Many SME owners start by deciding everything themselves, from ordering raw materials and quoting prices to hiring staff, signing purchase orders and transferring money. As the business grows, the team starts to wait. Quotations sit on the owner's desk, purchase orders go out late, middle managers do not dare decide even small matters, and the owner is tired of answering the same questions every day.
The popular answer is "delegate". But legally, letting someone else approve or sign for the company is not something settled by word of mouth. It involves the directors' authority as registered, powers of attorney, who is authorised to operate the bank account, and the company's liability to counterparties who believe the employee has authority. This guide helps you set up an approval matrix that works in practice, and shows which parts need legal documents behind them.
The core answer
The problem of an owner approving everything can be solved with a delegation of authority matrix that divides decisions into levels according to the risk and commitment involved, not according to convenience. Repeated, low-risk matters go to the team. Matters that bind the company for a long time or are hard to reverse go to management or the owner. Then write it down so everyone agrees.
The rule (Thai law). A limited company is a juristic person managed by its directors in accordance with its articles of association (Civil and Commercial Code section 1144), and directors must exercise the care of a prudent business person (section 1168). The relationship between the company and its directors is governed by the rules on agency (section 1167). An agent is a person who acts on behalf of another (section 797), and a person who holds out, or allows another to represent himself as his agent, is liable to third parties in good faith (sections 821 and 822). An agency ends when the principal revokes it or the agent gives notice, and when either party dies, becomes incapacitated or goes bankrupt, unless that conflicts with the agreement or the nature of the business (section 826).
Our practical view. A good matrix has three layers that should not be mixed. The first is "external authority", which belongs to the authorised directors under the company affidavit. The second is "authority delegated for a specific matter", done by a power of attorney. The third is "internal approval authority", which is the company's own table. Owners who confuse these three layers tend either to let employees sign without documents or, the opposite, to issue powers of attorney that are too broad.
For who has authority to bind the company and how to read the company affidavit, see who can bind your Thai company. This guide focuses on dividing authority within the organisation.
1. Why the owner became the bottleneck
Before designing the table, find out why authority is stuck with the owner, because each cause has a different fix.
- The team does not know the criteria. No one has said which matters they can decide, so they ask every time. Fix with a table that states clear criteria.
- The owner does not trust the team. Past damage from others' decisions. Fix by setting ceilings and after-the-fact reporting instead of approval before everything.
- The owner's name is on every document. Banks, suppliers and customers are used to dealing only with the owner. Fix by notifying them of the new authorised persons and issuing powers of attorney.
- There is only one director. Then there is no way except for the owner to sign. Fix by considering adding an authorised director. See section 6.
- There is no record system. The owner has to remember what was approved. Fix with a form or channel that keeps history.
2. Three layers of authority, kept separate
| Layer | Where it sits | Who sets it | Who it binds |
|---|---|---|---|
| External authority | Company affidavit, articles | Directors, shareholders and registration at the DBD | The company and outsiders |
| Authority delegated for a specific matter | Power of attorney | Authorised directors | The company and the counterparty who receives the document |
| Internal approval authority | Authority matrix, company policy | Owner or board | Internally; evidence of the responsibility of those who act |
The key point is that an internal table does not give an employee authority to bind the company externally, and does not remove the authority of registered directors. If you want a manager to sign a contract with a counterparty, you need a power of attorney, not just an entry in the table.
3. Designing the matrix in levels
Use levels rather than numbers, because the numbers need adjusting to the size of your business. Try four levels.
| Level | Nature of the matter | Decision-maker, for example |
|---|---|---|
| Level 1: routine work | Recurring, low risk, easily cancelled | Supervisor or department manager, for example buying consumables, quoting at already-approved prices |
| Level 2: moderate commitment | Affects profit or a single customer | Senior manager, for example discounts within a framework, approving customer credit under policy |
| Level 3: heavy commitment | Long contracts, contracts with penalties or unlimited liability, hiring executives | Authorised directors |
| Level 4: needs shareholders or a board meeting | Changing objects, increasing or reducing capital, large borrowing, giving security | Shareholder resolution or board resolution under the articles |
Set the limits or conditions for each level to suit your business, in consultation with your accountant. The criteria should reflect the loss the business can bear, not distrust.
Topics the matrix should cover
- Purchasing and hiring contractors
- Quotations, discounts and customer credit
- Signing contracts with customers and suppliers
- Hiring, promoting, adjusting pay and terminating employees
- Payments and money transfers
- Filings with government agencies, such as the Revenue Department and Social Security
- Responding to complaints and settling disputes
- Use of personal data and responses to data subject requests
4. Powers of attorney: when and how to write them
Use one when someone else is to act for the company externally, for example signing a specific contract, handling documents with government agencies, or dealing with a bank.
- Name the grantor and the attorney. The grantor must be an authorised director as shown in the company affidavit, signing and sealing as registered.
- Keep the scope narrow. State what, with whom and for what period. Avoid wording such as "to do anything on behalf of the company in every respect" unless necessary.
- Set an expiry. State an end date rather than leaving it open-ended.
