Authorized signatory

In the business world, it is important that companies operate efficiently and effectively. To achieve this, companies often delegate certain powers to specific employees. One such position, which carries considerable authority, is that of authorized signatory. In this comprehensive article we will look at the role of the authorized signatory, including their powers, duties and the legal aspects.

What is an authorized signatory?

An authorized signatory is a person who is granted power of attorney by the company. Procuration is a comprehensive power of attorney that enables the authorized signatory to represent the company in almost all types of business matters.

Granting of procuration

Procuration is granted by an express resolution of the Company’s management or Board of Management. The grant must be made in writing and entered in the Commercial Register.

Scope of powers

An authorized signatory has wide-ranging powers and can represent the company in many matters. These include:

• Conclusion and termination of contracts
• Litigation management
• Carrying out banking transactions

However, there are certain actions that an authorized signatory may not take, such as filing for insolvency or amending the articles of association.

Duties of an authorized signatory

An authorized signatory not only has far-reaching powers, but also considerable duties. These include:

• Duty of loyalty: The authorized signatory must act in the best interests of the company.
• Duty of care: He must exercise the care of a prudent businessman.
• Duty to report: He must inform the management about important matters.

Liability of the authorized signatory

The authorized signatory may be held liable both to the company and to third parties, in particular if he violates his duties or damages the company.

Termination of procuration

The procuration may be revoked at any time by a resolution of the management or the Executive Board. It also ends automatically when the authorized signatory leaves the company.

Differences between authorized signatory and managing director

While both the authorized signatory and the managing director can represent the company, there are important differences. The managing director is responsible for the management of the company, while the authorized signatory has primarily a power of representation. In addition, the managing director usually has more extensive powers than the authorized signatory.

Legal aspects

Procuration is regulated in the German Commercial Code (HGB). It is important to know and comply with legal requirements to avoid legal problems.

Significance of the procuration for the company

The appointment of an authorized signatory can be of strategic importance for a company. By delegating authority to an authorized signatory, management can be relieved and the company can act more flexibly and efficiently. Especially in larger companies, where the management cannot handle all business personally, the role of the authorized signatory is often indispensable.

Selection of an authorized signatory

When selecting an authorized signatory, the company should proceed carefully. Because of the broad powers associated with this position, it is important to choose a trustworthy and competent person. Experience in the relevant business area and knowledge of the company are often important criteria in the selection process.

Procuration in different legal systems

It is important to note that the rules on procuration may vary in different countries. In this article, we focus on the regulations in Germany. Different rules may apply in other jurisdictions.

Conclusion

The authorized signatory plays an important role in the corporate structure. Endowed with extensive powers, he represents the company in a wide range of business matters. At the same time, the position of authorized signatory entails considerable duties and responsibilities. Companies appointing an authorized signatory should be aware of the legal framework and carefully consider who they appoint to this important position.