Power of Representation

Power of representation is the authority to carry out transactions with third parties on the company’s behalf and bind the company. In a joint stock company it belongs to the board of directors; in a limited liability company, to the managers.

Who Represents the Company?

• Unless the articles provide otherwise, the board represents the company with two signatures.
• The board may delegate representation to one or more executive members or to third parties as managers; at least one board member must have representation authority (TCC Art. 370).
• The company may also appoint commercial agents and commercial representatives for certain matters.

Registration and Signature Documents

Authorised signatories and the form of their authority are registered with the trade registry and published. Authorised persons submit specimen signatures to the trade registry office; in practice, banks and counterparties ask for a notarised signature circular as proof of authority.

Restrictions

• Sole and joint signature: Whether signatories represent the company alone or jointly is set. A joint signature requirement can be relied on against third parties if registered and published.
• Head office or branch: Authority may be limited to the business of the head office or a branch.
• Other restrictions: Restrictions by amount or type of transaction are not effective against third parties acting in good faith. They only have internal effect, regarding the liability of a representative who exceeds their authority.

Delegation and scope of representation through an internal directive should be consistent with the company’s internal authority matrix. Before signing a significant contract, the counterparty’s current authority should be checked in the registry.