What is Signatory? Definition & Important Considerations

What is a Signatory?

A signatory is the one who is authorized to sign legal documents or contracts on behalf of the company. Such authority is normally conferred either using formal appointment by the company’s board of directors or by delegation from a person who has the legal authority to do so.

Signatories are in charge of signing agreements, transactions, and other legal matters on behalf of the company. In this way, they formally execute the agreements. They are the ones who usually make sure that the signatures they make on the documents are in line with the company’s interests and legal responsibilities. Based on the nature of the company’s structure and policies, signatories may be executives, officers, directors, or other authorized representatives.

For example, in a corporation, the signatories may include:

1. Chief Executive Officer (CEO): The top corporate official who is in charge of making big company decisions, managing the entire organization, and representing the company to the public.
2. Chief Financial Officer (CFO): The senior executive who is in charge of the execution of financial actions of the company, such as financial planning, financial records, and financial reporting.
3. President: The role of the president can vary depending on the company’s organizational structure. For instance, they may be responsible for supervising daily operations, implementing policies, and representing the company in different spheres.
4. Vice Presidents (VPs): In their roles, vice presidents may be assigned to specific areas of the company, like sales, marketing, operations, or human resources. They could be endowed with the signing power for their designated areas.
5. Board of Directors: The board of directors may hold the power to sign some documents or contracts on behalf of the corporate body by their office. The board is generally made up of the people who are voted by shareholders to control the management of the company.
6. Authorized Officers: Other corporate officers, including the Chief Operating Officer (COO), the Chief Legal Officer (CLO), and the Chief Technology Officer (CTO), may likewise be designated as signatories if they happen to be the ones who are assigned with the roles and responsibilities within the organization.

Important Considerations Regarding Signatories:

1. Authorization and Delegation of Power: 

All signatories must be authorized to bind their respective organizations with their signatures. This authorization may be a result of their official position within the company or as a result of individuals or entities that have the authority to authorize such transactions. The delegation is usually formalized in the form of internal policies, resolutions, or legal documents.

2. Verification of Identity and Authority: 

It is equally important to establish the identity and authority of the signatories to eliminate fraud and make the agreements enforceable. Organizations can use a variety of techniques for verification like using photo IDs, conducting background checks, or having digital signatures authenticated through secure platforms.

3. Witness Requirements for Validity: 

Some of the legal documents, especially the ones with large sums of money deals or agreements, may need the presence of a witness during the signing procedure. The witnesses are important because they can verify the signatures and thus add a further dimension of reliability to the document. The witnessing requirements differ from one jurisdiction to the other and for the type of document signed.

4. Comprehensive Record-Keeping: 

Organizations must maintain detailed records after the document is signed for the benefit of both parties as well as to ensure compliance. Such recordings should have copies of the signed agreements, along with any supporting documentation, correspondence, or approvals related to the transaction. The safe and orderly storage of such documents is an invaluable measure of transparency, accountability, and compliance with the law. Besides, keeping well-organized records makes it easy to retrieve and refer to them in the case of disputes, audits, or regulatory inquiries.