify him/her from exercising the bank mandate, then a copy of the Board Resolution or the Minutes of the General Meeting should be delivered to the bank immediately. Until the bank receives it, the bank's obligation is to act in accordance with their existing mandate.

[buildersmate]

Put it in writing.
Confirming our conversation earlier this afternoon, you agreed to............

[joggerjayne]

Yes ... as BM suggests.

[Lorrymac]

The bank have confirmed receipt of the form 288b yesterday. it reached the branch today and yet this still happened. I have two issues here: the ex-director has taken funds which they KNEW they were not entitled to - we have exchanged plenty of correpondence about it not being possible, and my second issue is with the bank - how long does it take to act on something??

[Skyline D]

A 288b form is an out of date form for removal of a director under Companies Act 1985. It ceased to be a legal document on 1st October 2009. The correct form now is a TM09.

Even if it had been the correct form I doubt the submission of such (presumably a copy since the original should go to Companies House (who will return it because it's the wrong form)) to the bank has any meaning at all. There will be a bank form to fill in to remove someone from having the authority to move funds. Or they may take a letter from the remaining signatories. Either way, the form isn't terribly relevant unless the account is set up to specify that ONLY directors are signatories whilst in the capacity of a director.

[Skyline D]

EDIT - The correct form now is in fact a TM01. I've no idea where the errant 9 in my previous answer appeared from!

[Lorrymac]

In addition to the 288b we sent the resolutions that were passed at the board meeting which was to vote a director off the board and for them to be removed as an authorised signatory for the bank account. The minutes of the meeting were also sent to the bank. They have admitted that it should have been sorted out. However, tomorrow may be different.

[Skyline D]

Then presumably you should be ok with the bank.

Still need to complete the correct form for Companies House though.

[Lorrymac]

The 288b is the form that we downloaded from Companies House's website. There wasn't another one. The bank has now gone back on what it said last night. £30bn a year in fraud - it's really no wonder.