- State prohibitions. For example no sub-delegation, no borrowing, no giving security.
- Keep a register. Record who holds which document so it can be recalled.
Example wording (an example only, to be adapted to the facts)
I hereby authorise [name of attorney], Purchasing Manager,
to sign purchase orders for raw materials with suppliers on the
company's approved list, within the framework set out in
the company's approval authority matrix,
from [day/month/year] to [day/month/year].
The attorney has no power to sub-delegate, borrow money, give guarantees
or amend contracts whose term exceeds the period stated above.
If it is to be used at a government agency, the agency may prescribe a form and stamp duty. Check the latest form with the agency concerned.
5. Risks of broad delegation or letting people exceed authority
If an employee exceeds their scope but the counterparty acted in good faith and had reason to believe the employee had authority, the company may be liable under the principle of agency by holding out (sections 821 and 822). Things that lead a counterparty to believe this include
- The employee has signed similar contracts before and the company performed them without objection.
- Use of a business card, a title or the company seal with the company's knowledge.
- A company email telling the counterparty that the employee is the main contact who can decide.
What to do: notify key suppliers and customers in writing who may sign what, and notify them when this changes. Keep the company seal only with the person responsible.
Conversely, if someone uses authority beyond what was given for their own benefit, the owner should keep the evidence and consult a lawyer about civil or criminal liability. The internal table and the powers of attorney will be important evidence.
6. Directors, banks and authorised signatories
- Authorised directors. The names and signing conditions are registered at the Department of Business Development, for example "any two of the three directors sign together and affix the seal". Changes must be registered. For details, see changing directors, capital, address or objects after registration.
- Adding directors. If the owner is the only director and is the bottleneck, adding a co-authorised director is one option, but consider the new director's liability and the effect on control of the company. Discuss with a lawyer first.
- Banks. Authorised signatories for withdrawals as set by the bank are separate from the company affidavit. A bank has its own resolution forms, signing conditions and specimen signatures. Notify the bank when signatories change.
- Bank limits. Some banks allow view-only access, or two-level approval for transfers, which reduces the owner's burden while keeping control of risk. Ask your bank.
- If something happens to the sole director. See what to prepare in if the sole director dies, how the company pays and signs contracts and the guide on the owner suddenly unable to work. Dividing authority from the start reduces these risks.
7. Approving by electronic signature and internal systems
Approving through an app or document system means the owner does not have to be on site, but the system must be able to answer who approved, when, what, and that the document was not changed afterwards. For details on the evidence for online signing, see signing company contracts online: what evidence is needed.
- Use individual accounts, not shared accounts whose password everyone knows.
- Keep approval records separate from the document files.
- For documents that bind the company externally, have a director or an attorney sign, according to the counterparty's conditions.
- Check first with banks and government agencies whether they accept electronically signed documents.
8. Monitoring without approving everything yourself
After delegating, the owner can still stay in control with mechanisms lighter than approving every matter.
- Weekly or monthly reports summarising what the team approved at each level.
- Spot checks. Pick some documents and check they follow the table.
- Exceptions must be recorded. If the team has to go past a limit, record the reason and the approver.
- Review the table yearly. Adjust for the size of the business and lessons learned.
For setting up a contract review procedure in a company without a legal department, see setting up a contract review process before signing when you have no legal department.
9. Common mistakes
- Having employees sign contracts in their own names without a power of attorney, then the counterparty asks about authority later.
- Signing blank documents or pre-stamping the seal for employees to use, which risks misuse.
- A power of attorney with no end date, and nobody recalls it when the employee resigns.
- Registering several directors but in practice having one sign, which causes disputes when the other directors disagree.
- An authority table that is never updated although the business has changed.
- Not telling the bank when signatories change.
10. Checklist for setting up approval authority
- Check the latest company affidavit for who may sign and on what conditions
- List the matters the owner currently approves, then divide them into four levels
- Write the matrix to cover purchasing, sales, contracts, staff, money and government agencies
- Issue specific powers of attorney for those who must sign externally, with an expiry and prohibitions
- Set up a register of powers of attorney and company seals
- Tell key counterparties and banks who has authority to do what
- Set up an approval system that keeps history and uses individual accounts
- Set up monitoring reports and review the matrix at least once a year
- Consider adding an authorised director or a back-up so the business does not stop when the owner is away
Further reading
- Who can bind your Thai company — reading the company affidavit and the scope of director authority
- Setting up a contract review process before signing when you have no legal department — contract approval steps for SMEs
- Signing company contracts online: what evidence is needed — approval and electronic signing
- Changing directors, capital, address or objects after registration — when you need to add or change authorised persons
- The owner suddenly unable to work — planning for the business to continue when the owner is absent
Let the team decide repeated, low-risk matters themselves, but put external authority in documents: the registered directors, powers of attorney for specific matters, and an internal table everyone agrees on.
We help draft powers of attorney, check director authority against the company affidavit, and set up approval procedures for contracts and important documents for Thai companies. For an initial consultation, call +66 92 254 2045 or send us the details. See also contracts and documents and corporate secretarial work.
This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.
