Bank powers and signing rights in the Austrian GmbH have to line up with the registered representation regime, the commercial powers under UGB and the internal signing limits, so that the account traffic stays reliably documented.
Bank powers and signing rights in an Austrian GmbH sit at the intersection of three separate layers. Externally the managing directors registered in the company register represent the company within the representation regime of section 18 GmbHG. On a distinct layer stand the commercial powers under the UGB: Prokura and Handlungsvollmacht, granted by the entrepreneur. Under section 35 paragraph 1 subparagraph 4 GmbHG the shareholders decide whether a Prokura or a Handlungsvollmacht for the whole business may be granted. In addition, each bank sets up account-level signing authorisations with amount thresholds and a four-eyes principle. Where those three layers are not kept apart, friction in payment traffic, disputes in the shareholder circle and uncertainty about the binding effect of a single bank transaction follow. The articles set the foundation, an internal signing policy sets the release thresholds and a maintained account matrix makes visible who may sign for which account and within which limit.
Pick the trigger and the sharpest friction point. The result points to the layer that should be addressed first.
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Every bank-powers question starts with the organic representation of the GmbH. Under section 18 GmbHG the managing directors represent the company in and out of court. Where more than one managing director is appointed, they act jointly unless the articles provide otherwise. The articles can provide sole representation, joint representation by two directors or a mixed representation by one director together with a procurator authorised to co-sign the firm (section 48 paragraph 2 UGB). This representation regime is entered in the company register and forms the external frame for bank transactions.
Under section 20 paragraph 1 GmbHG the managing directors are obliged towards the company to observe all limitations set by the articles, by a shareholder resolution or by a binding order of a supervisory board on the scope of their representation. Under section 20 paragraph 2 GmbHG such limitations have no legal effect towards third parties. Internal release thresholds and portfolio structures therefore operate in the internal relationship and do not automatically change the outward effect of a specific bank transaction.
For practice the sequence is: start with the current register extract and the articles, clarify the registered representation regime and only then set up the commercial powers of attorney and the bank powers on that base. Approaching the bank first and only then revisiting the foundations produces contradictory documents.
The basic structure appears in the topic view on management and representation. The link between the internal order and the registered representation is taken up in Align management areas in the GmbH agreement.
Alongside the organic representation stand the commercial powers. Prokura is regulated in sections 48 to 53 UGB. It can only be granted by an entrepreneur registered in the company register or by his legal representative and only by an express declaration. Its scope covers under section 49 UGB all kinds of court and out-of-court transactions and legal acts that the operation of an undertaking entails. Under section 49 paragraph 2 UGB the procurator only has authority to dispose of or encumber real estate if that authority is expressly granted. Under section 50 UGB limitations of the scope of Prokura are ineffective towards third parties, with the exception of Filialprokura under the narrow requirements of section 50 paragraph 3 UGB and of admissible Gesamtprokura.
Under section 53 UGB the granting of Prokura is to be filed for entry in the company register. On the shareholder layer, section 35 paragraph 1 subparagraph 4 GmbHG assigns to the shareholder resolution the decision whether a Prokura or a Handlungsvollmacht for the entire business may be granted. The actual external grant is carried out by the management within its representation authority. Under section 52 UGB Prokura is revocable at any time, without prejudice to the contractual remuneration; the revocation has to be filed for entry in the register.
Handlungsvollmacht is narrower. Under section 54 UGB, where someone is authorised without Prokura to run an undertaking or to conclude a defined kind of, or single, transactions of an undertaking, the power extends to all transactions and legal acts that the operation of such an undertaking or the conclusion of such transactions ordinarily entails. Under section 54 paragraph 2 UGB the holder needs a separately granted authority to dispose of or encumber real estate, to enter into liabilities on bills of exchange, to take up loans and to conduct litigation. Under section 55 UGB other limitations of Handlungsvollmacht only bind third parties who knew or should have known of them.
Anyone who wants to sort the picture of powers will find the preparation in the checklist for preparing an amendment if the grant also touches the articles. The link to a consent catalogue appears in Consent catalogue for investments, loans and credit lines.
The third layer is the actual bank power on a specific account. It follows the forms of the respective bank and is the basis for card access, online banking, transfer approvals and cash disposals. Most friction in practice arises here, because each bank uses its own form and because signatories change over time without the paperwork being updated.
An account matrix has proven useful. For each account of the GmbH it lists the persons authorised to sign, the agreed amount thresholds, the four-eyes principle and the access rights to cards and online banking. A separate folder collects the current forms per bank. Where persons change or the branch swaps a contact, the signing regime remains traceable.
The bank power works towards the specific bank and is not identical to Prokura or to the registered representation. Anyone who wants to introduce a four-eyes principle internally can formalise it through matching bank powers with joint signature, because the bank then documents the joint signature in its forms. Purely internal instructions without adjusting the bank paperwork do not change the bank-contractual signing rule.
The checklist for the first consultation sorts the documents to bring. On the interplay with a growing shareholder circle, Review the articles in a growing shareholder group is helpful.
Internal release thresholds are the central steering instrument of the internal relationship. They determine from which amount a second pair of eyes, a shareholder resolution or a supervisory-board consent is required. Thresholds can be split by purpose of the account, type of contract and amount. They create accountability and document who is involved and when.
The clean line between an internal threshold and external effect is decisive. Under section 20 paragraph 2 GmbHG internal limitations of the power of representation have no legal effect towards third parties. A single bank transaction is therefore regularly not ineffective just because an internal release threshold was exceeded. The acting managing director may however breach the standard of care of a prudent business manager under section 25 GmbHG and become liable to the company for damages.
