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NEWSLETTER 2013
78
The board of directors shall appoint the authorized signatories who
shall represent and bind the company with their signatures beneath
the trade name. The board of directors will also determine whether the
signatories shall represent and bind the company with their sole or joint
signatures. Art. 373 TCC requires that the board of directors registers and
announces the signatories and the representation method of the company.
Limitations to the Representative Authority
The representative authority of the signatories of a joint stock
company may not be subject to limitations other than those specified in
the TCC. This principle of unlimited representation serves to protect the
confidence of third parties in their transactions with the company. Limiting
the representative authority without respecting the statutory requirements
and exceeding the limitation allowed under the TCC shall not be binding
on
bona fide
third persons engaging in transactions with the company, even
if such limitations are registered with the trade registry and announced.
These excessive restrictions will bear effect only on persons who are aware
of the restriction imposed on the representative authority of a signatory.
The TCC regulates two exceptions to the general rule of unlimited
representative authority, which were both present in the abrogated
legislation as well. Accordingly, the representation authority of signatories
may be limited either by limiting the power to the transactions regarding
the headquarters or branch offices of a company; or by requiring joint
signatures of multiple signatories. For example, signatories may be
grouped as Group A and Group B signatories and joint signatures of one
signatory from each group may be required for representing and binding
the company.
Different from the abrogated code, the TCC foresees that transactions
which do not fall within the scope of activities of the joint stock company
will bind the company. Accordingly, unless it is proven that third parties
transacting with the company knew or were in a position to know that a
given transaction fell outside of the field of activities of the company;
such activities will bind the company. Therefore, the
ultra vires
rule,
which results in the nullification of any transaction not included in the
field of activities of the company, is abandoned.