Someone has to sign the corporation’s contracts: customer agreements, supplier orders, equipment leases, software subscriptions. The directors can approve each one themselves, or they can give an officer or employee standing authority to sign certain contracts, usually up to a set amount.
A signing authority resolution sets out who may sign what. It puts the limits in writing, and it lets the person signing show their authority when the other side asks. For bank accounts, use the resolution to change signing authority at the bank instead.
- Approved by
- The directors
- Signed by
- Every director entitled to vote, if passed in writing
- Filed with the government
- No
- Can’t be delegated
- Issuing shares, declaring dividends, approving financial statements, changing bylaws and other matters reserved to the directors
- Corporate seal
- Not needed
When you need one
- The owner wants an officer, manager or bookkeeper to sign routine contracts.
- Setting dollar limits above which two signatures, or the directors’ approval, are needed.
- A customer, landlord or government agency asks for proof that the signer can bind the corporation.
- A new officer is appointed, or someone who could sign leaves.
- Allowing the corporation’s contracts to be signed electronically.
Who approves it
The directors manage the business and can appoint officers and delegate management powers to them. A few powers always stay with the directors, and in British Columbia the articles decide how far delegation goes.
| Jurisdiction | Rule |
|---|---|
| Canada, federal (CBCA) | The directors manage (s. 102(1)) and may appoint officers and delegate powers to them (s. 121), except the matters in s. 115(3): among them submitting questions to shareholders, filling board or auditor vacancies, issuing securities except as authorized, declaring dividends, buying back shares, approving the financial statements and changing bylaws. |
| Ontario (OBCA) | The directors manage (s. 115(1)) and may delegate to officers (s. 133(a)), except the matters in s. 127(3), which in Ontario also include appointing or removing the chief executive officer, chief financial officer, chair or president. |
| British Columbia (BCBCA) | The directors manage (s. 136(1)) and appoint officers (s. 141(1)); what officers may do comes from the articles, and the standard Table 1 articles let the directors confer any of their powers on an officer (art. 13.2). A contract signed by a person acting under the company’s express or implied authority binds the company (s. 193). |
| Alberta (ABCA) | The directors manage (s. 101(1)) and may delegate to officers (s. 121(a)), except the matters in s. 115(3). |
| Quebec (QBCA) | The board’s powers may be delegated to a director, an officer or a committee (s. 112), except the 15 matters in s. 118, which include appointing the president, chief executive officer and chief financial officer and setting their pay. Officers are mandataries of the corporation (s. 116). |
| Delaware (DGCL) | The board manages the business (§ 141(a)), and the corporation may appoint the officers and agents its business requires (§ 122(5)). Officers have the duties set by the bylaws or a board resolution (§ 142(a)), and any authority given to an officer remains subject to the board’s management power. |
| Model Act states (MBCA) | Corporate powers are exercised by or under the authority of the board (s. 8.01(b)); each officer has the authority the bylaws or the board give them (s. 8.41). |
Before you sign
- Check the bylaws. Many already say who signs contracts, sometimes “any two officers”. The resolution should match them, or the bylaws should be amended.
- Set limits that fit the business: a dollar limit per contract, the kinds of contracts covered, and when two signatures or the directors are needed.
- Keep the reserved matters out. Issuing shares, declaring dividends, approving the financial statements and changing the bylaws stay with the directors.
- Tie authority to an office or a name, deliberately. Authority given to “the President” passes to whoever holds that office; authority given to a named person stays with them until it is revoked.
- Decide on electronic signatures. They generally satisfy a legal signing requirement; say in the resolution whether the signer may use them.
What the other side may assume
Canadian corporate statutes protect people who deal with a corporation in good faith. Under the indoor management rule, a corporation generally can’t deny that someone it held out as an officer was properly appointed or had the authority usual for that role, unless the other party knew or ought to have known otherwise (CBCA s. 18; Ontario s. 19; British Columbia s. 146; Alberta s. 19; Quebec ss. 13 and 14). So the limits in your resolution bind your own people, but they may not protect the corporation against an outsider who didn’t know about them. Delaware and the Model Act have no statutory version; apparent authority there comes from the general law of agency.
Seals and electronic signatures
A corporate seal is optional: a document isn’t invalid only because no seal is on it (CBCA s. 23; Alberta s. 25), a British Columbia company’s contract can be signed by anyone acting under its authority (s. 193), and in Delaware a seal is a power, not a requirement (§ 122(3)). Electronic signatures generally satisfy a signing requirement under Ontario’s Electronic Commerce Act (s. 11), the British Columbia and Alberta Electronic Transactions Acts (ss. 11 and 16) and Quebec’s Act to establish a legal framework for information technology (s. 39); in Delaware, the corporate statute accepts electronic signatures for most corporate documents (§ 116).
