Authentication of Documents & Execution of Bills of Exchange [Sections 21 & 22]
# Sections 21 & 22 — Authentication and Execution by Company
## Section 21 — Authentication of Documents, Proceedings and Contracts
A document or proceeding requiring authentication, or any contract of the company, may be signed by:
Key Managerial Personnel (KMP), OR
An officer or employee authorised by the Board for the purpose.
## Section 22 — Execution of Bills of Exchange, etc.
### Negotiable Instruments
A Bill of Exchange, Hundi, or Promissory Note is deemed to be drawn / accepted / endorsed by the company if it is drawn / accepted / endorsed on behalf of the company by a person acting under its express or implied authority.
### Formal Deeds (e.g., Partnership Deed)
Formal deeds can only be signed by persons authorised as attorney by the company. The company may authorise (either generally or for specific matters) an attorney in one of two ways:
Mode 1 (Common Seal)
Mode 2 (No Common Seal)
Under its common seal
• By a Director and the Company Secretary (if the company has a CS), OR<br>• By two Directors (if no CS)
Effect: Any deed signed by such an attorney shall bind the company.
## Key Point on Common Seal
The Companies (Amendment) Act, 2015 made common seal optional. That is why Section 22 provides the alternative mode of signing by directors / CS where the company does not have a common seal.
Worked example
### Example 1
Q: ABC Ltd. (no common seal) wants to authorise its General Manager as attorney to execute a partnership deed. How should this be done?
A: Since ABC Ltd. has no common seal, the power of attorney must be signed by (a) two directors, OR (b) one director and the Company Secretary (if the company has a CS). The deed signed by such GM-attorney will then bind ABC Ltd.
### Example 2
Q: The Marketing Manager of XYZ Ltd., expressly authorised to sign customer contracts, accepts a bill of exchange on behalf of the company. Is the company bound?
A: Yes. Under Section 22, a bill of exchange accepted on behalf of the company by a person acting under express or implied authority is deemed accepted by the company itself.
### Example 3
Q: A contract for purchase of office stationery is signed by the Office Administrator, who has been authorised by the Board. Is the contract validly authenticated?
A: Yes. Section 21 allows authentication by KMP or any officer/employee authorised by the Board.
⚠️ Common exam mistakes
Stating that only the Managing Director or CS can authenticate documents — Section 21 also allows any Board-authorised officer or employee.
Forgetting that common seal is now optional and Section 22 provides the alternative.
Saying that two directors AND CS must sign in the no-seal mode — only one director + CS (or two directors if no CS) is needed.
Confusing implied authority (sufficient for bills of exchange under S.22) with the formal attorney requirement (needed for deeds).
Bare-Act text Section 21 & 22 · Companies Act, 2013 · click to expand
A bill of exchange, hundi or promissory note shall be deemed to have been made, accepted, drawn or endorsed on behalf of a company if made, accepted, drawn, or endorsed in the name of, or on behalf of or on account of, the company by any person acting under its authority, express or implied.