A signed contract does not answer every corporate question. A company acts through its authorised organs and representatives, so an important transaction should be supported by the approvals required by law, the articles and the company’s own internal authority structure.
Good corporate records are not just compliance paperwork. They reduce uncertainty when banks, investors, auditors, counterparties or courts later ask who approved a transaction and on what terms.
1. Identify the decision making level
Some decisions may be handled through ordinary delegated authority; others require board approval, shareholder approval or compliance with specific statutory conditions. The nature and value of the transaction matter.
Before drafting a resolution, check the articles, prior delegations, financing documents and any shareholder arrangements that may impose additional approval requirements.
2. The resolution should match the transaction
A vague resolution saying that a transaction is “approved” may be less useful than a resolution identifying the agreement, counterparty, key commercial purpose and the person authorised to sign or complete related acts.
If the transaction changes materially after approval, consider whether the existing authority still covers the revised terms.
3. Authority to negotiate is not always authority to sign
Employees and executives may conduct negotiations without having final authority to bind the company. Keep the approval and signature authority clear, especially for borrowings, guarantees, property arrangements, settlements and long term commitments.
Counterparties may also request certified copies or extracts of resolutions; maintain a reliable record of what can properly be issued.
4. Minutes and supporting documents should tell the same story
Board papers, notices, minutes, resolutions and the final contract should be internally consistent. Material discrepancies can create later questions about what was actually considered or authorised.
For recurring delegated powers, periodically review whether the delegation remains current and whether the relevant officer still holds the stated role.
5. Keep approvals with the transaction file
A good transaction file should allow a later reviewer to understand both the commercial arrangement and the corporate authority behind it.
- Final contract and material drafts.
- Board/shareholder notices and resolutions where applicable.
- Delegation or power of attorney records.
- Regulatory or lender consents if required.
- Proof of filings or registrations triggered by the transaction.
Reference framework
Legal framework referred to in this article
- Companies Act, 2013
- Articles of Association and internal governance documents
- Applicable rules and filing requirements under the Companies Act
Primary materials
This article summarises the legal and regulatory framework relevant to the topic. Later amendments, factual differences and applicable directions may affect the position.