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Rajiv (technology head)     10 May 2010

Difference between Director and Authorised Signatory

Hi,

I joined an already created pvt. ltd co. as a invester few months back. We had few directors earliers who were also authorised signatories. In recent changes I was also made one of the director and cuCOO and current team were made to report to me. However no changes in the authorised signatory( I am not one among authorised signatory).

Is there any issue in this case?

Secondly am i losing in this deal anything?

 

Thanks in advance



Learning

 6 Replies

CA Adarsh Agrawal (CMD of SHAYVIDZ Group)     10 May 2010

Director means a person who is appointed as Director under Companies Act.

 

However, in ur case, the Authorised Signatory mean signature of person who are authorised by the board of directors for excecution of any specific activity/signing documents relatiing to any specific activity.

  

An authorised signatory need not to be a director also. An employee of the company may also be an authorised signatory if authorised by the board.
  

Rajiv (technology head)     11 May 2010

Hi,

Thanks for the quick reply. I have this basic understanding.

The reason why I was asking was this was the current two directors have been authorised to manage the finance including the signing of cheques and managing the bank, where as in case me, I don't have any rights to do any finance transactions. Will that be a Issue is what I am bit confused or should I demand to change the resolution to include me into the finance authorised signatory.

Thanks

CA Adarsh Agrawal (CMD of SHAYVIDZ Group)     11 May 2010

Dear Rajiv Ji,

 

Its purely depends upon the understanding among you three people !! You can also be included in the cheque sigining authorisation !! its purely business stratic decision !!

 

In my opinion, a clear understanding will never bring any dispute !! so if all of u are not a part of family member, then keep equal rights in everything !!

 

but signing in cheques only will not effect ur rights for future action !! so, its not that much important point !!

 

In fact, I sign on cheques of two private limited companies, however I am not a director in any of these two companies !! Even no other directors(except two others) have the signing power !! I am having more power than other directors but I cannot sign on cheque payment of which is unapproved !!

 

So its just business routine !! no thing so much for this !!

Anukriti   26 February 2020

Hey

An authorized signatory is defined as a director of the issuer or another person who has been authorized to sign documents and has notified the trustee that they've been given the power to do so. A representative or officer is normally given the power to sign the organization to an agreement that's binding. This is also known as a signing officer. The legal power is given by someone in authority to positions that are organizational, such as manager, to make them agents of that organization for specific or general purposes. This can include revenue authority, payment authority, or spending authority.

While authorized signatory is an agent who does not need to get permission before signing off on a legally binding document or contract, as the employer has already entrusted them with that, it definitely is an additional responsibility bestowed upon an individual and acts as an additional power. Though majorly the pros and cons depend upon the MOA and AOA of the company but it is advisable to address your concern by resorting to a discussion.

Hope  this helps!

Geetha Krishnan   29 March 2020

Thks for ur answer sir. Can I know as per company act section?

Palak Singh   31 March 2020

An authorized signatory is different from a director. 

An authorized signatory is defined as someone who has been authorized to sign documents and has notified the trustee that they've been given the power to do so. A representative or officer is normally given the power to sign the organization to an agreement that's binding. This is also known as a signing officer. The legal power is given by someone in authority to positions that are organizational, such as manager, to make them agents of that organization for specific or general purposes. 

The persons who are in charge of the management of the affairs of a company are termed as directors. They are collectively known as Board of Directors or the Board. The directors are the brain of a company. They occupy a pivotal position in the structure of the company. Directors take the decision regarding the management of a company collectively in their meetings known as Board Meetings or at the meetings of their committees constituted for certain specific purposes. Section 2 (10) of the Companies Act, 2013 defined that “Board of Directors” or “Board”, in relation to a company, means the collective body of the directors of the company.

From the definition its is plenty clear that while a director is someone who has authority and manages the affairs of company, an authorized signature is the one authorized by directors or higher management to take decisions on their behalf. Hence, you don’t need to worry as a director need not be an authorized signatory.


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