8.3.2 Representation

The company’s participation in legal transactions results in particular from the performance of legal acts by its directors on behalf of the company. Directors derive their power to represent the company from statutory law (for directors of private limited companies enshrined in section 2:240 DCC). The authority to represent the company is always unrestricted and unconditional and may also be granted to persons other than directors. However, the authority of individual directors can be limited. Internal and organisational rules of the company cannot affect this authority. If the company is duly represented, the legal act on its behalf is attributed to the company. The statutory rules on the representation of companies are, again, based on the principle of protection of third parties.

In addition to this statutory power of representation, the company may also be duly represented pursuant to statutory rules on the granting of a power of attorney. Not only directors, but also others can represent the company on the basis of a power of attorney. The scope of a power of attorney may be limited and is also subject to the powers imposed on the principal. A power of attorney may be embedded in a certain legal relationship, an appointment or position and may arise from the appearance of authority to represent the company. Finally, statutory law provides for liability of the person who claims to act by virtue of a power of attorney. In the absence of an adequate power of attorney, the other party can hold that person liable.