In India, a company is considered a separate legal entity that is distinct from its shareholders or directors. Therefore, the signing of a contract on behalf of a company is not an easy task, and it is not something that just anyone can do. In this article, we will explore who can sign a contract on behalf of a company in India.
Board of Directors
The Board of Directors is the supreme governing body of a company and has the power to make decisions on behalf of the company. Therefore, the Board of Directors is authorized to sign contracts on behalf of the company. The signing authority of the Board of Directors is usually defined in the Articles of Association of the company. It is essential to note that not all directors have the authority to sign contracts on behalf of the company. The board may designate a particular director, the CEO, or any other authorized officer to sign the contract on the company`s behalf.
Authorized Signatories
Authorized signatories are persons who are authorized to sign contracts on behalf of the company. Authorized signatories can be anyone, including employees, directors, or shareholders. The company must provide a written authorization to the authorized signatory. The authorization should outline the limits of the authorized signatory`s power. The authorized signatory is liable for the legal obligations of the company in any contract they sign, and they should, therefore, act with caution.
Power of Attorney
A power of attorney is a legal instrument that authorizes a person to act on behalf of another person. It can also be used to authorize someone to sign a contract on behalf of a company. The company can grant a power of attorney to an individual, authorizing them to sign the contract on the company`s behalf. The power of attorney needs to be executed in writing and must be signed by the authorized signatory. The power of attorney must also be registered with the relevant authorities.
Conclusion
In conclusion, the signing of a contract on behalf of a company in India is done by the Board of Directors, authorized signatories, or through the grant of a power of attorney. It is essential to note that whichever method is used, the person signing the contract must act in the best interest of the company and not exceed their authorized power. Companies must ensure that their policies and procedures specify who has the authority to sign on the company`s behalf and establish appropriate controls to mitigate the risk of unauthorized signatures.