A supplier sends you a contract. Can your business partner sign it alone? Do you need to sign too? And can your office manager bind the company even if they do not own any shares?
With individual signing authority, an authorised person can bind the company alone within the scope of their powers. With joint signing authority by two, two authorised people must act together. The choice depends on the controls you want and the availability of your signatories.
Organising these powers properly helps you control commitments without bringing the business to a halt whenever someone is absent. Above all, distinguish between the authority to represent the company towards third parties and the internal rules you agree for making decisions.
At a glance
- Individual signing authority allows each authorised person to bind the company alone within the scope of their powers.
- Joint signing authority by two requires two authorised people to act together under the registered representation arrangements.
- In an SA/AG, being a shareholder does not give you signing authority. In an LLC (Sàrl/GmbH), the members’ management and representation powers also depend on the articles of association.
- An internal spending limit does not have the same effect towards third parties as joint signing authority recorded in the Commercial Register.
- Consider absences, departures and representation in Switzerland when choosing your signatories.
What does signing authority mean?
It allows a person to represent the company and enter into transactions on its behalf. These might include a lease, a customer contract, an order or a financing agreement. The Commercial Register (information in French) identifies the registered signatories and how they are authorised to sign.
For a business partner, this information helps establish who can bind the company. For you, it is one part of your control framework. It does not, however, replace all the rules governing agency: limited or specific authority may exist without a general entry in the register.
You must also distinguish between the decision to carry out a transaction and the authority to sign it on the company’s behalf. A transaction may require internal approval even if someone has individual signing authority.
The different types of signing authority
| Type | How it works | What to watch |
|---|---|---|
| Individual | The authorised person can represent the company alone | Internal controls and continuity during absences |
| Joint signature by two | Two authorised people act together | Check the permitted combinations |
| Joint signature by three | Three signatures are required under the registered arrangements | Risk of delays or deadlock |
| No registered signing authority | A job title or ownership interest does not confer this general power | Check any specific mandates separately |
Individual signing authority: more than one person can have it
Individual signing authority does not mean that only one person in the whole company may sign. Two managers can each hold this authority: either can then bind the company alone within the scope of their powers.
This is convenient for a small business that needs to make quick decisions. The trade-off is that an error or excessive commitment can occur without a second check when the document is signed. Contracts and commitments still need to be monitored.
How does joint signing authority by two work?
Two authorised people must act together as specified in the register. For example, two managers with joint signing authority by two sign the company’s lease together.
This arrangement adds a check. But if the company has only two signatories and one is unavailable, transactions may be delayed. Plan for continuity from the outset: the arrangements must work during holidays and disagreements.
If three people (A, B and C) each have joint signing authority by two, with no restrictions on the combinations, A + B, A + C or B + C can represent the company. An employee without the corresponding authority cannot provide the second signature simply because they work there.
Specific combinations may apply, such as an obligation to sign with a named person. Always read each signatory’s entry in full.
Joint signing authority by three
This can suit some organisations, but it makes entering into transactions more cumbersome. Before choosing it, ask what specific risk it addresses and whether three people will actually be available to act within the required time.
Who can sign for an LLC or an SA/AG?
In an LLC (Sàrl/GmbH)
As a rule, all members manage the company jointly unless the LLC’s articles of association provide otherwise. Each manager is generally authorised to represent the company, although the articles may set different representation arrangements. At least one manager must nevertheless be authorised to represent it.
Read both the articles and the Commercial Register entry. A member is not necessarily a signatory, but you must also take account of the statutory default rules when the articles do not set different management arrangements. Powers may also be granted to an executive officer or other people according to their role.
In a limited company (SA/AG)
The board of directors represents the company. Unless the SA/AG’s articles of association or organisational regulations state otherwise, each board member has this authority. The board may delegate representation to some of its members or to third parties, particularly executive officers. At least one board member must remain authorised to represent the company; this does not necessarily require individual signing authority.
Being a shareholder does not, in itself, confer the authority to represent the company.
Representation by a person resident in Switzerland
An LLC must be able to be represented by a person resident in Switzerland who is a manager or executive officer. In an SA/AG, that person must be a board member or executive officer. Having a member or shareholder resident in Switzerland is therefore not sufficient on its own.
Where joint signing authority applies, have the chosen combination checked to ensure it meets this requirement, particularly if some signatories live abroad.
For more on these roles, see our explanations of Swiss company managers and shareholders and the board of directors of an SA (in French).
An internal spending limit does not replace joint signing authority
You may agree internally that a purchase above CHF 10,000 requires both members’ approval. That is a useful working rule. However, if one of them remains registered with individual signing authority, this purely internal limit cannot be invoked against a third party acting in good faith.
