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new business bank account.. strange clause

  • 24-08-2011 11:39pm
    #1
    LH2011
    Closed Accounts Posts: 206 ✭✭


    looking at a new business bank account application form with a main bank, account form is for a ltd company a/c and it seems that they have worded in a personal guarantee clause into the application form...

    it reads

    " i / we hereby agree to hold ourselves severally as well as jointly liable for all monies due and liabilities incurred under the above authorisation in any manner what so ever. furthermore we hereby agree that this mandate shall remain in full force and effect until an ammending mandate shall be communicated to you under joint signatures"..


    seems strange...


Comments

  • #2
    martinn123
    Registered Users, Registered Users 2 Posts: 2,300 ✭✭✭martinn123


    Not really, the Banks have a blinkered, and dogmatic attitude to Personal Guarantees, and insist in them in all cases, in my experience.

    I know this flies in the face of the practicality of establishing a Ltd Co, which should shelter the shareholders, from liability in excess of the value of their shareholding.

    So other creditors who you may deal with accept the status of their exposure, but not the Banks.

    I suppose when we see what happened in Construction, and how NAMA is persuing Directors on foot of Guarantees, its not a surprise.

    In the event that your Ltd Co does not require credit from the Bank, you may be able to discuss this clause with the Bank, but it may result in a refusal to open an account, as they will cite, uncleared funds from cheques, and any exposure through Credit Card transactions as a reason to rely on your Guarantee.

    Afraid it is the norm in Banking.


  • #3
    Bandara
    Registered Users, Registered Users 2 Posts: 3,282 ✭✭✭Bandara


    Bog standard


  • #4
    Hootanany
    Registered Users, Registered Users 2 Posts: 5,477 ✭✭✭Hootanany


    Really even if you don't seek credit from them.:eek:


  • #5
    scwazrh
    Registered Users, Registered Users 2 Posts: 2,796 ✭✭✭scwazrh


    martinn123 wrote: »
    In the event that your Ltd Co does not require credit from the Bank, you may be able to discuss this clause with the Bank, but it may result in a refusal to open an account, as they will cite, uncleared funds from cheques, and any exposure through Credit Card transactions as a reason to rely on your Guarantee.

    Does this mean that if you have a limited company credit card that you automatically give a personal guarantee on the card ?


  • #6
    maxer68
    Closed Accounts Posts: 1,076 ✭✭✭maxer68


    Hootanany wrote: »
    Really even if you don't seek credit from them.:eek:

    yep - as it would allow for the manager to pay something if there was a shortage of funds in the account or if you sunndenly had an unexpected cheque returned or if you close your account and still have charges to pay.

    without it, the bank woudl offer no leeway whatsoever.

    if you have no credit from them, then the clause is really of no importance.


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