Sample wording
Adapt the wording to your corporation: replace everything in square brackets, and check your articles, bylaws and any shareholder agreement first. Each person signs and dates a copy, and a scanned or electronic signature is usually fine.
Resolutions of the directors of [Corporation name] (the “Corporation”)
BE IT RESOLVED THAT:
1. [Name], [title], [or: the person holding the office of [title] from time to time,] is authorized to sign for the Corporation [contracts with customers and suppliers, purchase orders, equipment leases and other agreements in the ordinary course of business] with a value of up to $[amount] each.
2. Contracts with a value above $[amount], and any contract outside the ordinary course of business, must be signed by [any two of: [names or titles]] [and approved by the directors].
3. The authorized signers may sign by hand or electronically.
4. This resolution replaces [the resolution on signing authority dated [date]] and continues until the directors change or revoke it.
The foregoing resolutions are passed by the signatures of all the directors of the Corporation, as of [date].
______________________________
[Name], director
______________________________
[Name], director
Action by unanimous written consent of the board of directors of [Corporation name] (the “Corporation”)
RESOLVED, that [name], as [title], [or: the officer holding the office of [title] from time to time,] is authorized to execute and deliver on behalf of the Corporation [contracts with customers and suppliers, purchase orders, equipment leases and other agreements in the ordinary course of business] with a value of up to $[amount] each;
RESOLVED FURTHER, that any contract with a value above $[amount], or outside the ordinary course of business, requires the signatures of [any two officers / the President and one other officer] [and the approval of the Board];
RESOLVED FURTHER, that the authorized officers may sign manually or electronically; and
RESOLVED FURTHER, that these resolutions supersede [the resolutions dated [date]] and remain in effect until amended or revoked by the Board.
This consent is signed by all the directors of the Corporation, is effective as of [date], and will be filed with the minutes of the proceedings of the board.
______________________________
[Name], director
______________________________
[Name], director
After you sign
- Give each signer a copy, and give a certified copy to any counterparty that asks for proof of authority.
- Keep a current list of who can sign what, and up to what amount.
- When a signer leaves or changes role, update or revoke the authority right away and tell the counterparties who rely on it.
- Check that the bylaws and the bank’s signing authorities are consistent with the resolution.
What to keep in your minute book
- The signed resolution, and any earlier resolution it replaced.
- A list of current signing authorities and their limits.
- Copies of certified copies given to counterparties.
Common questions
Does every contract need its own resolution?
No. A standing resolution gives an officer authority for a category of contracts, so each one doesn’t need separate approval. Significant or unusual contracts, and matters the directors can’t delegate, still go to the directors.
Can an employee who isn’t an officer sign contracts?
Yes, if the directors authorize it. The resolution can name any person, such as an office manager, and set limits on what they may sign.
What if someone signs beyond their limit?
The corporation may still be bound to an outsider who reasonably relied on the person’s apparent authority. Internally, the signer has exceeded their authority, and the directors decide whether to ratify the contract.
Do we need a corporate seal?
No. A seal is optional, and under the federal and Alberta statutes a document isn’t invalid only because it has no seal. Some counterparties still ask for one out of habit.
This page is general information about corporate resolutions in the United States and Canada, not legal or tax advice. The sample wording is a starting point: your articles, bylaws and any shareholder agreement may require something different, and rules change over time. For advice about your corporation, speak with a qualified lawyer or accountant.
Sources
- Canada Business Corporations Act, sections 18, 23, 102, 115 and 121
- Ontario Business Corporations Act, sections 19, 115, 127 and 133
- British Columbia Business Corporations Act, sections 136, 141, 146 and 193
- British Columbia Business Corporations Regulation, Table 1 Articles, article 13
- Alberta Business Corporations Act, sections 19, 25, 101, 115 and 121
- Quebec Business Corporations Act, sections 13, 14, 112, 116 and 118
- Delaware General Corporation Law, sections 141 and 142
- Delaware General Corporation Law, section 122
- Delaware General Corporation Law, section 116
- Model Business Corporation Act (American Bar Association), sections 8.01 and 8.41
- Ontario Electronic Commerce Act, 2000, section 11
- British Columbia Electronic Transactions Act, section 11
- Alberta Electronic Transactions Act, section 16
- Quebec Act to establish a legal framework for information technology, section 39