When a UK company needs to execute a document for use abroad (e.g. a power of attorney), the document will often need to be notarised. If the company has more than one director, the notary may need to see a resolution of the company’s board of directors approving the transaction and/or authorising one of the directors to formalise the document in question.
But is a director of a UK company not already authorised to sign on their own?
A director of a UK limited company can usually sign documents on their own, subject to certain signing formalities, but this does not mean that a director can make decisions for the company without consulting with the other directors. A notary needs to verify not only that a document is correctly executed but also that the company had wanted to enter into the transaction.
Take a company with four directors. One director can sign a contract to purchase an aircraft and bind the company vis-à-vis third parties. But can the director do this without consulting with the other directors? The answer is obviously no. The decision to enter into a transaction needs board approval (and the correct way to record board approval is a board resolution), even if the Companies Act then allows the contract to be valid by way of just one director signing alone, mainly because requesting all directors to be present for the implementation of each transaction would be impractical.
The safeguarding role of the notary means that he or she often needs to verify both:
- the correct execution of the document, and
- the authority of the signing director (i.e. that a board resolution exists approving the transaction and/or authorising the director to sign the document in question)
Why have I not encountered this before?
In UK company law, third parties acting in good faith can usually rely on a presumption that the powers of the directors of a company are not subject to limitations. If a director purports to have authority to sign a document, then those interacting with the company are not usually required to establish whether internal authority had indeed been transferred from the board to that particular director to go ahead with the transaction.
The position of a notary public, however, is different from that of a member of the public, as his/her intervention is needed to verify the identity, capacity and authority of the signatory, as well as the correct execution of the document.
Note also that, where a director acts without authority, he or she becomes personally liable and the director may be sued for any losses.
The picture can be different in other jurisdictions, such as Spain, where company law regulates different categories of directors, some of which may have full decision-making power, unlike the collective decision-making system that operates for UK companies.
It is always important to check the articles of association of a company, as these may contain rules on decision-making and document execution that are specific to that company. It may also be possible for the board of directors to delegate decision-making on certain matters and, in those cases, the delegation document would need to be shown to the notary.
A power of attorney for use abroad is the most typical type of document for which a notary will need to see a board resolution, but there may be other instances where this is needed. Our notaries will be able to guide you through any supporting documents that you need to show in order to get your documents notarised.