The Pen That Outruns the Paperwork: Rebuilding Delegated Authority Across a UK Group

Across UK mid-market groups, authority rarely fails in a single dramatic moment. It drifts. A subsidiary director signs a supply agreement after a restructure; a bank mandate still lists a former finance director; a Companies House filing is authenticated by someone whose appointment was never recorded. Each event looks minor. Together they create a governance gap between the group's operating reality and its legal paperwork.

Delegated authority should be treated as a governance control, not an administrative formality. The person who signs can bind a legal entity, trigger a contractual obligation or expose the group to a warranty claim. For a group with several companies, shared services and a parent board, the question is not simply who has a pen. It is who may use that pen, for which entity, up to what value, and with what evidence.

The pen is a control, not a courtesy

A UK company is a separate legal person. A parent director does not automatically acquire the right to sign for a subsidiary because the subsidiary is in the same group. That authority must come from the subsidiary's articles, a board resolution, a power of attorney, a delegation policy or another valid instrument. Board minutes may record a decision, but they do not override a constitutional restriction or cure a lack of quorum.

This is why delegated authority sits alongside financial control, treasury policy and risk management. It determines who can commit the entity, not merely who can approve an invoice. When authority is unclear, staff tend to rely on seniority, habit or proximity to the parent. Those are not legal bases for execution.

A five-step authority matrix test

A practical test need not be elaborate, but it should be documented and repeatable.

1. Map entities and decisions. Start with every legal entity, including dormant companies, property vehicles and shared-service companies. For each, list the decisions that matter: contracts above a threshold, property leases, banking facilities, litigation, regulatory filings, employment settlements and guarantees. Identify who recommends, who approves, who signs and who retains the evidence.

2. Trace the source instrument. For each signing role, locate the document that confers authority. Check the articles, shareholder resolutions, board minutes, delegation policy, powers of attorney and bank mandates. Note dates, limits and any conditions. A policy that says 'the board may delegate' is not the same as a resolution that actually delegates.

3. Test thresholds and escalation. Authority often breaks at the boundary. A managing director may sign up to a set value, but a contract with an unlimited indemnity or a multi-year term may require parent approval. Test unusual contract terms, not just headline value. Consider employment, property, IT, insurance and litigation separately.

4. Reconcile external counterparties. Internal matrices can be correct while the outside world holds outdated information. Check bank mandates, insurer notifications, landlord records, key customer contacts and Companies House filings. If the group's internal list and the bank's signatory list disagree, the bank will usually follow its own mandate.

5. Set review triggers. Authority should be refreshed after acquisitions, director changes, refinancing, restructuring and year-end. Give one function, typically the company secretary or legal team, responsibility for maintaining the matrix and reporting exceptions to the board.

Where UK groups commonly slip

Bank mandates are a frequent weak point. Boards change, but mandates linger. A new finance director may be unable to approve payments while a former director remains on the mandate. Treasury teams discover the problem at the point of a payment run, not at the point of appointment.

Companies House filings create a parallel risk. Appointment and resignation forms, confirmation statements and accounts must be authenticated correctly. If the group's internal records show a director in office but the public register does not, counterparties may challenge execution or delay a transaction.

Execution formalities matter too. Deeds require witness and delivery rules; contracts must be signed by the correct legal entity. A parent guarantee signed by someone without authority may be unenforceable or, worse, may be treated as a representation that authority existed.

Shared-service entities add another layer. Central staff often sign purchase orders or service contracts 'for the group' without an entity-specific mandate. The supplier may later argue that the group accepted liability. Acquisitions compound the problem: legacy authorities in the target survive until they are expressly replaced.

Making the matrix stick

The matrix should be more than a spreadsheet. It should be approved by the board, owned by a named function and supported by evidence. An annual attestation from each entity's directors can confirm that the matrix reflects current appointments and delegations. An exceptions log can capture overrides and near misses, giving internal audit something concrete to test.

Training should focus on the practical questions staff face: which entity is contracting, who may sign, what approval is needed and where the evidence is stored. A short guide at the point of contract execution is often more effective than a lengthy policy.

Conclusion

Delegated authority is not a back-office tidy-up. It is the visible expression of how a group governs its legal entities. A current authority matrix gives the board assurance that the pen travels with the mandate, not ahead of it. In a group of several companies, that distinction is the difference between controlled delegation and inherited ambiguity.