Resolution for Authorisation for Car Finance
Use a clear company board resolution to approve the vehicle loan, name the signatory, create hypothecation and complete lender, RTO and ROC requirements.
What should the resolution approve?
A company car finance resolution should approve the borrowing limit, lender, vehicle purchase, hypothecation and repayment arrangements. It should also name the person who may sign the application, sanction letter, loan and RTO documents. The final copy must agree with the company's legal name, sanction terms and applicable Board or shareholder limits.
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When is a car finance board resolution needed?
Use the resolution when a company will buy or refinance a car in its own name and borrow from a bank, NBFC or vehicle financier. The lender needs evidence that the company approved both the debt and the person signing for it.
The resolution is not merely an authority letter. It records the Board's decision to borrow, approves the asset and security, and gives defined signing powers. An authority letter can be issued after the resolution, but it should not invent powers that the Board never approved.
Before sanction
Some lenders request a proposed resolution with the application. Keep the amount and terms within a clear maximum so the final sanction can be accepted without contradicting the Board approval.
After sanction
Where the final lender, amount and vehicle are known, the resolution can approve the precise transaction and authorise execution of the sanction letter, loan agreement and hypothecation papers.
Board resolution for authorisation for car finance
Replace every highlighted placeholder. Delete powers the lender does not require and add any lender-specific wording only after checking that it matches the sanction and the company's constitutional documents.
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF [COMPANY LEGAL NAME] HELD ON [DATE] AT [TIME] AT [VENUE / THROUGH VIDEO CONFERENCING]
"RESOLVED THAT pursuant to Section 179(3)(d) and other applicable provisions of the Companies Act, 2013, the Articles of Association of the Company and subject to any approval required under Section 180(1)(c), consent of the Board be and is hereby accorded to avail a vehicle finance / term loan facility not exceeding INR [AMOUNT] from [FULL NAME OF BANK / NBFC / FINANCIER] for purchase of [VEHICLE MAKE, MODEL AND VARIANT OR APPROVED VEHICLE CATEGORY] in the name of the Company, on the terms contained in the sanction letter and finance documents placed before the meeting.
RESOLVED FURTHER THAT the Board approves payment of the Company's margin contribution, processing fees, insurance, registration charges and other approved acquisition costs, and authorises repayment of the facility through the Company's designated bank account in accordance with the agreed repayment schedule.
RESOLVED FURTHER THAT the vehicle financed under the facility be hypothecated in favour of [LENDER NAME] as security for the facility and that the lender's interest be recorded in the registration certificate and other records as required.
RESOLVED FURTHER THAT Mr./Ms. [NAME], [DESIGNATION], DIN [IF DIRECTOR] be and is hereby authorised [SEVERALLY / JOINTLY] on behalf of the Company to negotiate and accept the finance terms within the approved limit; sign and submit the application, sanction acceptance, loan agreement, deed of hypothecation, declarations, undertakings, NACH or standing instructions, insurance papers, invoices, Form 20, Form 34 and other lender or vehicle-registration documents; and provide certified corporate and KYC records.
RESOLVED FURTHER THAT the authorised person be and is hereby empowered to complete charge-registration and other statutory filings where applicable, respond to lawful lender or authority requirements, make corrections that do not change the approved commercial limit, and do all acts necessary to give effect to this resolution.
RESOLVED FURTHER THAT a certified true copy of this resolution be furnished to the lender, dealer, insurer, registering authority and any other person requiring the same, and that each may act upon it until written notice of modification or withdrawal is received from the Company."
For [COMPANY LEGAL NAME]
________________________
Name: [NAME]
Designation: [DIRECTOR / COMPANY SECRETARY]
DIN / Membership No.: [DETAIL]
Date: [DATE]
Place: [PLACE]
Company seal, if adopted and required
Drafting note: This is a general company format, not a substitute for the lender's prescribed resolution. Remove Section 180 wording if it is not relevant, and do not certify the extract until the resolution has actually been passed and entered in the minutes.
Details the resolution should capture
A lender can reject a technically valid resolution when names, figures or authority clauses do not match the application and sanction letter.
| Field | What to enter | Drafting control |
|---|---|---|
| Company identity | Exact legal name, CIN and registered office where the lender asks for them. | Use the incorporation and MCA master-data spelling, not only the trade name. |
| Lender | Full legal name of the bank, NBFC or financier. | Avoid using only a brand or branch nickname. |
| Finance amount | Exact sanction or a clearly stated maximum amount. | Include processing and ancillary finance only when the sanction does. |
| Vehicle | Make, model and variant, or an approved category within a maximum cost. | Add chassis or engine details only after they are available and verified. |
| Security | Vehicle hypothecation and any additional security actually required. | Do not authorise an all-assets charge when only the car is intended. |
| Repayment | Tenure, instalment route and company bank account authority. | The final mandate must match the company account and authorised banking powers. |
| Signatory | Name, designation and individual or joint authority. | Match the lender KYC and current Board or employment status. |
| Validity | Whether authority continues until withdrawal or only for this transaction. | Use transaction-specific authority for better control. |
Legal basis for the resolution
The car purchase and the borrowing are connected but distinct decisions. The minutes should show that the Board considered the asset, the debt and the security rather than authorising a signature in isolation.
