Company Authorized Representative: Roles & Appointment

What is an authorized representative of the company?

In the corporate world, companies commonly use the role of an authorized representative. An authorized representative is a person who, by virtue of a legal authorization, can act on behalf of a company in certain matters. This authorization is formalized through a notarized power of attorney (general or special) that must be registered with the Commercial Registry to be fully effective against third parties (Commercial Code arts. 21–22; Mercantile Registry Regulations art. 4 and 94.1.5; Companies Act arts. 233–234).

Unlike the administrator, the authorized representative is not part of the company’s governing body, but can legally represent the company in specific transactions. However, it is important to emphasize that the grantor of the power (the company or principal) will always remain responsible for the actions taken by their authorized representative.

The role of an authorized representative is especially useful in companies with multiple locations, geographically dispersed teams, or operational needs that require agility without compromising internal control.

Functions of an authorized representative in a company

• Sign commercial contracts.
• Manage banking transactions.
• Represent the company before public agencies.
• Carry out asset purchases or sales.
• Finalize employment contracts.
• Provide legal representation in legal proceedings.
• Delegate operational tasks on behalf of the company.

In any event, it is essential that these functions are clearly outlined in the notarized power of attorney document to avoid conflicts or unwanted liabilities.

Types of authorized representatives in a company

The Commercial Code recognizes three classes of authorized representatives based on the scope of their powers:

• General Authorized Representative (Commercial Code art. 283): This representative has the broadest authority. They are authorized to manage and direct the main commercial establishment, and their authority extends to all of the company’s business operations.
• Singular Authorized Representative (Commercial Code art. 292): Unlike the general representative, their authority is limited to a specific branch or sector of the business. In other words, they are granted the power to perform specific, expressly defined activities as set forth in the power of attorney.
• Mancebo (Commercial Code arts. 294–295): A specific type of singular representative with a very limited scope of authority. Their powers are typically restricted to collecting cash payments on behalf of the principal (from cash sales within the establishment or warehouse), issuing receipts in the principal’s name, and receiving goods from the principal’s suppliers.

Differences between an authorized representative and an administrator

Risks of being an authorized representative of a company

Taking on the role of an authorized representative entails responsibilities and certain risks that should be understood and properly managed:

First, from a legal standpoint, the authorized representative may incur liability if they exceed the powers granted in the notarized power of attorney. For example, if an authorized representative signs a sales contract when they only had authorization for banking transactions, the company could challenge the operation and hold them accountable. In severe cases, if an authorized representative continues to act beyond their mandate on an ongoing basis, they may be considered a de facto administrator, with the same obligations and risks as a formal administrator.

Second, from a financial perspective, misuse of authority can generate significant losses for the company. A common example is entering into contracts under unfavorable terms or approving payments to suppliers without proper controls. This can not only cause financial harm, but also damage the company’s reputation.

To mitigate these risks, it is crucial to establish clear limits in the power of attorney, specifying the permitted transactions and setting financial thresholds. Similarly, internal control protocols should be implemented, such as requiring dual signatures for high-value transactions, periodic verification of current powers, or legal department review of relevant contracts. These measures do not eliminate all risks, but they significantly reduce the possibility of overstepping and strengthen the company’s legal security.

An important point regarding liability: when an administrator seriously breaches the obligations inherent to their position, they are liable for the company's debts with their personal assets. However, an authorized representative has no liability unless they exceed the powers granted to them. Article 236.3 of the Companies Act clarifies that the liability of administrators extends to de facto administrators – that is, a person who in practice performs the functions of an administrator without a valid title, with an invalid or expired title, or under a different title.

In summary, even though the two roles can sometimes seem similar, it is crucial not to confuse them because they are fundamentally different.

Who can be a company’s authorized representative and how to choose one

A company's authorized representative can be any individual with legal capacity to act, whether a trusted employee, an executive, or even an external collaborator. The choice should be based on criteria of responsibility, knowledge of the business, and alignment with the company's values.

In some cases, involving external profiles can be advantageous. For example, a fractional CFO can transform the company and increase its profitability by taking on strategic functions without compromising the internal structure.

