According to the Procuration Act the company may have representatives whose general competence of representation is partly narrower than that of the board of directors and of a person who has been authorized to represent the company. The board of directors has directly according the law a right to grant procuration.
The procurator’s right to represent a company can be restricted so that the right to represent the company based on the procuration belongs to only two or several people together (co-procuration) or so that the right to represent the company is only together with another person authorized by the articles of association or board’s decision.
The holder of procuration can act on behalf of the principal in all that belongs to the principal’s business. The holder of procuration may not, however, without a special authorization, transfer the principal’s real estate or tenancy rights, nor seek a mortgage thereto. This applies also to situations where a company´s field of operation is acquisition and sale of real estate.
If the procuration is in written form, the holder of procuration has the right to represent the principal before courts and other authorities. Procuration in written form can be a mandate or an extract from the minutes of the meetings of the board. Procuration registered in the Trade Register is considered to be in written form.
The procuration is a general authorization especially created for the purposes of business life. A trader entered in the Trade Register may grant procuration. A holder of procuration is not in this capacity a company organ or a member thereof. The board of directors decides upon the granting of procuration. The managing director is not in possession of this right. Since the general meeting of shareholders may not authorize a person to represent the company it may also not grant procuration. It is not even possible to stipulate in the articles of association that the granting of procuration is assigned to someone else than to the board of directors. Furthermore, it is not possible to stipulate in the articles of association that a person holding a certain position, e.g. a member of the board of directors, would directly by virtue of his/her status be a holder of procuration.
Only a physical person may be a holder of procuration. For instance another company may not act as one. A procuration is always granted to a named person, and the holder of procuration may not transfer it to another person. The holder of procuration may, however, within the limits of his competence grant more limited authorizations binding upon his principal. It is possible for a person to be a holder of procuration although he/she is bankrupt.
The procuration may be registered in the Trade Register. In practice, a procuration is granted by giving a notice on a separate form to the Trade Register.
The existence of the procuration is indicated by presenting an extract from the Trade Register. When signing for the company the holder of procuration indicates his/her authorization as a holder of procuration with an appropriate addition, such as p.p., per procuram or as a holder of procuration. The procuration may be revoked at any time. A procuration entered into the Trade Register is revoked by registering the revocation with the Trade Register.