What an authorized signatory is allowed to do: Simply explained

An authorized signatory plays a significant role in a company. In this article you can find out what an authorized signatory is allowed to do and what not.

Authorized officer - that includes the position

The procuration contains both the Italian procura, for power of attorney, and the Latin procurare, to take care of something.

• Both terms reflect quite well what constitutes an authorized signatory's job: the authorized signatory is given extensive powers to look after a company for the purposes of management.
• The authorized representative represents the managing director or the company externally. In this way, he supports society or the merchant in daily business. In order for him to have legally binding decision-making authority, the authorized representative is entered in the commercial register as a representative of the management.
• The German Commercial Code defines exactly which rights a general manager has. This means that external procuration cannot be restricted by internal agreements. Even if other agreements are made within the company, these are basically irrelevant in the sense of the law for external transactions. This is important so that business partners can reliably rely on agreements or contracts that have been concluded with the company's authorized signatory.
• In plain language, this means that an authorized representative is authorized to carry out all activities that the operation of the respective company entails. This includes the conclusion of contracts as well as the termination of contracts. An exception to this are real estate sales - the authorized representative must be explicitly authorized to do this.
• Of course, the authorized officer must not use his position of power to act against the company. For example, he may not arbitrarily sell the company or enrich himself at the expense of the company. Targeted action with the third party to the detriment of the company also leads to the nullity of the contract.

In the next post, you will find out exactly what is behind the term holding.