Board Resolution Format for Provision for Bad & Doubtful Debts

Bad debt is the amount of money given by a lender/creditor to a borrower/debtor for some expenses, which the creditor is not willing to take action to collect after several follow-ups with the debtor. Here, the creditor is sure that the debtor will not pay. He believes that it is not worth it to take legal action against the debtor to recover the dues.

The provision for bad and doubtful debts is an estimation of the amount of bad and doubtful debts, which needs to be written off during a particular financial year. Necessary entry in the books of accounts is made in this regard.

The approval of the board of directors is necessary to make provision for bad and doubtful debts. The management should prepare a list of all such debts and present it before the board in its meeting in order to take the approval.

Here are templates of resolutions passed in the meeting of the board of directors for making provision for bad and doubtful debts. Please refer to relevant provisions under the law and make changes accordingly.

FORMAT #1

#. To make provision for bad debts for the year ended 31st March, ________

“RESOLVED THAT the company do make provisions for bad debts of Rs. _________ (Rupees ____________ only) due from different parties during the financial year ____ and necessary entries be made in the books of accounts of the company in relation to that for the year ended 31st March, _______.

RESOLVED FURTHER THAT a detailed list of the aforementioned parties was tabled at the meeting at Annexure - ___ duly initialed by the Chairman for the purpose of identification and the board noted the same.

RESOLVED FURTHER THAT (Name of the Director/Officer), (Designation) be and is hereby authorised to do all such acts, deeds and things as may be necessary to give effect to the foregoing resolution.”

FORMAT #2

#. To make provision for doubtful debts for the year ended 31st March, ________

“RESOLVED THAT the company do make provisions for doubtful debts of Rs. _________ (Rupees ____________ only) due from different parties during the financial year ____ and necessary entries be made in the books of accounts of the company for the year ended 31st March, _______.

FURTHER RESOLVED THAT a list of the debtors for doubtful debts as mentioned above was placed before the Board at Annexure - ___ duly initialed by the Chairman for the purpose of identification and the board took a note of the same.

FURTHER RESOLVED THAT (Name of the Person), (Title) be and is hereby authorised to do all such acts, deeds and things as may be necessary to give effect to this resolution.”

FORMAT #3

#. To make provision for bad and doubtful debts for the year ended 31st March, ________

The Chairman/ Managing Director/ Company Secretary informed the Board that some debtors have not yet paid their dues to the company after several follow-ups. The company has been following up with them regularly to recover the amounts. It is expected that some of them may pay their dues and whereas some amount will remain unrecoverable. The list of such bad and doubtful debts was tabled at the meeting. The directors perused the same.

Upon motion duly passed and seconded, it was:

“RESOLVED THAT the consent of the Board of Directors be and is hereby given to make a provision for bad debts of Rs. _________ (Rupees ____________ only) and a provision for doubtful debts of Rs. _________ (Rupees ____________ only) due from different parties during the financial year ____.

FURTHER RESOLVED THAT a list of the debtors for bad and doubtful debts as mentioned above was placed before the Board at Annexure - ___ duly initialed by the Chairman for the purpose of identification and the board took a note of the same.

FURTHER RESOLVED THAT necessary entries be made in the books of accounts of the company for the year ended 31st March, _______ in this regard.

FURTHER RESOLVED THAT (Name of the Officer), (Designation) be and is hereby authorised to do all such acts, deeds and things as may be necessary to give effect to this resolution.”