A reliable release policy covers amount thresholds, subject-matter thresholds such as loans and framework agreements, formal thresholds such as written form and receipt duty, and a rule on bundled approvals and standing orders. On the interaction with shareholder competences, Majority catalogue for fundamental GmbH decisions provides the frame.
The release policy is an internal document. It should be adopted by the shareholders and reviewed regularly. Integrating it into the rules of procedure of the management prevents contradictory instructions. The checklist on voting rights and majorities sorts the surrounding structure.
Personnel changes are the most common trigger for friction. A new managing director is appointed, a procurator leaves, a senior manager changes. Without a clean update of the account matrix, bank forms and register, powers may continue to be effective or reappear unexpectedly in a later signing chain. Revocation has to be handled actively.
A clean offboarding covers the return of cards and tokens, the deactivation of online-banking accesses, written revocation towards each branch and confirmation from the bank that the deletion has been implemented. A time-limited transition window with clear collective signatures bridges the gap. The process is completed only when the confirmations are in.
For procurators the register entry is added. Under section 52 UGB Prokura is revocable at any time; under section 53 paragraph 3 UGB the revocation is to be filed for entry in the same manner as the grant. The deletion is coordinated with the revocation towards the banks and with the update of the account matrix, so that appointment, revocation and bank paperwork line up in time.
On the interplay with a simultaneous change in the management, Align management areas orders the internal structure. Anyone who has to structure a two-shareholder constellation will find the toolbox in Two-shareholder GmbH: roles and control.
Bank powers live off traceability. For each signatory, each account and each change, date, base document and bank confirmation must remain locatable. A maintained register of powers is not a formality but a protective layer for the management and the shareholder circle.
A folder with a cover sheet and a version status per account has proven useful. It contains the current register extract, the Prokura or Handlungsvollmacht deed, the bank forms, the account matrix, the internal release policy and the bank confirmations of changes. Across several banks a shared naming scheme helps documents refer to each other.
It matters to separate the public layer from the internal layer. The register and Prokura are publicly accessible through the company register. The bank power is only documented towards the specific bank and is not public. The account matrix and release policy are internal steering documents. The articles or rules of procedure can state which layer is binding for which purpose.
The checklist for the first consultation shows which documents to prepare. Anyone who wants to combine the review of powers with a change to the articles will find the next steps in the checklist for preparing an amendment.
Practice throws up special cases that the account matrix alone cannot explain. Urgent decisions when a managing director is unavailable, payments to related persons, short-notice larger investments and cross-border transfers with particular formal requirements are typical. The articles or the release policy should hold a fallback rule for such situations.
A tested urgency rule combines a defined time window, a documentation duty and a follow-up in the collegial body of the management. A written report to the shareholders within a set deadline prevents urgent decisions from acting later as silent threshold shifts. Linking urgency to the release policy matters, because urgency should not become a routine bypass of the thresholds.
Cross-border transfers and foreign-currency transactions bring additional bank requirements. Some institutions demand joint signature above certain amounts even where sole signature is provided internally. Such bank-contractual requirements bind vis-a-vis the specific bank; the internal rule continues to apply alongside.
For deadlock situations the topic view on deadlock and dispute prevention gives the frame. Anyone who structures a two-person setup with parity signing rights will find the discussion in Two-shareholder GmbH: roles and control.
Powers age faster than the agreements they sit in. People change, account lists grow, bank branches roll out new forms. The internal release policy has to be adjusted for higher volumes. Without at least an annual review, the overview disappears.
The articles should set the frame. A clause on signing authority with a reference to a separate register of powers, a rule on adjusting release thresholds by shareholder resolution and a reporting rhythm on bank powers in the shareholders meeting keep the topic part of live governance.
When setting up the structure for the first time, three layers should be stabilised in this order: external representation in the register, commercial powers with Prokura or Handlungsvollmacht and finally the bank-contractual signing forms with the account matrix. Only once these layers are consistent does the release policy deliver visible value.
The topic view on shareholder rights and voting rights shows the interaction with the shareholder layer. The link with resolution documentation appears in Resolution minutes as evidence among shareholders.
Regularly not. Under section 20 paragraph 2 GmbHG internal limitations of the power of representation have no legal effect towards third parties. The acting managing director may however breach the standard of care of a prudent business manager under section 25 GmbHG and become liable to the company for damages.
No. Prokura is a broad commercial power of representation regulated in sections 48 and following UGB and registered in the company register. The bank power is a relationship between the GmbH and the bank on a specific account. Both can coexist and should be delimited in writing.
It operates bank-contractually if it is documented as joint signature in the signing forms of the bank. Purely internal instructions without adjusting the bank paperwork do not change the bank-contractual signing rule. Anyone who wants joint signature registers it in the forms with each bank and mirrors it in the account matrix.
Cards, tokens and online-banking accesses are returned and deactivated. Revocation towards each bank is issued in writing and confirmed. For procurators the revocation of Prokura is to be filed for entry in the company register under section 53 paragraph 3 UGB. The account matrix and the register of powers are updated.
A yearly review works well, complemented by triggered reviews at management changes, new banking relationships, changes to release thresholds and larger reorganisations. The articles or the release policy can anchor this review duty explicitly.
Review and structure GmbH articles with Brandauer Rechtsanwälte in Austria.
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