Power of Attorney Explanations 3


The entry of the power of attorney in the commercial register is associated with costs that are determined by the law on the costs of voluntary jurisdiction for courts and notaries ( GNotKG ). For the registration of a newly appointed authorized signatory, a total of around 220 euros is incurred in court costs and notary fees. If an existing power of attorney is deleted at the same time, another 50 euros are added. Since the court costs for the entry in the commercial register also depend on the legal form, these are only guidelines based on the case of a GmbH.

Termination of the power of attorney

The business owner or his deputy can revoke the power of attorney at any time. The revocation is effective against the authorized signatory and against third parties as soon as they find out about it. After the entry in the commercial register, which is required by law in accordance with Section 53 (2) HGB, the revocation applies to everyone.

In the case of employees, the revocation does not automatically lead to the termination of the employment relationship. Not even if the employee has been explicitly hired as an authorized signatory. The employment relationship must be terminated separately, taking into account the contractually agreed deadline. The latter is usually unproblematic, since authorized officers as executive employees only enjoy very limited protection against dismissal.

The power of attorney also expires in the following cases:

  • the contractual relationship on which the power of attorney is based (e.g. employment contract) ends
  • business operations are discontinued
  • the company files for bankruptcy
  • with certain changes of legal form (e.g. from sole trader to GmbH)
  • when setting up or taking over your own trading business
  • due to the death of the authorized signatory

On the other hand, the death of the principal or the managing director does not affect the power of attorney.

What is the difference between power of attorney and proxy?

A power of attorney , which is regulated in Section 54 of the German Commercial Code, can also convey very far-reaching competencies. However, there are still significant differences to the power of attorney, in particular the following:

  • The authorized representative may not undertake all, but only those legal transactions that are typical for the respective commercial trade (Section 54 (1) HGB).
  • The authorized representative is only entitled to sell or encumber land, enter into bill liabilities, take out loans and conduct litigation if he has been specifically granted such authorization (Section 54 (2) HGB).
  • The power of attorney can also be restricted to any third party, the only requirement is that the third party knows or is aware of the restriction
  • would have to (§ 54 Abs. 3 HGB)
  • A power of attorney does not have to be issued by the principal or his representative; it can also be issued as a sub-power of attorney.
  • Entry in the commercial register is not planned.

What are the risks of the power of attorney?

The company that grants the power of attorney grants the respective employee a very wide range of action, this applies in particular to the individual power of attorney. Even if the authorized signatory makes a wrong decision or exceeds his internally defined competencies, the business owner must be accountable for this. It is therefore liable for the business activities of the authorized signatory.

The authorized signatory himself must observe the necessary degree of care when making use of his power of representation. This also includes, in particular, that he observes an internally effective limitation of his powers of attorney also in external relationships. Otherwise he makes himself liable for damages.

Liability risks, with which managing directors and board members are regularly confronted, especially in the case of over-indebtedness and insolvency, do not affect the authorized signatory as long as he does not actually take over the management. In the event of an impending bankruptcy, authorized signatories (and other executives) should therefore keep a low profile and not regularly step in for the managing director, who often suddenly falls ill in such situations.


The power of attorney makes it possible for the company management to delegate decisions effectively. Because of the high reputation that authorized signatories enjoy, the granting of power of attorney can also replace a classic promotion and help to bind important employees to the company if a hierarchical rise is not possible in any other way. In addition, shareholders who formally cannot or do not want to be managing directors can still manage the company’s business.

Due to the very large scope of action that is associated with the power of attorney, the business owner must be able to trust his authorized signatories. This scope of action can only be effectively restricted vis-à-vis third parties if, instead of the individual procuration, an overall procuration is issued and this is also entered in the commercial register. In this case, an authorized signatory can at least no longer act against the interests of his principal alone.

Power of Attorney 3