How Does a Company Legally Authorize an Employee to Sign Important Documents?

Hi,

In a company, how is one designated to be an authorized signatory? For example, if a company has to authorize an employee to sign offer letters, is there any legal procedure to be followed? I have heard that it may be necessary for a company to have the board pass a resolution to the effect that it is authorizing the employee with specific powers and register the same with the registrar of companies. Is this correct?

Dear Aramusk Guy,

Welcome to CiteHR.com!

What you have heard is partially correct. Depending on the kind and quantum of specific power to be delegated, it has to be done through either a Board Resolution, Power of Attorney, or an Order for Delegation of Power.

Warm regards.

Thanks, Raj Kumar. Can you please tell me more?

If a letter has been signed by an employee of the company without having fulfilled any of the above three methods, what happens to such a letter? Would it be legally invalid?

As for the order for delegation of power, is there any specific format that needs to be filled?

Thanks in advance

There is no specific format for an Order of Delegation of Powers; however, it must be very clear about its intent, purpose, and extent. If a letter is signed without proper authorization or delegation, it may not be legally valid unless the company denies it and can prove that it was purely in a personal capacity or beyond the jurisdiction of the employee. Sometimes, delegation of powers is not explicit but is established through precedence, custom, procedure, or job specification. Without knowledge of the specific instance, it would be difficult to provide any meaningful suggestions.

Warm regards.