A Name on the Register, a Hand on the Pen: Authority After Identity Verification

Companies House can now state, with reasonable confidence, that the person recorded as a director is the person they claim to be. It cannot state that the same individual is entitled to sign the particular contract on your desk. Identity and authority are distinct questions, answered by distinct evidence, and the gap between them is where a surprising number of commercial disputes begin.

What verification establishes, and where it stops

The identity verification regime introduced under the Economic Crime and Corporate Transparency Act 2023 has been rolled out in stages: mandatory for new appointments and for persons with significant control from late 2025, and extended through 2026 to existing directors as confirmation statements fall due. Verification is performed through a GOV.UK One Login or an authorised corporate service provider, and the outcome is recorded against the individual rather than the company.

That is a genuine improvement in the integrity of the register. It is not, however, a representation about capacity. The register does not disclose board resolutions, delegations of authority, signature mandates, financial thresholds, dual-signature requirements, restrictions in the articles or a shareholders' agreement, or whether a director has been suspended internally pending investigation. A verified badge confirms a person's identity; it says nothing about the scope of their hand on the pen.

Two routes to being bound

A company is bound by a contract where the signatory had actual authority, and it may also be bound where the signatory had apparent, or ostensible, authority. Actual authority arises from the constitution, from a board resolution, or from a delegation made under the articles. Section 40 of the Companies Act 2006 assists the counterparty further: in favour of a person dealing with a company in good faith, the power of the directors to bind the company, or to authorise others to do so, is deemed free of any limitation under the constitution.

That protection is wider than the old indoor management rule, but it is not unconditional. It does not assist a counterparty acting in bad faith or one who knows, or ought to know, of the limitation. Nor does it apply where the transaction is with the company's own director or a person connected with them, where sections 41 and 190 of the Act impose separate approval requirements. And section 40 protects dealings with directors; where the signature comes from someone who is neither a director nor a duly authorised officer, the counterparty must fall back on the general law of apparent authority, which requires a representation by the company and reliance upon it.

The signatory schedule problem

Most large organisations maintain a delegated authority matrix. Fewer maintain it accurately. Schedules appended to framework agreements tend to reflect the hierarchy at the date of signing and then quietly decay: a finance director moves on, a regional head is given a higher threshold, a subsidiary is folded into a shared service centre, and the schedule is not revisited. Because these matrices are internal documents, a counterparty has no way of testing them against the public record.

The practical consequence is that the strongest evidence of authority is rarely the register. It is a dated, certified extract from the minute book, delivered shortly before signature, identifying the transaction and the signatory by name.

Evidence worth assembling before signature

For any transaction of substance, the authority file should contain the following:

• A register search carried out immediately before execution, retained with its date, showing the current directors and any verification status.
• A certified copy of the board resolution, or written resolution, authorising the transaction and naming the signatories. A secretary's certificate is the cleanest way to deliver this.
• Confirmation that the meeting was properly convened, quorate and noticed, particularly where the articles impose procedural requirements.
• A check of the articles for restrictions on borrowing, disposals or delegation, and for any requirement of shareholder approval.
• Where the counterparty is a director or a connected person, confirmation that the members have approved the arrangement.
• For execution as a deed, compliance with section 44 of the Act: signature by two authorised signatories, or by one director whose signature is witnessed.
• For overseas entities, equivalent constitutional documents and local law advice on execution formalities, which frequently differ from the UK position.

Drafting that moves the risk back

The contract itself should carry the burden where the verification file cannot. Four provisions do most of the work.

First, an authority representation and warranty: that the company has taken all necessary corporate action, that the signatory is duly authorised, and that the obligations are legal, valid and binding. Second, a warranty of authority from the individual signatory, personal in effect, which gives a remedy in damages if the representation proves false. Third, a ratification and further assurance covenant, requiring the company to procure board or member approval within a defined period if the original authority is found wanting. Fourth, a notification obligation, under which the counterparty is told promptly of any change to authorised signatories during the term.

A short acknowledgment that the counterparty has not relied solely on the public register is also worth including, since it forecloses an argument that the buyer or supplier had constructive notice of a limitation it could never have discovered.

If the signature is later challenged

The dispute usually arrives months after completion, when the transaction has become inconvenient. The company asserts that its internal limits were exceeded, or that the signatory was acting outside their remit. In most such cases the analysis turns on section 40, on the signatory's actual authority, and on ratification. Where the company has since taken the benefit of the contract, ratification is often straightforward and the argument collapses. Where it has not, a claim for breach of warranty of authority against the individual may be the only realistic route to recovery.

What rarely succeeds is an attempt by the company to rely on its own unpublished internal restrictions against a counterparty that acted in good faith and asked the obvious questions.

Verification as a floor, not a ceiling

Identity verification should be treated as the starting point of due diligence on authority, not a substitute for it. The discipline required is modest: search the register on the day, obtain a certified resolution, read the articles, align the signature block with the minute, and keep the file. A few hours of documentation will not prevent every dispute, but it will decide most of them before they begin.