Understanding Duties Of A Company Secretary: Can a Company Secretary be Held Personally Liable?

Company secretaries play a vital role in ensuring that businesses comply with relevant laws and regulations. They are responsible for various secretarial duties, including record-keeping, filing of statutory forms, and preparing board meetings. However, one question that often arises is whether a company secretary has the authority to sign on behalf of a company.

Under company laws in the United Kingdom, a company secretary may have certain signing authority. However, the extent of this authority will depend on various factors, including the specific regulations governing the company and the terms of any applicable contracts.

Key Takeaways

• A company secretary may have signing authority on behalf of a company, but the extent of this authority depends on various factors.
• Compliance with applicable laws and regulations is essential for company secretaries when executing legal documents on behalf of the company.
• Best practices suggest that a company secretary should ensure that they have the proper authority to sign legal documents before doing so.
• Electronic signatures have become increasingly popular as a means of executing legal documents, and company secretaries should be aware of their responsibilities when using them.
• In some cases, a company may require two authorised signatories to sign a document, and company secretaries should be aware of these requirements.

Authority of a Company Secretary to Sign on Behalf of a Company

When it comes to signing on behalf of a company, company law in the UK grants specific authority to certain individuals, including company secretaries. A signatory is an individual authorised to sign a document, and when it comes to UK companies, the Companies Act and English law govern the powers of company signatories.

To execute a deed, which is a specific type of binding legal document, the signing must be witnessed. However, for other documents, the signature is witnessed only for evidentiary purposes to prove that the document was signed.

A company secretary may sign a contract on behalf of a company only if he or she has the authority to do so. This authority can either be express or implied. An individual with express authority has been formally appointed to act as a signatory, while an individual with implied authority may sign when it is reasonable to assume that they have the authority to do so based on their position in the company.

The Companies Act 2006 requires that contracts to be signed on behalf of a company must be signed by two authorised signatories or by a director in the presence of a witness. The use of electronic signatures is permitted, so long as the signatory follows the proper procedures for signing electronically.

Can a company secretary commit the company to a contact or transaction?

It is important to note that a company secretary cannot commit the company to a contract or a transaction, as this requires the authority of the board of directors. If a company secretary signs a contract without the proper authorisation, the company may be released from the contract, or the company secretary may be held personally liable.

In conclusion, company secretaries have the authority to sign contracts and other legal documents on behalf of a company, provided they have the express or implied authority to do so. The execution of documents must follow the proper procedures for validity, such as obtaining witness signatures where required by law. Company secretaries must be aware of their responsibilities and seek appropriate legal advice to ensure compliance with the law and protection of the company’s interests.

Best Practices for Company Secretaries Signing on Behalf of a Company

As electronic communication and remote work become increasingly prevalent, company secretaries may find themselves signing documents on behalf of the company more often. It is important to understand the best practices to follow when doing so to ensure compliance with relevant laws and regulations. This section will discuss the following best practices:

1. Use electronic signatures cautiously
2. Verify authority to sign on behalf of the company
3. Adhere to the concept of implied authority
4. Require the presence of two authorised signatories

Use electronic signatures cautiously

While electronic signatures can make contract execution more convenient, they can pose potential risks as well. As a company secretary, it is important to ensure that you are using electronic signatures in accordance with the relevant laws and regulations. The Companies Act 2006 permits the use of electronic signatures, though it is worth noting that some documents, such as deeds, require a traditional wet signature. Before using an electronic signature, it is wise to consult with legal counsel and make sure that the signature software used is secure, reliable, and tamper-proof.

Verify authority to sign on behalf of the company

Before signing any document on behalf of the company, it is important to verify that you are authorised to do so. Company secretaries should ensure that they are included in the list of authorised signatories that the company has filed with relevant authorities. Additionally, it is always wise to double-check with the board of directors or at least two directors of the company before signing any significant documents.

Adhere to the concept of implied authority

Company secretaries should be cautious of acting with implied or apparent authority. Implied authority refers to situations where a person has not been expressly authorised to act, but the authority to do so can be inferred from the circumstances or past practice of the company. Apparent authority refers to situations where a person appears to have authority to act on behalf of the company, even though they do not. To avoid any potential legal issues, it is important to act only within your express authority.

Require the presence of two authorised signatories

It is best practice to have the presence of at least two authorised signatories when executing significant contracts or documents on behalf of the company. This can provide a system of checks and balances and reduce the risk of unauthorised signing. Additionally, it is important to document all decisions and actions taken when signing on behalf of the company, including the reasoning behind the decision to sign.

By following these best practices, company secretaries can sign on behalf of the company with confidence and ensure compliance with relevant laws and regulations.

Conclusion

In conclusion, it is crucial for company secretaries to understand their authority to sign on behalf of a company and the requirements under company law. An authorised signatory is entitled to sign contracts connected with the company’s business and can commit the company to contractual obligations. However, a company secretary’s authority to sign depends on express or implied authority.

Contracts can be signed on behalf of the company either with implied or apparent authority. It is important for company secretaries to be aware of their legal responsibilities and to seek appropriate legal advice when necessary to ensure compliance with company law and protect the interests of the company.

When signing on behalf of a company, it is best practice to have two authorised signatories or two directors present to ensure proper execution of documents. Additionally, electronic signatures are becoming increasingly common, and company secretaries should be familiar with the requirements for validly executing documents electronically.