Corporate power of attorney, authorized signatory rights, and procuration – what is the difference?

Short answer: A corporate power of attorney can authorize a person to represent the company in specified matters. Authorized signatory powers are corporate legal competencies to sign on behalf of the company, and a proxy (prokura) is a specific statutory form of commercial power of attorney. These three forms should not be confused.

What is a corporate power of attorney?

A power of attorney is based on contract law principles and can be designed broadly or narrowly. For example, a company can authorize an employee to enter into certain agreements, represent the company in dealings with suppliers, or handle a specific matter.

Authorization and scope of authority

In the law of agency, a distinction is made between what the agent is outwardly authorized to do and the internal instructions, the scope of authority, given by the principal. If these are not coordinated, disputes may arise as to whether the company is bound by a legal act.

What is an authorized signatory?

Authorized signatory status refers to the right to represent a company and sign for its firm. In a limited company, there are rules regarding who can represent the company, and the board may appoint a specific authorized signatory. Authorized signatory status is therefore not the same as a standard internal power of attorney.

What is a proxy (prokura)?

A proxy (prokura) is a special form of commercial power of attorney with a statutorily regulated scope. It can be useful when a person is to represent the business on an ongoing basis, but it should be chosen with an understanding of its broad effect and specific rules.

When is a standard power of attorney most appropriate?

• a specific agreement or project
• purchases up to a certain limit
• contact with banks, authorities, or suppliers
• a limited time period
• substitution or temporary absence

What should a corporate power of attorney contain?

• the principal and the attorney-in-fact
• the exact legal acts that may be performed
• monetary limits or other restrictions
• validity period
• whether sub-delegation is permitted
• how the power of attorney is revoked
• signature of an authorized representative

Revocation and practical control

When a power of attorney expires, it is not always enough to simply write an internal decision. The company also needs to manage power of attorney documents, system permissions, and information to counterparties so that the former power of attorney is not used in practice.

Common mistakes

• the power of attorney is broader than the internal authorization procedure
• no final expiry date is specified
• the counterparty cannot verify who issued the power of attorney
• authorized signatories and attorneys-in-fact are confused
• no routine exists for when the person leaves

See the Mallbutiken corporate power of attorney template in Swedish and English.

FAQ

Can an employee sign agreements without being an authorized signatory?

Yes, for example with the support of a power of attorney or other basis of authority. The scope must be assessed on a case-by-case basis.

Must a corporate power of attorney be registered?

A standard power of attorney does not normally need to be registered in the same way as certain corporate representative roles. Proxy (prokura) and authorized signatory powers have special rules.

Can the power of attorney be in English?

Yes. In international relationships, it is wise to specify the applicable law, scope, and how the counterparty can verify the authority.

The article provides general information and does not replace legal advice.