Companies, being artificial persons, act through their directors and other authorised individuals. Instituting legal proceedings in court is one of the decisions that have to be made by authorised individuals. Several courts’ decisions have made it clear that before a company files a lawsuit, there should be a board resolution which empowers the relevant officers to file the suit and take necessary action in prosecuting it. Any action carried out for and on behalf of the company has to be authorised. In some instances, the court has held that a board resolution should be annexed to the pleadings as proof that the act of filing the case was properly authorised by the company:

Companies have been facing serious challenges when initiating legal proceedings without attaching a board resolution, which authorises the company to take such action and, in some instances, cases have been struck out on the reason that there was no board resolution presented at the time of filing the matter on behalf of the company. The law ¹ also provides that an appearance when a party is a corporation can be by an advocate or by directors, or managers or secretaries who are appointed by resolution. The question is whether it is a must for a board resolution to be included in the pleadings as proof that the company has been authorised to file a case in court. 

Recently, the Court of Appeal of Tanzania in Civil Application No. 266/16 of 2022 made it clear in its ruling that it is not always necessary for the board resolution to be accompanied with the pleadings. The court held that the circumstances of the case will determine whether or not the resolution is needed. In this particular case, a company made an application for a stay of execution of the judgement and decree, and the application was supported by an affidavit of the legal officer of the company, and there was no board resolution to authorise such officer to swear the affidavit. The Respondent’s counsel opposed the application – one of the reasons being the fact that there was no board resolution which authorised the legal officer to swear the affidavit and, therefore, counsel for the Respondent argued that the legal officer had not been mandated to initiate the proceedings. The Applicant’s counsel, on the other hand, insisted that it was not mandatory to have the board resolution since the affidavit supporting the application stated firmly that the deponent was authorised to swear the affidavit and, therefore, there was no need for board resolution.

The Justices of Appeal, in their decision, ruled that in some cases the board resolution does not need to form part of the pleadings. The court made a finding that when a company has not disassociated itself with the person who signed the pleadings, it is clear that the company had authorised such action. The court said in its ruling:“… where as it is undeniable that the Legal Officer being neither a Director, Secretary, nor Manager of the Company did not produce a board resolution or power of attorney enabling her to swear an affidavit on behalf of the applicant’s Company, we find that the circumstances of the case suggest that the Company impliedly ratified her act of making the affidavit.” The Justices of the Court of Appeal stated that the ratification was viewed from the fact that the company did not in any way disassociate itself from the contents of the affidavit, which was lodged almost two years ago. Further, the company did not distance itself from the advocate who drew and filed the notice of motion synchronously with the disputed affidavit. On the contrary and at the time of hearing the application, the Applicant’s counsel adopted the affidavit and heavily relied on its contents to advance its case, including the affidavit.

This decision of the court has highlighted an important point regarding the purposes of board resolutions when instituting court proceedings. A resolution is for the purpose of confirming that individuals who sign documents and institute proceedings on behalf of the company have a mandate to do so. In a situation where it can be inferred that the individuals who signed the document had the authority to do so, there will be no need for a board resolution and, therefore, not all cases instituted by a company without a board resolution will be incompetent and struck out. 

1. Rule 30(3) of the Court of Appeal Rules 2009 as amended.