Delegations of authority: who may actually sign, and how to prove it.

The question almost never arrives before the signature. It arrives after, when a contract is queried, an auditor traces a payment, a bank instruction is challenged, or a settlement surfaces that the board never sanctioned. Then, suddenly, everyone wants to know the same thing: did that person actually have the authority? In most organisations the honest answer is a shrug. Contracts are signed every day by people whose authority no one has checked, on the strength of a job title and the fact that nobody objected last time.

Under the Companies Act 71 of 2008, the business and affairs of a company are managed by or under the direction of its board. Every signature below board level therefore rests on a chain of delegation: Act and Memorandum of Incorporation, board, committee, executive, manager. When authority fails, it fails in one of two expensive directions. Either the deal unravels: the organisation disowns it, the counterparty is left holding a worthless page, and the signer faces a personal claim for breach of warranty of authority. Or, worse for the organisation, the deal holds: the law binds it to a bargain it never authorised, because of what the outside world was entitled to assume. Five disciplines keep the chain intact.

1. Start from the source, and put it in writing.

Authority is conferred, not assumed. Trace it from the top: the Act and the MOI, which may reserve or restrict powers; the board, in whom section 66(1) vests the management of the company; the committees the board creates under section 72; and the executives and managers below them. A delegation of authority framework, adopted by board resolution, is where that chain becomes visible: it tiers authority by the nature and value of the transaction, attaches each power to a position rather than a person, states whether and how far a power may be sub-delegated, and lists the reserved matters that never leave the board table. The same discipline is statutory in the public sector: the Public Finance Management Act requires delegations by accounting officers and accounting authorities to be in writing (sections 44 and 56). And an NPO is no different: every power must trace back to the constitution. An unwritten delegation is not a delegation. It is a habit, and habits cannot be produced when an auditor asks.

2. Match the paper to the practice.

The audit finding that stings is rarely the missing framework; it is the framework that is ignored: delegations on paper that do not match the signatures in practice. Bank mandates should mirror the framework exactly, and be revoked the day a signatory leaves. Electronic signing needs the same discipline: the Electronic Communications and Transactions Act 25 of 2002 recognises ordinary electronic signatures between contracting parties, but where legislation itself requires a signature, an advanced electronic signature is generally needed, so the framework should say who may sign electronically, on which platform, and for what. And keep a current resolutions register, so that for any signature the organisation can produce an unbroken chain: board resolution, delegation, signatory. If the chain has a gap, fix the delegation, or stop the signing.

3. Know what the outside world may assume.

Here is the uncomfortable part: your internal rules do not travel. Under the common-law Turquand rule, preserved alongside section 20(7) of the Companies Act, a person dealing with a company in good faith may presume that its internal formalities have been complied with. “The signatory never had internal sign-off” is therefore rarely a defence against an innocent outsider. Ostensible authority reaches further still: in Makate v Vodacom the Constitutional Court held a company to a bargain struck by a manager who lacked actual authority, because the company’s own conduct had clothed him with the appearance of it. Titles, letterheads, email signatures, a history of unchallenged signing: all of it speaks on the organisation’s behalf. The protection, then, cannot be built at the boundary; it must be built inside, by making sure the appearance of authority and the fact of it are the same thing.

4. Prove it before you need to.

For any transaction of consequence, authority should be demonstrable on paper, in both directions. Outbound: a certified extract of the board resolution, signed by the chairperson or company secretary, recording who may negotiate and sign; a signature block that states the capacity; and, on major transactions, a short incumbency-style confirmation that the signatory holds the office the resolution names. Inbound: ask for the same. The presumption protects the innocent, not the incurious: section 20(7) expressly falls away where a party knew, or reasonably ought to have known, of the internal failure. A counterparty who asks for the resolution and files it has converted a presumption into proof. And write the warranty of authority into your contracts expressly, so a signer without authority answers for it in the document itself.

5. Renew, revoke, record.

Delegations decay. People change roles and keep old powers; acting appointments blur the lines; monetary thresholds set in 2019 quietly stop matching 2026 prices; a signatory resigns and the bank is told a month later. So treat the framework as a living instrument: review it annually against the board calendar; state expressly what an acting incumbent may and may not do; revoke lapsed authority in writing and tell the institutions that relied on it, banks first; and keep a register of current delegations, resolutions attached, as the single source of truth. When the transaction is one day questioned, the best evidence is dull: a file that answers in three documents, resolution to delegation to signature, with no gaps to argue about.

The signature and the delegation

A signature binds the moment it is made; the delegation is what protects everyone standing behind it: the organisation from bargains it never sanctioned, the counterparty from a page that turns out to be worthless, and the signer from personal exposure. A signature binds; a delegation protects. Make sure the second exists before the first.

This piece is general commentary on governance practice. It is not legal advice on any specific matter, and no professional relationship arises from reading it.