- Section 179(3)(d): borrowing money is a Board power exercised through a resolution passed at a Board meeting.
- Delegation: the Board may delegate borrowing powers within specified conditions to a committee, managing director, manager or principal officer. Signing authority should still be precise.
- Section 180(1)(c): where applicable, member approval by special resolution is required if aggregate borrowing crosses the statutory threshold.
- Section 77: a charge created over the company vehicle should be assessed for registration with the Registrar, generally within 30 days.
- Section 117: MGT-14 filing may apply to the Board resolution or any special resolution, subject to the company's category and available exemption.
- Sections 173 and 174: the meeting needs proper notice and quorum unless a specific statutory exception applies.
Check the borrowing position before signing
A short review of existing loans, annual filings and lender security can prevent a defective resolution or missed ROC filing.
Is a Board resolution enough?
For many private-company car loans, a properly passed Board resolution is the central approval. The conclusion changes with company type, borrowing totals, filing status and the articles.
| Entity / situation | Usual approval route | Important check |
|---|---|---|
| Eligible private limited company | Board resolution under Section 179. | The private-company exemption from Section 180 is subject to current eligibility and absence of specified annual-filing defaults. |
| Public company within borrowing limit | Board resolution under Section 179. | Calculate existing plus proposed borrowing against the Section 180 threshold. |
| Public company above borrowing limit | Special resolution setting the overall borrowing ceiling, followed by transaction approval. | The member resolution must state the total amount up to which the Board may borrow. |
| Private company unable to rely on exemption | Board resolution plus member approval where Section 180 conditions are triggered. | Check AOC-4 and annual-return filing status before assuming the exemption. |
| OPC with one director | Decision entered in the minute book using the OPC procedure. | Adapt the certified extract to the lender's format; do not create a fictional Board meeting. |
| LLP or partnership | Designated-partner or partner consent under the governing agreement. | This Companies Act Board resolution should not be reused unchanged. |
Who should be authorised for the car loan?
Choose someone who can complete the transaction from application through registration and who already has a clear role within the company.
Common choices
A director, managing director, company secretary, CFO or another principal officer is commonly named. The lender may insist on a director or a person appearing in its KYC and banking records.
Individual or joint authority
State whether the person may sign alone or only with another authorised person. Silence can create practical uncertainty at the lender, dealer or RTO.
The authority should distinguish company execution from personal commitment. A director signing "for and on behalf of" the company does not automatically give a personal guarantee. If the lender requires a personal guarantee, it should be identified and executed separately after informed approval.
Documents commonly requested with the resolution
The exact list varies by lender, loan size and company profile. Give current records and keep the same legal name and address across every document.
- Certified true copy of the Board resolution and, where applicable, the member resolution.
- Certificate of incorporation, memorandum and articles of association.
- Company PAN, registered-office proof and current MCA master data.
- KYC of authorised signatories, directors and beneficial owners requested by the lender.
- Latest audited financial statements, bank statements and income-tax returns.
- Vehicle quotation or pro forma invoice issued in the company's legal name.
- Sanction letter, loan application and existing borrowing schedule.
- Bank mandate, cancelled cheque and proof of authorised banking signatories.
- Insurance proposal and RTO forms, including hypothecation papers where required.
How to approve and execute the car finance
Collect terms
Place the vehicle quotation, lender proposal, finance amount, tenure, pricing and security before the Board.
Check authority
Review the articles, existing borrowing, member-approved ceiling, annual filings and conflicts of interest.
Call the meeting
Give the required Board notice, circulate the agenda and supporting papers, and confirm quorum.
Pass and minute
Approve the borrowing, purchase, hypothecation, repayment account and signatory limits.
Execute documents
Issue the certified copy and sign the sanction, agreement, mandate, insurance and RTO forms.
Complete filings
Record hypothecation, register the charge and file resolutions where applicable; preserve acknowledgements.
Form 34, CHG-1 and MGT-14 after approval
These documents serve different authorities. Completing the dealer or RTO process does not automatically complete the company's ROC obligations.
| Document | Purpose | Usual timing / control |
|---|---|---|
| Form 34 | Requests entry of the hire-purchase, lease or hypothecation agreement in vehicle-registration records. It is signed by the registered owner and financier. | Used for the applicable RTO or VAHAN hypothecation process with the registration documents. |
| CHG-1 | Registers creation or modification of a company charge other than one relating to debentures. | Section 77 starts with a 30-day registration period from creation of charge; delayed routes involve additional requirements and fees. |
| MGT-14 | Files specified resolutions and agreements with the Registrar of Companies. | Assess the Section 179 Board resolution, company-category exemption and any special resolution. The statutory period is generally 30 days where filing applies. |
| Certified true copy | Evidence to the lender, dealer, insurer or RTO that the approval was passed. | Issue only after the resolution is passed and properly entered in the minutes. |
Use the date the security interest is legally created under the executed finance documents when assessing CHG-1. Do not assume that the vehicle-delivery date, first EMI date or RTO endorsement date is always the charge-creation date.
