The Bank Signer Who Never Left: Fixing Stale Authority

The situation

Andre had spent most of his career as a real estate agent, building a client list across the county while his father ran the mechanical contracting company their family had owned for close to thirty years. The business supplied and installed plumbing and heating systems for homes and small commercial buildings across the region, and by the time Andre's father was ready to retire, it was doing between one and five million dollars a year in revenue with a small permanent crew.

The succession plan, as the family understood it, was simple. Andre would take over as majority shareholder because he had the head for the business side, while his brother Donovan — a licensed plumber who had worked in the field for over a decade — would hold a minority stake and keep running day-to-day operations and the crew. Their father transferred the shares, stepped back from the business, and everyone assumed that was that.

What nobody did was walk back through the company's paperwork to see what still needed updating. The share transfer happened. A new share register entry was made. But the corporate minute book — the company's ongoing record of resolutions, share transfers and director appointments required for a company incorporated under the Business Corporations Act (Ontario) — hadn't been touched in years, and neither had the company's banking resolution, the document that tells a bank exactly who is authorized to sign cheques, move money, or open new accounts on the company's behalf.

What the review found

About eight months after the ownership change, Andre came to Treadstone Law for something unrelated — a commercial lease the company was renegotiating for its shop space. During the intake conversation, our team asked a standard question: when was the last time the corporate records had been reviewed as a whole? Andre wasn't sure. He said the transfer from his father had been handled by an accountant at the time, and he'd never seen a formal legal file.

We offered to run a governance review alongside the lease work, and it turned up two problems. First, the minute book had never been updated to reflect Andre and Donovan as the sole directors — their father was still listed as a director of record, years after stepping away. Second, and more urgent, the company's banking resolution — the document on file with its bank naming authorized signers — had never been revised either. It still named their father and a former office manager, Genevieve, who had left the company on strained terms roughly eighteen months earlier after a dispute over her role during the ownership transition.

A banking resolution doesn't expire on its own. Once a bank has one on file, it keeps relying on it until told otherwise — but what the people named on it can actually do is whatever that particular resolution says. Many resolutions authorize signers to run the day-to-day operating account without authorizing them to add new signers or close accounts. Authority under a resolution ends if the company revokes it and notifies the bank in the form the bank requires, or, where the resolution ties authority to a specific office rather than a name, when the person stops holding that office. Genevieve's departure had been handled as an employment matter, but nobody had thought to also treat it as a banking matter. She was gone from the office, but on paper, she still had authority over the company's money.

The risk wasn't hypothetical. Not long after we flagged it, the bank's fraud monitoring team called Andre directly about an inquiry made using Genevieve's name and old credentials, asking about a transfer of company funds to an outside account. It hadn't gone through — the bank's own systems had flagged it for a callback before releasing anything — but it confirmed that the exposure we'd found on paper was a live one, not a theoretical gap.

What we did

1. Reconstructed the corporate record first. Before touching the bank, we brought the minute book current: drafted the resolutions confirming Andre and Donovan as the company's only directors, formalized the earlier share transfer with proper supporting documentation, and updated the share register so the company's own paper matched what had actually happened. Fixing the internal record first mattered, because a bank will only accept a resolution from directors whose own authority is properly documented, and an outdated minute book would have slowed the very fix the company needed most urgently.
2. Drafted a new banking resolution naming only current directors as signers. The new resolution named Andre and Donovan exclusively, expressly revoked all prior signing authority — including the entries for their father and for Genevieve — and set a dollar threshold above which both signatures would be required rather than either director acting alone. Naming everyone being removed individually, rather than simply listing the new signers, closed off any argument that a prior authorization was still technically in force somewhere in the bank's files.
3. Delivered the resolution to the bank directly, in writing, the same week. Banks act on the most recent resolution on file, but only once they receive it. We didn't rely on Andre to hand-carry a document and hope it was processed; we confirmed with the bank's business banking unit that the new resolution had been received, entered, and that every prior signer — named individually — had been removed from the account.
4. Asked the bank to confirm removal in writing. A phone call confirming a change is easy to lose track of later, and bank staff turn over just as often as corporate staff do. We asked for written confirmation that Genevieve and their father were no longer authorized signers on any company account, so the company had its own record independent of the bank's internal systems — something Andre could point to immediately if a dispute over authority ever came up again.
5. Recommended a standing review schedule. Because this gap had sat unnoticed for the better part of a year, we suggested the company treat corporate governance the way it treats equipment maintenance — on a fixed schedule, not only when something else brings a lawyer's attention to it. We recommended reviewing the minute book and banking authority at least once a year, and immediately after any change in ownership, directors, or key staff with financial access, so the next transition gets caught by routine rather than by luck.

The outcome

The new banking resolution was in place within a week of the review confirming the problem. When a second inquiry using Genevieve's old details came in shortly after — this time an attempt to have herself re-added as a signer rather than a transfer — the bank rejected it outright, citing the updated resolution on file and flagging the attempt internally as a second contact from the same individual within a short window. No company funds were ever accessed without authorization, and the company avoided what could have been a far more difficult conversation about tracing and recovering money that had already left the account, and potentially reporting a completed fraud rather than simply logging a rejected inquiry.

Andre and Donovan also came away with a minute book that finally matched reality: a clear record of who owned what, who could act for the company, and when each change had happened. That record mattered again a few months later when the company applied for a small equipment loan — the lender's underwriting team asked for a current minute book and banking resolution as a condition of approval, and the company had them ready rather than needing an emergency legal scramble under a financing deadline.

The broader lesson for the brothers was less about Genevieve specifically and more about how ownership changes ripple outward. A share transfer between family members can feel like an internal matter, settled with a handshake and an accountant's entry. But a company's bank, its landlord, its lenders and its insurers all rely on separate paper trails that don't update themselves. Treadstone Law's role wasn't to uncover wrongdoing — it was to make sure the company's authority on paper matched who was actually running it, before that gap became someone else's opportunity.

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