Representation of the company: who may sign?

In day-to-day business operations, a company signs contracts, pays suppliers and hires personnel. But who is actually legally authorised to sign on behalf of the company, and within what limits?

Not every signature is automatically binding: directors and authorised representatives have specific powers and may be subject to internal limitations. If someone acts outside those powers, this can have legal and financial consequences for both the company and the director themselves.

In this article, I discuss how representation works for the most common company forms, the BV and NV, what you should pay attention to when signing and how you can prevent problems with an invalid signature.

The Basics

A company cannot act by itself. It is a legal construct and has no body to perform acts. Everything a company does occurs through natural persons, namely its directors or authorised representatives. These persons bind the company through their acts and signatures. It is therefore crucial to know who is authorised and what internal limitations apply.

Suppose a director wishes to sign an agreement with an important client. Only if that director is authorised to do so is the company legally bound. If not, the contract may be invalid or later be disputed, with all the legal consequences that entails.

The Limited Liability Company

For a limited liability company , the LLC, the rules are fairly straightforward.

If the BV has only one director, that person can act independently and the company is fully bound by the sole signature of this director.

Where there are multiple directors, a distinction is made between collegial and non-collegial management.

If there are multiple directors without collegial management, each director can act individually, unless the articles of association provide otherwise. If the management forms a collegial body, a majority is generally required to sign validly, unless the articles of association provide for a single or multiple signature clause.

In addition, the management may grant special powers of attorney for specific legal acts. For example, a financial director may be authorised to sign contracts up to a certain amount. As long as that person remains within the limits of the power of attorney, the company is validly bound.

The Public Limited Company

For a public limited company, the PLC, the regime is somewhat more complex, as the Code of Companies and Associations provides for three governance models.

• Monistic management: In this governance model, the management consists of a collegial board of directors, usually with three or more members. The board represents the company as a whole. Important: decisions are generally taken by a majority of the directors, who are then authorised to sign contracts or enter into agreements on behalf of the company. However, the articles of association may grant individual powers to one director, for example for signing contracts below a certain amount or for specific transactions.

• Dual management: This model divides powers between two bodies: a supervisory board, which oversees the company's strategy and policy, and a management board, which conducts operational management. Both bodies represent the company within their respective powers, but decisions of one body are not automatically binding on the other.

• The sole director: Under this structure, there is only one director, who may act entirely independently. This person can perform all acts on behalf of the company, naturally within the limits of the articles of association and any internal limitations.

Limitations on Representation

It is also possible for the articles of association to impose internal limitations. A director may, for example, only perform acts up to a certain amount, or may require the approval of the board of directors for certain decisions.

What is important here is that these limitations do not apply vis-à-vis third parties.

A company therefore remains validly bound, even if a director has internally exceeded their authority. Internally, however, this may give rise to liability or sanctions within the company.

Suppose a director signs a contract for the purchase of goods worth €50.000, whilst the articles of association provide that purchases above €25.000 must be approved by the entire board of directors. The supplier can validly perform the contract and receive payment, but internally the director may be held liable for exceeding their authority.

Improper Representation

Improper representation can have far-reaching consequences for a company. If directors or authorised representatives act outside their authority, the company may not be validly bound legally. Contracts may be invalid and proceedings inadmissible. This can lead to financial damage or missed business opportunities.

Directors themselves risk personal liability when they exceed their authority. This can range from damage claims to termination of the mandate in case of breach of trust. For more information on the liability of directors and other auxiliary persons, see our earlier article “Important Changes in Liability Law as of 2025: What Entrepreneurs Need to Know”

To avoid this, it is essential that companies:

• establish clear internal arrangements regarding signing authority;
• inform all directors and employees thereof;
• and ensure that the data in the Crossroads Bank for Enterprises (CBE) remains up to date.

Directors' and officers' insurance can moreover provide additional protection in disputed transactions.

Conclusion

Correct representation is not a formality, but an essential part of good entrepreneurship.

The Code of Companies and Associations offers flexibility, but also requires precision and control.

An incorrect signature can not only cost business opportunities, but also have personal consequences for directors.

Therefore, ensure that the rules surrounding representation are clearly established, that the information in the CBE remains current and that doubtful cases are verified in a timely manner. A small check beforehand often prevents problems afterwards.

Would you like to be certain that the signatures and signing authorities within your company are correctly arranged, or do you have questions about how the Code of Companies and Associations regulates this? Please do not hesitate to contact our office for specific advice tailored to your business.

Karo Verloo