Signing authority: who can sign contracts and commit the company

Signing authority is the power to sign documents that legally bind a company: contracts, purchase commitments, cheques, payment instructions, guarantees and official filings. The people who hold it are often called authorised signatories. It sounds like an administrative detail until a contract signed by the wrong person is challenged, or a departed employee is still listed as a signatory on the bank mandate. Clear signing authority protects the company from both.

Signing authority vs approval authority

The two are related but not the same. Approval authority is the internal decision: this purchase may go ahead. Signing authority is the external act: this person may commit the company to a third party. A manager might approve a purchase within their budget while only a director may sign the supplier contract. Deriving signing authority from the delegation of authority keeps the two consistent — nobody should be able to sign what nobody was allowed to approve.

What a signing authority policy should state

• Document types covered: contracts, purchase orders, cheques and payments, guarantees, leases, employment contracts, regulatory filings.
• Named roles or individuals who may sign each type.
• Monetary limits per signatory, based on the total value of the commitment.
• Where two signatures are required — typically payments and contracts above a threshold.
• Documents only the board or specific directors may sign.
• How signatories are added, removed and notified to banks and counterparties.

Bank mandates are the most common gap. Changes to signing authority inside the company do not update the bank — the mandate must be changed separately, usually with a board resolution, the day someone leaves.

Keeping signing authority current

1. Keep one register of authorised signatories with role, document types, limits and effective dates.
2. Tie changes to people events: joining, promotion, role change and leaving all trigger a review.
3. Update bank mandates and key counterparties at the same time as the internal register.
4. Check signatures against the register before countersigning or releasing payment.
5. Review the register at least annually, and after any restructuring.

Ettex Sign helps enforce the policy at the moment of signing: signers are assigned per document, the order of signatures is fixed, and the audit trail records who signed, when and from where. Paired with a register of signatories and limits, that makes it straightforward to show a counterparty or auditor that each agreement was signed by someone entitled to sign it.