I am an employee at a company and my boss has made me president in order to sign documents regarding purchases for the company such as other real estate and vehicles. How does this affect me if at all and am I legally responsible for anything?
3 Answers from Attorneys
Way back in the early days of corporate law, the office of President was largely ceremonial (kind of like the President of France, where all the power really resides with the Prime Minister) and the sole statutory function was to preside over meetings of the Board of Directors (at which he could not vote). In modern times, the President has implied authority to act as chief executive officer unless there is some specific board action to the contrary. Thus, in your new office, you have apparent authority to bind the company to contracts and obligations in the ordinary course of its business, and for those you would have no personal liability as long as you clearly indicate that you are signing on behalf of the company.
Things do get sticky if the company starts to go under and federal or state withholding or sales taxes are unpaid -- the President and Treasurer can be held personally liable.
The President of a company has an obligation to act in the best interest of the company and can be held personally responsible for certain actions such as failure to pay payroll taxes; failure to disclose truthful information in applications for bank loans etc.
You cannot act as a simple signatory and sign documents put in front of you. If you do you are at risk of being personally liable if something unlawful occurs.
You need to understand what you are signing and if the information is accurate. You should also ask if the company has D&O insurance.
However, if this is a real promotion and your duties are defined as such then you simply need to act like the President of the company. Presidents are usually the equivalent of the CEO or COO of an organization depending on the actual structure.
Please feel to call me if you have more questions.
As a Franchise Attorney I agree with the other attorney answers. You should definitely only sign as President and do not execute any personal guarantees. Know what your signing and it's a good idea to require your boss to have Directors and Officers (D&O) insurance. Just ask yourself a simple question - why didn't your boss make himself or herself President? Consult with a good business or franchise attorney in your area for specific advice.
Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.
Franchise Foundations, a Professional Corporation