In Turkey, many corporate disputes and financial losses don’t start with bad business—they start with bad signing authority design. If the company’s representation and signing authority is too broad, one person can bind the company to loans, guarantees, leases, or long-term contracts that shareholders never intended. If it is too strict, operations slow down and the company cannot function efficiently.
This guide explains signing authority in Turkish companies in a practical way: what it means, how single vs joint signatures work, where the real risks are, and how to structure authority limits that protect the company without killing speed.
1) What “Signing Authority” Means in Turkey
“Signing authority” (representation authority) is the legal power to bind the company toward third parties. In practice, it determines:
- who can sign contracts on behalf of the company,
- who can open and operate bank accounts,
- who can sign loan/guarantee documents,
- who can hire employees or sign leases,
- who can commit the company to obligations.
Key point: If a person has registered representation authority, third parties may rely on that authority. Internal “verbal rules” are not enough.
2) Single Signature vs Joint Signature: The Practical Difference
Single Signature (Sole Representation)
One authorized signatory can bind the company alone.
Pros
- fast execution
- operational simplicity
- useful for small founder-led companies
Cons
- higher fraud and misuse risk
- harder to control large obligations
- greater dependency on one individual
Joint Signature (Co-Signature / Dual Signature)
Two (or more) signatories must sign together.
Pros
- better risk control
- reduces unilateral commitments
- stronger governance for foreign-owned companies
Cons
- slower execution
- operational friction if not designed well
- can cause bottlenecks if signatories are unavailable
Practical takeaway: Many companies use a hybrid model: single signature for routine matters, joint signature for high-risk transactions.
3) The Most Common Signing Authority Mistakes
Mistake #1: Giving “Unlimited” Authority for Convenience
Founders sometimes authorize a local manager or accountant broadly “to handle everything.” This is risky because high-impact transactions (guarantees, loans, long leases) can be executed without true oversight.
Mistake #2: Not Separating “Banking Authority” From “Contract Authority”
Banking operations can create liability quickly. If a signatory can borrow, guarantee, or pledge assets via banking documents, the company can be exposed in ways that are hard to unwind.
Mistake #3: No Monetary Thresholds
If authority is not limited by amount, a routine approval culture can suddenly become a major commitment.
Mistake #4: Internal Rules Not Reflected in Formal Governance
If your internal rules are not documented through proper corporate decisions and authority design, they may not protect you against third parties.
4) Where Signing Authority Risk Is Highest
These are the transactions that most often create disputes:
- loans and credit facilities
- guarantees and sureties
- pledges, mortgages, and security packages
- long-term leases
- major procurement and supply commitments
- sale of key assets
- related-party agreements
A safe authority system is designed around these risk points.
5) How to Structure Signing Authority Safely (Best-Practice Model)
A practical risk-control model often includes:
A) Authority Matrix (By Transaction Type)
Define categories such as:
- routine operating contracts
- HR contracts
- banking and finance documents
- asset sales and purchases
- guarantees and security documents
B) Monetary Thresholds
Example logic:
- below threshold → single signature
- above threshold → joint signature
- very high threshold → board/shareholder approval + joint signature
C) Reserved Matters + Approval Workflow
Combine signing authority with governance:
- some actions require board/shareholder approval first
- signing authority is only effective after documented approval
D) Geographic/Availability Planning
If a company requires two signatories, design backup mechanisms:
- alternate signatories
- clear travel/availability coordination
- internal pre-approvals for routine items
6) Foreign-Owned Companies: Extra Practical Considerations
Foreign-owned companies face additional real-world challenges:
- one signatory may be abroad, causing delays
- banks may require extra KYC for new signatories
- local managers may have operational leverage
Best practice for foreign shareholders:
Use joint signature for high-risk transactions, but also build operational flexibility by:
- appointing trusted alternates,
- setting pre-approved spending rules,
- using clear internal controls and reporting.
7) Updating Signing Authority After M&A or Share Transfers
A classic Turkish M&A mistake is not updating signing authority immediately after closing. Even if shares transfer, operational control can remain with old signatories in practice.
Post-closing, buyers should prioritize:
- appointment/resignation filings
- Trade Registry updates (where required)
- bank signatory updates and KYC
- internal authority matrix implementation
FAQ
Can a company limit signing authority by amount in Turkey?
In practice, companies design internal and formal authority frameworks with thresholds and approval requirements. The safest approach is to align internal controls with formal corporate decisions and registered representation rules.
Is joint signature always safer?
It is safer for high-risk transactions, but if designed poorly it can slow business and create bottlenecks. The best model is usually hybrid.
What is the biggest signing authority risk for foreigners?
Granting broad authority to a local representative without monetary thresholds and approval mechanics is one of the most common and costly mistakes.
Yanıt yok