Board meeting, minutes and certified true copy
The signed extract given to the lender must be supported by a real corporate decision and minute-book entry.
Notice and quorum
Section 173 generally requires at least seven days' written notice to each director, subject to the urgent-business procedure. Section 174 generally requires one-third of total strength or two directors, whichever is higher.
Minutes and certification
Record the papers considered, interested-director position, decision and authority granted. The certified copy should be signed by a person permitted to certify company records.
- Use the actual meeting date, time, place or electronic mode and resolution number.
- Keep the lender sanction and vehicle quotation with the agenda papers.
- Record any disclosure of interest and how the quorum was determined.
- Do not backdate the resolution to match a loan application or dealer invoice.
- Preserve the signed certified copy and proof of every lender, RTO and ROC submission.
Common drafting mistakes
Wrong company name
The resolution uses a brand name while the invoice, loan and RC use the incorporated legal name.
No maximum amount
The Board gives unlimited authority or approves less than the final facility and financed charges.
Missing hypothecation
The borrowing is approved but the resolution never authorises security over the vehicle.
Vague signatory power
The lender cannot tell whether the person may sign alone, accept revised terms or issue mandates.
Conflicting lender details
The resolution names a different lender, branch or amount from the sanction and loan agreement.
Ignoring borrowing limits
Existing loans are not counted before deciding whether member approval is required.
Missing charge filing
RTO hypothecation is completed, but CHG-1 applicability is never checked.
False certification
A draft is stamped as a certified true copy before the Board actually passes it.
Useful resolution variations
| Situation | How to adapt the resolution | Do not overlook |
|---|---|---|
| Vehicle not selected | Approve a vehicle category and maximum on-road cost or finance amount. | Final invoice and asset record must identify the chosen car. |
| Loan already sanctioned | Refer to the sanction letter date and approve acceptance of its terms. | Check whether security or guarantee exceeds the original application. |
| Multiple signatories | State "jointly" or "any two jointly" and name each person. | Use the same signing combination in all lender and bank mandates. |
| Existing company car refinanced | Identify the registration number, existing charge and refinance purpose. | Check prior-lender NOC, charge satisfaction and new charge creation. |
| Director also guarantees | Keep company authority and personal guarantee as separate approvals and documents. | Disclosure, interest and personal-capacity signatures. |
| Commercial or transport vehicle | Add permit, fitness, route, insurance and operational approvals as relevant. | State transport requirements beyond ordinary private-car registration. |
Car finance board resolution FAQs
Is a board resolution required for car finance in a company name?
A company borrowing money for a vehicle should approve the facility through its Board. Section 179(3)(d) identifies borrowing money as a power exercised by a resolution passed at a Board meeting.
What should a car finance board resolution contain?
Identify the lender, maximum amount, vehicle or purchase limit, hypothecation, repayment authority, authorised signatory, documents the person may execute and RTO or ROC formalities.
Can the car model be left blank in the resolution?
If the vehicle is not finalised, approve a vehicle category and maximum purchase or finance amount. The final invoice, sanction and asset records should identify the selected vehicle.
Who can sign the company car loan documents?
Name an appropriate director, managing director, company secretary, CFO or principal officer and state clearly whether that person acts individually or jointly.
Is shareholder approval required for the car loan?
For a company to which Section 180 applies, a special resolution is needed when aggregate borrowing crosses the statutory threshold. Eligible private companies may have an exemption, subject to current conditions and filing status.
Is MGT-14 required for the Board resolution?
A Section 179(3) Board resolution is ordinarily within Section 117. An eligible private company may use the applicable exemption where its annual filings are not in default. Special resolutions are separately assessed.
Is CHG-1 required for a financed company car?
Where finance documents create a charge or hypothecation over a company vehicle, charge registration under Section 77 should be assessed and is generally filed through CHG-1 within 30 days.
Are Form 34 and CHG-1 the same?
No. Form 34 records hypothecation in the vehicle-registration system. CHG-1 registers a company charge with the Registrar of Companies.
Can an OPC use this format?
An OPC with one director records the decision in its minute book under the OPC procedure. A certified extract can then be adapted to the lender's requirements.
Can an LLP use this Board resolution?
No. An LLP should use designated-partner consent or a resolution under its LLP agreement because it does not have a Board under the Companies Act.
Does signing the resolution make a director personally liable?
No, not by itself. Personal liability can arise if the director separately signs a personal guarantee, indemnity or another document in an individual capacity.
Should the exact interest rate and EMI be written?
You may state the sanctioned terms or approve a maximum amount and authorise acceptance within defined limits. Avoid figures that conflict with the final sanction letter.
Rules checked for this guide
The legal and filing notes were checked against official sources available on 8 August 2026. Lender formats, state registration practice and company facts can change the final document.
Have the resolution checked before the lender signs off
Share the company type, lender sanction, vehicle quotation, existing borrowing and proposed signatory. companyji can review the approval route, resolution, certified copy and post-finance filings.