Authorized Signatory: Who Can Sign & Why It Matters

An authorized signatory is someone qualified to sign contracts and documents on behalf of a company or organization.

Authorization is granted through a formal company resolution (e.g., a resolution of the board of directors or a notarized deed) explicitly stating who has signing authority and in which matters. This guarantees that the signatory can be recognized for their position on behalf of the organization.

Due to its functions and responsibilities, this role has become very important in global business operations, especially in terms of governance and financial accountability. Signatories must therefore act with due care, as their signatures can have significant financial, legal, and reputational consequences.

What Is an Authorized Signatory?

An authorized signatory is therefore a legal entity formally designated by a company to sign legally binding official documents. In a business context, this means that this person can represent the firm in specific negotiations; in a legal context, this means that their signature is equivalent to that of the business itself, with significant consequences.

It is essential to distinguish a signatory from a manager or employee, as a manager, despite having operational responsibilities, does not have the power to sign documents that are binding on the company.

Finally, the role of the signatory may be permanent—i.e., appointed by the business for an indefinite period and on multiple projects—or temporary if it relates to a specific project.

How Signatory Authority Is Assigned

Signatory authority is assigned through formal documents, Board of Directors resolutions, or internal policies. Specifically:

• Board resolution: In this case, the board of directors meets and decides on the appointment of an authorized signatory. At the same time, the areas of responsibility, any restrictions, and whether the authorization is temporary or permanent are specified.
• Internal policies: Some organizations define internal policies that highlight who has signing authority on behalf of the company.
• Legal documents and statutes: Binding agreements are signed authorizing certain managers to be signatories.

Signatory authority can be delegated to directors, executives, and managers, provided that the delegation is signed in writing and registered by a notary. The delegation’s recognizability and traceability are essential when dealing with financial institutions and stakeholders.

Levels and Limits of Authority

Within a firm, signing powers are organized on multiple levels, each with specific limits established based on the role, the document’s importance to be signed, and internal risk management policies. The authority signatory, i.e., the authorization to sign on behalf of the company, can take several forms:

• Sole signatory: The broadest and most responsible form of signing authority. A single person—usually the administrator—is authorized to sign all official documents of the organization.
• Joint signatory: Here, the signing authority is shared between two or more people. Therefore, all designated persons must sign the document for an act to be valid.
• Limited authority: In this case, the person can sign restricted amounts. Once a certain threshold is exceeded, a manager’s authorization is required to approve larger expenses.

The definition of these signatory authority levels varies considerably depending on various company factors. For example, the organization’s size or the jurisdiction in which it operates play a central role in the choice. In international contexts, the signatories may also be required to reside in the country where the registered office is located.

Legal and Operational Implications

The role of an authorized signatory has significant legal and operational consequences for a company. When an authorized person signs a document, it becomes legally binding: it is therefore equivalent to an official act of the firm itself, not just the signatory. This applies to commercial agreements, banking agreements, purchase orders, official letters, and tax paperwork.

If a signature is affixed without formal authorization or beyond the authorized limits, the agreement may be declared null and void or unenforceable, with serious consequences for both the firm and the individual involved.

From an operational standpoint, signatories’ identification and traceability are essential in banking, purchasing, compliance, and human resources documentation. In fact, only those with signed authority can manage bank accounts, sign purchase orders with customers, hire and fire staff, and much more.

Finally, verifying the authorized signatory (including through apostille or notarization) is necessary in international contexts to validate documents abroad, set up companies, or manage cross-border orders.

When Authorized Signatories Are Used

Authorized signatories are involved whenever the firm performs formal acts that commit it legally or operationally. Here are some of the most common scenarios where their signature is required:

• Signing agreements with suppliers or customers: Every contract the firm signs requires the signatory’s approval. Contracts, in fact, commit the company financially and legally, and an authorized person must sign them.
• Opening or managing company bank accounts: Signatories can therefore open and manage bank accounts on behalf of the firm. They can then manage expenses, send money, control credit lines, etc.
• Representing the company in legal proceedings: Organizations often submit official papers and contracts to the authorities. For this reason, financial statements, tax returns, and corporate documents require an authorized person’s signature and approval.
• Conclusion of agreements between companies or shareholders: In this case, any type of contract (shareholders’ agreements, amendments to the articles of association, M&A transactions, etc.) must be formalized by one or more persons authorized to sign.

For all these reasons, the company nominee service has become widespread internationally. In this way, you entrust third-party professionals—such as Ascot International—with business asset management, thanks to formal approval. 

Related Corporate Roles and Distinctions

Authorized signatories should not be confused with other similar business figures with different legal responsibilities. Among the main ones are:

• What is a silent partner? A silent partner contributes capital to a company but does not actively participate in its management.
• Beneficial ownership vs legal ownership: The beneficial owner is the person who exercises effective control over economic benefits from an asset or a company, even if their name does not appear in official records. Conversely, the legal owner is the person or entity legally registered as the owner.

Authorized signatories, therefore, overlap with various key figures in the company’s operations. For example, a director or administrator has governance powers but is not necessarily an authorized signatory. 

FAQs

Who can be an authorized signatory in a company?

Typically an administrator or manager chosen explicitly and with formal approval.

Is an authorized signatory liable for what they sign?

Yes. He may also be held liable if he acts beyond his authorization or without the approval of the beneficiaries.

Can there be more than one authorized signatory?

Yes. It is very common for companies to appoint multiple signatories with different levels.

Does an authorized signatory need to be a shareholder?

No, the signatory does not need to be a firm shareholder, as they are only representatives.

How is signatory authority revoked or changed?

The signatory authority is revoked by resolution of the Board of Directors or by amending business documents.

References

PandaDoc. (n.d.). Signatory Authority: Meaning, Types and Examples. PandaDoc. 

https://www.pandadoc.com/blog/signatory-authority

UpCounsel. (n.d.). Authorized Signatory. UpCounsel. 

https://www.upcounsel.com/authorized-signatory

Cygnetise. (2020, February 3). Types of authorized signatories. Cygnetise. 

https://www.cygnetise.com/blog/2-2020-types-of-authorized-signatories