A customer sends over a contract. A team lead wants to hire. An investor asks about a new strategic direction.
Who gets to approve each move?
When the answer is “ask the founder,” decisions bottleneck. When the answer is “whoever is closest,” the company may take on commitments no one had authority to make.
Clear decision rights help your team move quickly without turning every important choice into a founder decision, or leaving everyone to guess.
Approval and signature are not the same thing
A person may be allowed to approve a business decision without being authorized to sign the contract. And someone with authority to sign may still need approval before making the commitment.
Treat these as two separate questions:
- Who approves the decision?
- Who may sign or otherwise bind the company?
For example, a department lead might approve a routine vendor expense within an agreed budget. A designated officer may be the person authorized to sign the agreement. A larger, unusual, or strategically important commitment may need a higher level of approval before anyone signs.
Job titles alone don’t answer these questions. Authority depends on the company’s governing documents, board actions, policies and applicable law.
Start with the documents , not the org chart
Before creating an approval chart, gather the documents that may already set the rules:
- Certificate or articles of incorporation and bylaws
- Board and stockholder resolutions
- Financing documents and investor consent rights
- Existing signing-authority, spending and hiring policies
- Relevant debt agreements or other commitments
These materials can overlap. A board resolution may authorize an officer to act within a defined scope. Financing documents may require investor or preferred-stockholder consent for certain decisions. Applicable law may require board or stockholder approval for particular actions.
For Delaware corporations, DGCL §141(a) generally places management of the corporation’s business and affairs under the board’s direction, subject to the statute and certificate of incorporation. DGCL §142 addresses officers and their duties. A title like “COO” or “CFO” is not, by itself, a complete delegation of authority.
That is a starting point, not a universal template. Companies incorporated elsewhere may have different rules. The company’s own documents and applicable law control.
Make a practical map of who decides
An approval matrix should make common decisions easier, not send routine work through a maze of approvals. Start with the decisions your team actually makes, then state who can approve them and who can sign.
| Decision | Typical day-to-day approach | Escalate when… |
|---|---|---|
| Contracts | A business owner approves standard, ordinary-course agreements within a defined scope. An authorized signatory executes them. | Terms are unusual, long-term, exclusive, high-risk, outside the ordinary course, or above a set limit. |
| Spending | Budget owners approve planned purchases within their delegated limits. Finance checks budget and payment controls. | Spending is unbudgeted, unusually large, recurring, or strategically significant. |
| Hiring | Managers hire within approved headcount and compensation bands. | The role is senior, outside the plan, or involves exceptional compensation. |
| Public commitments | Designated leaders approve routine announcements and customer-facing statements within agreed guidelines. | The statement could create a material business, regulatory, financial or reputational commitment. |
| Strategic changes | Executives manage execution of the approved plan. | The change may materially affect strategy, capital, leadership, risk or the company’s direction. |
This is a discussion starter, not a legally sufficient matrix for every company. Amounts, roles and escalation points should reflect the business and its documents. And dollar limits alone may miss important risks: a low-cost contract can still include exclusivity, sensitive data obligations, a long renewal term or a significant promise to a customer.
Define terms that might otherwise cause confusion. Does “contract value” mean the annual amount, the full term, or the maximum potential liability? Do renewals and amendments count as new commitments? Can related purchases be combined to meet a threshold? Include a clear rule against splitting a commitment to avoid approval.
Keep board and stockholder matters distinct
Not every important decision belongs to the board. But some decisions should not be delegated to an individual executive under an ordinary operating policy.
A company might reserve certain decisions for board approval, such as issuing equity, taking on significant debt, changing the annual budget materially, appointing or removing the CEO, approving a major acquisition, or entering a related-party transaction. Those are examples to review, not a universal list.
Some actions may also require stockholder approval under applicable law or the company’s governing documents. For example, DGCL §271 addresses stockholder approval for certain sales of all or substantially all corporate assets. Financing documents may create additional investor or class consent rights.
Be specific about which approval is required. “Investor approval” could mean a board vote that includes an investor director, a separate preferred-stockholder vote, or another consent set out in the financing documents. They are not interchangeable.
Give managers room to act, and set clear edges
The goal is not to have the board approve every vendor agreement or routine hire. Give leaders defined authority to act within an approved budget, standard terms and their area of responsibility.
For example:
- A team lead can approve planned spending within a set limit.
- A hiring manager can hire within approved headcount and compensation bands.
- An executive can approve an ordinary-course contract within delegated limits.
- A designated officer can sign agreements on the company’s behalf.
- A matter outside those limits goes to the CEO, board or another required approver.
Decide who reviews nonstandard terms, who handles exceptions and what happens when an approver has a conflict. A person should not approve their own expense or approve a transaction that benefits them personally without the appropriate independent review.
Keep the system short enough to use. A one-page matrix with links to relevant policies can be more useful than a sprawling document no one remembers to check.
Record the decision, not just the signature
If authority is unclear later, a signed contract may not tell the full story. Keep a record of who approved the decision, what they approved, and when.
That record might be a board consent or minutes for a board matter; a written approval in the company’s workflow for an operational decision; or an attached approval record in the contract file. The exact process depends on the action and company requirements.
For significant decisions, capture:
- The decision and its business purpose
- The approver and the basis for their authority
- Any required board, stockholder or investor consent
- Any conflict disclosure or review
- The final signed agreement or supporting document
Keep records in a place the right people can find. Update the authorized-signatory list when roles change, and promptly remove access when an employee or officer leaves.
Revisit the system when the company changes
Decision rights can drift as executives join, financing terms change, teams take on new responsibilities, or the business enters a new market. Recheck the matrix after a financing, a material budget change, a leadership change or a major shift in strategy. A regular review can catch stale names, conflicting policies and approvals that no longer fit how the company operates.
For a company moving from founder-led decisions to a broader leadership team, the right framework should protect the decisions that matter while letting daily work happen without unnecessary delay.
A fractional general counsel can help map current authority, compare the matrix with corporate documents and financing terms, draft or refine delegations, and put a review process in place. Learn more about The Chief Counsel’s fractional general counsel and legal services, or contact us at contact@thechiefcounsel.com.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. It is not a substitute for advice from a qualified attorney about your specific facts, circumstances, governing documents or applicable law. Reading this post or contacting The Chief Counsel through this post does not create an attorney-client relationship. Laws and requirements vary by jurisdiction and may change. Do not act or refrain from acting based on this content without seeking appropriate legal advice.