Delegating board powers to committees and managers

Q: What cannot be delegated?

Powers the board does not have. Article 5 only covers powers conferred on the directors under the articles. Decisions the Act reserves to members, such as special resolutions, are not the board's to give away. Statutory board decisions. Section 414 says the annual accounts must be approved by the board of directors and signed on behalf of the board by a director, and section 419 says the same of the directors' report, which may be signed by a director or the secretary. A finance committee can prepare and review the accounts, but the approval belongs to the full board; see approving and signing company accounts. Restrictions imposed by members. Article 4 lets the shareholders, by special resolution, direct the directors to take or refrain from taking specified action, and any delegation is subject to that.

Q: How does this work in practice?

Illustration only. A private company with model articles has four directors. The board resolves that: the managing director may enter contracts up to £50,000 and hire staff within the approved budget, and may pass the hiring power to the operations manager; a finance committee of two directors and the finance manager will review monthly figures and the draft annual accounts, with a quorum of two that must include a director; the board keeps contracts above £50,000, borrowing, dividends and approval of the annual accounts. When the finance committee recommends the accounts, the full board still approves them under section 414 and a director signs the balance sheet. A year later the board reduces the managing director's limit to £25,000 by a new resolution under article 5(3).

Under the model articles the board is responsible for managing the company’s business, and article 5 lets the directors delegate any of their powers to any person or committee, on whatever terms they think fit, and revoke or change the delegation at any time. A committee must follow procedures based on the board’s own decision making rules. Delegation shares out the work, not the responsibility: each director still owes the statutory duties, and some decisions, such as approving the annual accounts, must stay with the full board.

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Where does the power to delegate come from?

The power comes from the articles, not from the Companies Act 2006. Article 3 of the model articles for private companies limited by shares says that, subject to the articles, the directors are responsible for the management of the company’s business, for which purpose they may exercise all the powers of the company. Article 5 then allows them to hand those powers on. The model articles for public companies contain the same delegation wording in their own articles 5 and 6.

This order is deliberate. Section 173 requires a director to exercise independent judgment, and the explanatory notes to the Act (paragraphs 333 to 335) say the duty does not itself confer a power to delegate, nor prevent a director from exercising a power to delegate conferred by the constitution, provided it is exercised in accordance with the constitution. A board with no power to delegate in its articles cannot create one by resolution. If the company has bespoke articles, check them first; see articles of association.

What does article 5 of the model articles allow?

Article 5(1) says that, subject to the articles, the directors may delegate any of the powers conferred on them under the articles:

to such person or committee;
by such means, including by power of attorney;
to such an extent;
in relation to such subjects or territories, as the article puts it; and
on such terms and conditions,

as they think fit. Article 5(2) adds that, if the directors so specify, a delegation may authorise further delegation by the person to whom the powers are delegated. Article 5(3) allows the directors to revoke any delegation in whole or part, or alter its terms and conditions.

Two points follow. First, the delegate does not have to be a director: the article refers to any person or committee, so powers can go to a managing director, a finance manager, an outside agent or a committee that includes non directors. Second, sub delegation is not automatic. A managing director who passes authority to a junior manager needs the board’s delegation to have allowed it.

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How do committees have to work?

Article 6(1) says committees to which the directors delegate powers must follow procedures based, as far as applicable, on the provisions of the articles governing decisions by directors. In practice the rules on calling meetings, quorum, majority decisions and conflicts of interest in articles 7 to 14 are applied to the committee with suitable changes. Article 6(2) lets the directors make rules of procedure for all or any committees, and those rules prevail over the rules derived from the articles if they are inconsistent.

A committee’s terms of reference should therefore say who sits on it, what its quorum is, what it can decide and what it must refer back, and how it reports to the board. Without them, the default board rules apply, which can produce odd results, such as a quorum rule that a two member committee cannot meet if one member has a conflict. Board procedure itself is covered in board meetings: procedure and quorum.

What if the company still has Table A articles?

