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ACCA Applied Skills · Corporate and Business Law (Global) · Other company officers

Zenith Ltd's board has appointed Ravi as company secretary. A supplier asks whether Ravi, merely by holding that office, can bind Zenith to a contract to buy a fleet of delivery vehicles. Which statement best reflects the modern legal position?

A company secretary does not have authority to bind the company to commercial trading contracts simply by holding office. Authority is limited to administrative matters unless the board grants more, so the statement saying his authority is limited is correct.

  1. ARavi has no authority to bind the company to commercial trading contracts merely by being secretary; his authority is limited to administrative matters unless the board gives moreCorrect
  2. BRavi has automatic authority to bind the company to any contract because the secretary is the chief executive of the company
  3. CRavi can bind the company to any contract so long as he signs it in the company's name, whatever the board has said

Explanation

Under the modern view (Panorama Developments v Fidelis Furnishing Fabrics), a secretary has apparent authority for administrative and day-to-day matters connected with the office, such as ordering cars for client transport or staff matters. Buying a vehicle fleet for trading is not within his role without board authority. The other options wrongly make the secretary a chief executive or ignore limits on authority.

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