How to properly appoint an authorized representative

Appointing an authorized representative requires following certain steps to ensure legal security:

• Clearly define the functions to be delegated.
• Draft the power of attorney before a notary, specifying the type of power granted.
• Register the power of attorney with the Commercial Registry. Until this registration is completed, the power will not be effective against third parties.

Additionally, the appointment should be communicated within the company to avoid potential conflicts, and current powers should be reviewed periodically. It is also advisable to establish internal controls to supervise the authorized representative’s actions, especially if they handle sensitive transactions.

A good corporate governance practice is to maintain an up-to-date register of powers of attorney. This record should include who the authorized representatives are, what powers they have, when the power was granted, its expiration date, and whether the power is still valid or has been revoked. Maintaining this updated register provides several advantages:

• Strengthens internal control by clearly delineating each representative’s powers.
• Provides traceability and transparency in case of audits or internal reviews.
• Allows for the timely detection of expired or overly broad powers.
• Facilitates the immediate revocation of powers in case of organizational changes (for example, the departure of an employee who held powers).

Furthermore, this database should be linked to the Compliance department so that it is integrated into the company's internal control system. Centralized monitoring of powers of attorney helps prevent fraud, mitigate legal risks, and ensure that only authorized individuals act on behalf of the company. Integrating this control with human resources processes and internal management systems is considered a best practice for ensuring robust regulatory compliance.

Flexibility through joint and collective powers

In addition to general or singular powers, there are practical arrangements such as joint (solidary) and collective (mancomunado) powers, which allow adjustment of the degree of control in decision-making. Under joint powers, each authorized representative can act independently on behalf of the company, granting agility and speed in transaction management. In contrast, under collective powers, two or more representatives must act together, which reinforces legal security and prevents unilateral decisions in significant transactions.

A good practice is to combine both models in a tiered signature system based on transaction amounts: for example, authorize a single representative for low-value or routine transactions, but require the joint signature of two or more representatives for transactions exceeding certain economic thresholds. This flexible structure balances operational efficiency and internal control, adjusting the level of oversight to the risk of each transaction.

Advantages for the company of having a trusted authorized representative

Appointing a trusted authorized representative provides significant benefits to the company’s operations.

• First, it enables greater operational agility, as day-to-day decisions no longer depend solely on the administrator or the board, thereby avoiding delays in contract signings, banking transactions, or administrative procedures.
• Second, it promotes resource optimization, because delegating certain functions to a representative frees up time and effort for the governing bodies, allowing them to focus on more strategic, higher-impact issues. This translates into a more efficient use of human capital and a more balanced management structure.
• Finally, an experienced and judicious authorized representative can directly contribute to improved management. Their ability to negotiate terms with suppliers, oversee treasury operations, or control certain expenses creates an added value that reinforces the company’s financial stability.

In summary, a well-chosen authorized representative not only streamlines daily operations, but also becomes a key element in strengthening the organization’s efficiency and financial robustness.

Our recommendation as financial advisors

Delegating certain decisions through powers of attorney at various levels of responsibility substantially streamlines company management, allowing the board of directors to focus on strategy, expansion, and ultimately value creation for shareholders. However, the company must implement an efficient internal control and compliance system to minimize the risks associated with such delegations.

An additional risk mitigation tool is directors’ and officers’ liability insurance (D&O insurance), which in many cases can extend coverage to authorized representatives. This type of policy protects against claims arising from decisions or omissions made in the performance of their duties, such as signing contracts that result in losses, mismanaging resources, or regulatory breaches. Having this insurance does not replace internal control protocols, but provides an extra layer of security that builds confidence in both the representative and the company by ensuring that potential legal or financial contingencies do not rest solely on the individuals involved.

From Maraz Corporate Finance, we recommend that the authorized representative role be integrated within a clear corporate governance strategy, where each role is defined and aligned with the company’s objectives. In this sense, having a fractional CFO can provide expert insight that complements decision-making and reinforces the company’s internal control.

Vicente Bernabé López

Analyst - Maraz Corporate Finance