Necessary approvals: Overview, definition, and example
What are necessary approvals?
Necessary approvals refer to the required permissions, consents, or authorizations that must be obtained from relevant parties or authorities before a specific action, transaction, or process can proceed. These approvals are often required in business, legal, regulatory, and financial contexts to ensure compliance with applicable laws, regulations, or contractual agreements. They ensure that any actions taken are authorized and do not violate any legal or organizational rules.
For example, before a company can launch a new product, it may need approval from regulatory bodies to ensure the product meets safety and industry standards.
Why are necessary approvals important?
Necessary approvals are important because they ensure that actions and decisions are legal, ethical, and aligned with established rules or expectations. They provide a safeguard for businesses, governments, and individuals by confirming that no steps are taken without appropriate oversight. In business, obtaining the necessary approvals helps avoid legal risks, financial penalties, and reputational damage, while also ensuring that projects, contracts, or transactions are completed in a lawful manner.
For businesses, obtaining the necessary approvals is critical to prevent delays, avoid violations of laws or regulations, and maintain good standing with stakeholders, regulators, and customers.
Understanding necessary approvals through an example
Imagine a construction company is planning to build a new office complex. Before they can begin construction, they must first obtain necessary approvals from local government agencies, such as zoning approval, building permits, and environmental impact assessments. These approvals ensure that the project meets all legal, safety, and environmental standards before construction begins.
In another example, a business may need approval from its board of directors before making a major acquisition. The necessary approval in this case is a formal consent from the board to move forward with the acquisition, ensuring that the decision aligns with the company’s strategy and governance policies.
An example of a necessary approvals clause
Here’s how a necessary approvals clause might appear in a contract or agreement:
“The Parties agree that the completion of this Agreement is contingent upon the necessary approvals being obtained from the relevant regulatory authorities, including but not limited to [list specific approvals or agencies]. Any delay in obtaining such approvals shall not constitute a breach of this Agreement, but the Parties shall make best efforts to secure them promptly.”
Conclusion
Necessary approvals are essential for ensuring that actions, projects, or transactions are conducted in compliance with laws, regulations, and contractual obligations. By securing the required approvals, businesses and individuals can reduce legal risks, ensure proper oversight, and maintain good relationships with relevant authorities. For businesses, the process of obtaining necessary approvals is an important step in the planning and execution of projects, acquisitions, or other significant actions.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.