In other words, you cannot assume that the company will be released from a contract simply because a signatory exceeded the limit in your internal regulations. The restrictions that can be invoked against third parties follow specific rules, particularly Article 718a of the Code of Obligations, which also applies to LLCs through Article 814.
What happens if an internal limit is exceeded?
Suppose your regulations require prior approval for commitments above CHF 10,000. A board member with individual signing authority nevertheless orders a machine costing CHF 30,000 without that approval. If the transaction falls within their powers of representation and the supplier acts in good faith, the company cannot assume that citing its internal regulations will allow it to escape the contract.
The company may have to address the external contract separately from the internal consequences of the breach. An approval rule remains useful, but it needs arrangements that make it effective: monitoring orders, setting appropriate access rights and ensuring consistent representation powers.
Example: two members, two levels of control
One member handles sales and the other finance. They want to discuss every new lease and loan together. They can provide for this approval in their internal regulations and choose consistent representation arrangements in the register.
Banking permissions (information in French) must be arranged separately with the bank: a payment approval process is not automatically the same as the authority to sign the company’s contracts. Check both, rather than assuming that an update to the register changes every access right.
Commercial power of attorney and a company officer’s authority
A board member or LLC manager acts as a corporate governing officer. A holder of a commercial power of attorney (procuration) has a separate form of authority whose scope is specifically governed by the Code of Obligations. In particular, express authorisation is required to sell or encumber real estate. A commercial power of attorney should not be confused with a mandate limited to signing one specific document.
A small team does not always need to give another person general representation powers. The need may simply be to authorise a specific transaction during someone’s absence. Have the appropriate instrument chosen for the purpose, then clearly explain its scope to everyone concerned.
Three separate controls
| Control | Question to resolve |
|---|---|
| Internal decision | Who approves the commitment, and against which budget? |
| Signing the contract | Who can validly represent the company towards the other party? |
| Payment | Who can prepare the bank transfer, and who can release it? |
Dual approval of bank payments does not prevent a debt arising from a validly signed contract. Conversely, two signatures on a contract do not remove the need to check that a payment matches the goods or services delivered. All three stages must work together.
Setting up arrangements that work
Start with the transactions your business actually carries out: who negotiates contracts, hires staff, approves purchases and deals with the bank? Arrangements that suit two founders may no longer be sufficient after several people have joined.
Then prepare straightforward internal regulations covering reserved decisions, approvals, delegations, records to retain and absences. Have the relevant governing body adopt the decisions, then register any necessary changes with the Commercial Register.
If you are starting a business with others, an agreement between members or shareholders (article in French) can also formalise your arrangements for important decisions, disagreements and departures. Ensure it is consistent with the articles of association, organisational regulations and registered representation powers.
Communicate the rules to the employees and business partners concerned. A title such as “manager” or “director” on a business card does not tell someone the scope of that person’s authority.
When a signatory leaves the company
Deal promptly with the revocation of authority, the application to remove the register entry and notification of the relevant contacts. Our page on changing directors, managers or signatories explains the steps and documents to prepare. Remove the relevant banking access and digital permissions. Also check specific powers of attorney, which do not necessarily end simply because a job title changes.
Our article on changes to the Commercial Register (in French) explains how to prepare the application. New signatures may require certification (information in French).
Review the arrangements whenever someone joins or leaves, a major financing transaction takes place or responsibilities change. The right signing arrangement protects the company while allowing it to operate normally.
Match signing authority to real business decisions
Choose representation powers based on the contracts the company needs to enter into and the controls it can realistically maintain. Then check the articles, the register and the bank separately. Clear arrangements let you make decisions quickly while knowing who can bind the company, for what purpose and with which checks.
Frequently asked questions
Must two people with individual signing authority sign together?
No. In principle, each can represent the company alone within the scope of their powers. An internal rule requiring dual approval must be distinguished from the registered signing arrangement.
Can you be an LLC member without signing authority?
Yes, if the company’s arrangements provide for this. In an LLC, however, all members manage the company jointly by default unless the articles state otherwise. Check the articles, the person’s status as a manager and their representation powers. Ownership of an interest alone does not answer the question.
Does joint signing authority by two apply only to large contracts?
Do not assume so. Registered joint signing authority does not automatically become individual authority below an internal threshold. Specific mandates must be arranged properly where needed.
What should you check before signing with another company?
Consult a recent Commercial Register extract (information in French), identify the authorised people and read their signing arrangements in full. For an important or unusual transaction, also check the necessary powers and approvals.
Sources
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Romain Prieur is a Swiss certified public accountant and the founder of Entreprendre.ch. With over ten years of experience in auditing and supporting businesses in Switzerland, he advises entrepreneurs on company formation, accounting and taxation.
