Of course, this can be a major setback for the company. Not only is the wrong party bound in the contract, but another legal consequence is that the court can cancel such a contract on the grounds that the purpose of the agreement does not have the power to represent the company, which violates the obligation of legitimacy for contracts in accordance with the Indonesian civil code. In order to ensure the smooth running of the business process, the Board of Directors may give a mandate to authorize certain parties or members of the company`s high-level staff to sign certain contracts and/or agreements. Is it possible that a board member or a director may not be eligible to sign a contract? This is possible according to the company`s statutes. It is not only possible to restrict the authority of the director, but for some contracts, the GMS may find that the Board of Directors needs the approval of the Board of Directors and/or the GMS. Directors who are not included in the statutes are also not allowed to sign a contract on behalf of a company. The first step when signing on behalf of the company is to make it clear that your signature is representative of the company. You will sign your name and indicate that the signature represents the company, not your personal dedication. It can help your title enter the company near your signature or indicate that you are a corporate agent. Some contracts contain a line under the signature in which you can enter your professional title. Agent Choo had stated that he was clearly entitled to act on behalf of CEPCO, the company at issue in this case, to conclude the administrative agreement.
This was also supported by the actions of CEPCO staff and its Board of Directors who supported Choo`s representation, such as Choo`s appointment to CEPCO`s Board of Directors and Choo`s opportunity to chair board meetings. Section 66 Companies Act 2016 provides for how to effectively execute a document on behalf of the company. In order for the document to be effectively executed by a company, it must be signed, on behalf of the company, by at least two qualified executives, when it is necessary to be a director.