The Absent Signatory: A Director’s Continuity Plan for the Company That Still Has to Trade

Most companies are designed around the presence of one or two people. The arrangements work well while those people are available. They become fragile when a director is admitted to hospital, stranded abroad, called away for a family emergency or simply unreachable for a week. The company has not failed, but the machinery of approval has. Payments wait, contracts sit unsigned and staff look for decisions that nobody feels authorised to make.

The prudent response is not to create a pile of paperwork for its own sake. It is to settle a small number of practical questions while everyone is well and reachable. For an owner-managed UK company, that can usually be done in an afternoon, provided the right people are in the room and the conclusions are written down.

Begin with the authority question

The first question is not who can sign cheques. It is who can bind the company. Under the Companies Act 2006 and the company’s articles of association, directors exercise the company’s powers collectively, subject to any restrictions in the articles or a shareholders’ agreement. A single director may have apparent authority in day-to-day dealings, but that is not the same as having a clear internal mandate for every decision.

Review the articles before inventing a workaround. Private companies incorporated under the model articles often have straightforward quorum provisions, but older or bespoke articles can contain unexpected requirements. Check how many directors are needed for a board meeting, whether written resolutions are permitted, whether alternate directors are allowed and whether any decisions require shareholder approval. If the company has only one director, consider what happens if that person cannot act at all. The answer may require a shareholders’ decision or a change to the articles, not merely a temporary bank arrangement.

Make the bank mandate practical

Bank mandates are where director absence is felt most quickly. A company may have a mandate that lists two signatories but requires both for every payment, or one that relies on a single online banking token held by the managing director. Neither is wrong in principle, but each needs a continuity plan.

Ask the bank what temporary arrangements it will accept and what evidence it requires. Some institutions permit a temporary mandate, additional authorised user or dual authorisation for payments above a set threshold. Others require board resolutions and updated identification before any change takes effect. The time to discover this is not the morning after an accident.

Separate the authority to approve a payment from the practical ability to release it. Online banking tokens, card readers and administrator logins should not all sit with one person. A deputy approver who cannot log in is not a deputy. Record who holds each credential, where backup devices are kept and how access is revoked when someone leaves or returns.

Settle quorum and delegation rules

A company can function with absent directors only if the remaining directors can validly meet. Check the quorum in the articles and test it against realistic scenarios. If two directors are required and one is unavailable, the board may be unable to act formally. If the articles allow a sole director to act, make sure the records show that the arrangement is understood and has not been undermined by habit.

Where the articles permit delegation, consider a written delegation of specific functions for a defined period. This is not a substitute for appointing a director. It is a limited authority to carry out particular tasks, such as authorising routine payments, dealing with named suppliers or signing standard-form documents. Keep the delegation narrow, time-bound and recorded in the minute book.

Understand what a power of attorney can and cannot do

In England and Wales, a lasting power of attorney for property and financial affairs can allow an attorney to manage the donor’s financial affairs, including interests in a business, subject to the terms of the instrument and the law. Scotland and Northern Ireland have different regimes. An LPA is a serious document and should be prepared with legal advice.

It is equally important to understand its limits. An attorney acting under an LPA does not automatically become a director of a company or acquire a director’s voting rights at board level. The attorney may deal with the director’s personal financial interests, but the company’s constitutional arrangements still govern who can act for the company. If continuity depends on someone stepping into a board role, the articles and any shareholders’ agreement need to be examined well before the need arises.

Keep the statutory books where they can be found

A company’s statutory registers, minute books, share records and material contracts are not ornaments. They are the evidence of authority. If they are kept in one director’s study, with no index and no backup, a period of absence can become a governance problem as well as an administrative one.

Decide where the statutory books live, who else can access them and how copies are maintained. Confirm that the registers are up to date, that minutes of board and shareholder decisions are filed and that the persons with significant control register is accurate. If the company uses a registered office service or an accountant to hold records, confirm what is held where and how quickly documents can be produced. A bank or solicitor may ask for a board resolution at short notice; being able to locate the precedent and the register of directors matters.

Treat key-person cover as protection, not succession

Key-person insurance can provide money if a crucial individual dies or becomes seriously ill. It cannot sign a contract, chair a meeting or reassure a customer. It is a financial cushion, not a continuity plan. Use it alongside practical arrangements: a named deputy for critical tasks, documented supplier and customer contacts, cross-training for essential processes and a short list of professional advisers who can be called on.

For smaller companies, the most valuable continuity measure is often a simple operations file. It should identify the company’s main commitments, payment dates, professional advisers, banking contacts, insurance policies and the location of the statutory books. It should not contain passwords in an unsecured document, but it should tell a trusted deputy where to start.

The afternoon decisions

A useful continuity review ends with decisions, not observations. Confirm the board quorum and whether written resolutions are available. Identify at least one deputy for banking approvals and test that their access works. Review the bank mandate and ask what temporary changes are possible. Record any limited delegation in writing. Check the articles for alternate director or sole director provisions. Confirm where the statutory books are held and who can retrieve them. Review whether a power of attorney or key-person policy is appropriate, taking professional advice where needed. Finally, tell the people who need to know, without circulating sensitive details more widely than necessary.

None of this removes the risk of illness or absence. It does reduce the chance that a single missing signature turns a manageable disruption into a stalled company. The work is modest, but it should be done before it is needed. This article is general guidance and is not a substitute for legal or financial advice on the company’s particular articles, mandates and circumstances.