Companies formed under the Companies Act 1985 often still use Table A. As originally made in 1985, regulation 72 allowed the directors to delegate any of their powers to a committee consisting of one or more directors, and to delegate to a managing director or any director holding executive office such of their powers as they considered desirable. A delegation could be subject to conditions, could be either collateral with or to the exclusion of the board’s own powers, and could be revoked or altered. Regulation 71 allowed the directors to appoint any person as the company’s agent, by power of attorney or otherwise.

The practical difference is that a Table A committee must consist of directors, while a model articles committee need not. Later versions of Table A changed some wording, so check the version registered for the company. Moving to modern articles requires a special resolution; see amending articles of association.

What cannot be delegated?

Powers the board does not have. Article 5 only covers powers conferred on the directors under the articles. Decisions the Act reserves to members, such as special resolutions, are not the board’s to give away.
Statutory board decisions. Section 414 says the annual accounts must be approved by the board of directors and signed on behalf of the board by a director, and section 419 says the same of the directors’ report, which may be signed by a director or the secretary. A finance committee can prepare and review the accounts, but the approval belongs to the full board; see approving and signing company accounts.
Restrictions imposed by members. Article 4 lets the shareholders, by special resolution, direct the directors to take or refrain from taking specified action, and any delegation is subject to that.

Does delegation reduce a director’s responsibility?

No. GOV.UK guidance for directors says you can hire other people to manage some things day to day, but you are still legally responsible for your company’s records, accounts and performance. Section 174 requires each director to exercise the care, skill and diligence of a reasonably diligent person with the general knowledge, skill and experience expected of someone in that role, and the director’s own knowledge, skill and experience. Choosing a competent delegate, setting limits and checking reports is part of meeting that standard. Section 173 also means the board should not hand over its judgment so completely that it can no longer exercise it. See directors’ duties under the Companies Act 2006.

How are people outside the company protected?

Outsiders are protected by section 40. In favour of a person dealing with the company in good faith, the power of the directors to bind the company, or to authorise others to do so, is deemed to be free of any limitation under the constitution, and the person is not bound to enquire about limits on that power. Internal limits on a delegation therefore protect the company against its own staff more than against third parties. Deeds are a separate case: under section 47 a company may, by instrument executed as a deed, appoint an attorney to execute deeds or other documents on its behalf. Our guides to directors’ authority to bind the company and signing on behalf of a company explain how authority works in practice.

What records should be kept?

The delegation is itself a board decision. Article 15 requires the directors to ensure the company keeps a written record, for at least ten years, of every unanimous or majority decision taken by the directors, and section 248 requires minutes of all proceedings at directors’ meetings to be kept for at least ten years. The minute or written resolution creating a delegation should record:

who receives the power, and whether it is personal or attached to a role;
exactly what is delegated, with any financial limits;
whether further delegation is permitted under article 5(2);
how and when the delegate reports back;
any end date, and that the board may revoke or vary it under article 5(3).

Committee decisions should be minuted in the same way, and many companies keep a schedule of decisions reserved to the board alongside a single authority list showing every current delegation.

How does this work in practice?

Illustration only. A private company with model articles has four directors. The board resolves that:

the managing director may enter contracts up to £50,000 and hire staff within the approved budget, and may pass the hiring power to the operations manager;
a finance committee of two directors and the finance manager will review monthly figures and the draft annual accounts, with a quorum of two that must include a director;
the board keeps contracts above £50,000, borrowing, dividends and approval of the annual accounts.

When the finance committee recommends the accounts, the full board still approves them under section 414 and a director signs the balance sheet. A year later the board reduces the managing director’s limit to £25,000 by a new resolution under article 5(3).

What mistakes come up most often?

Delegating under model articles wording when the company actually has Table A or bespoke articles.
Allowing sub delegation in practice when the board’s delegation did not authorise it.
Letting a committee approve the annual accounts instead of the full board.
Setting up committees with no terms of reference, so the default board quorum rules apply unexpectedly.
Delegating and then not supervising, which leaves the directors exposed under section 174.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.