We are regularly being requested to provide some kind of evidence to the clients regarding the capacity of a director to individually bind the company
In Cyprus, there is no official Governmental Certificate that points out the powers of the directors.
Nevertheless, according to Section 33A of Companies Law Cap. 113, any of the directors of the company can bind a Cyprus company acting jointly and/or separately against third parties even though such actions may be outside the scope of business of the company or in excess of the powers of the directors. If the company proves that the third party knew that the actions were outside the scope of business of the company (an action in excess of the powers of the directors cannot be brough forward as a defence even if such information was publicly available) then the directors may not bind the company.
Common law also follows the same principle. Pursuant to the Turquand rule, the directors have the capacity to bind the Company against third parties, acting jointly and/or separately, even if they are acting in excess of their powers as these are being provided by the company’s Articles of Association, without the validity of the agreement being questioned.
From the aforementioned rule, it can be derived that all the directors of a Cyprus company may bind severally and/or jointly the company and sign any documentation relating to the company’s business, considering that the Board has authorized them to do so through a written resolution of the Board, and such documentation will be binding against third parties.
This article has been created by Maria Mastrogiannopoulou, Senior Associate at Pyrgou Vakis Law Firm.
