Delegations of authority: a register a CEO can use
A delegations register works when it fits on a few pages, names positions rather than people, and is tested against real transactions every quarter.
Renzo Demartini, Chartered Accountant and finance executive · · 4 min read Drafted with AI, reviewed and spot-checked by me.
Exhibit 1Who can approve this A$40,000 supplier bill?
Supplier bill
Sample, excl. GST
Amount
A$40,000A$40,000A$40,000
Budget
Within budget
Approved by
WaitingCEO
Department headUp to A$25,000Over the limit
CEOUp to A$150,000Within the limit
Quarterly testA sample checked each quarterApproval kept
A supplier bill for A$40,000 arrives. It is within budget.
The department head can approve up to A$25,000. Not this one.
The CEO’s limit covers it, so the CEO approves.
The register names positions and limits, so every approval can be checked against it.
Illustrative figures, not client data.
In short
The board keeps a short list of decisions and delegates the rest in writing, with limits and conditions.
A usable register names positions, counts the whole commitment and says what happens when someone is away.
Test it each quarter by checking a sample of real approvals against the limits, and report the exceptions.
Most growing businesses have a delegations policy. Fewer have one that anyone uses.
The usual version was written once, for an auditor or a lender. It names people who have since left, its limits were set when the business was half its size, and nobody checks approvals against it. So the real rules live in people’s heads. The CEO becomes the bottleneck for small decisions, or decisions get made by whoever is closest. Neither is control.
Where the authority comes from
Exhibit 2
The board can delegate, and it stays responsible for what the delegate does
01Directors run the business
Section 198A: the business is managed by or under the direction of the directors.
02They may delegate
Section 198D: to a committee, a director, an employee or any other person, unless the constitution provides otherwise. The delegate follows their directions.
03It goes in the minute book
A note to section 198D: the delegation must be recorded in the minute book.
04They stay responsible
Section 190: a director is responsible for what a delegate does with the power, as if the directors had done it.
The way out of that responsibility is narrow. A written register, a sensible choice of delegates and evidence of testing help show the board’s beliefs about its delegates were reasonable. Your constitution can limit or change the power to delegate (sections 198A and 198D), so get legal advice on your own position.
More detail
The director must have believed, on reasonable grounds and at all times, that the delegate would act within the directors’ duties. The director must also have believed, on reasonable grounds, in good faith and after proper checks where the circumstances called for them, that the delegate was reliable and competent.
What the board keeps
Exhibit 3
The board keeps a short list. Everything else is delegated in writing
The board keeps
The strategy and the annual budget
Borrowing, and security over the company’s assets
Acquisitions, disposals and new lines of business
Capital spending outside the budget, above a set amount
Appointing the CEO, and the CEO’s pay
Dividends and changes to share capital
Transactions with directors or their related parties
Delegated to the CEO
Everything else, in writing, with limits and conditions
The CEO can pass parts of it down
A typical list. Your constitution decides what the board may delegate.
Keep the board’s list to decisions that change the company’s risk or shape. Keeping it short is what makes the rest of the register usable.
A delegation of authority matrix you can copy
Exhibit 4
One limit per position for each decision, and no names
Decision
Department head
Sales manager
CEO
Board
Supplier bills within budget
Up to A$25,000
–
Up to A$150,000
–
Capital spending outside budget
–
–
Up to A$50,000
Above A$50,000
Customer contracts (total value)
–
–
Up to A$500,000
–
Discounts off list price
–
Up to 10%
–
–
New roles within budget
–
–
Decides
–
Borrowing or security
–
–
–
Always
A fictional A$30M business, figures excl. GST: illustrative limits, not a recommendation for yours. A dash means no authority for that decision.
Illustrative figures, not client data.
Copy the table as a template, then set the limits for your own business. Beside each row, write three more things. The measure: per transaction, per year, or the contract’s value over its whole life. The condition: within budget or not. The record: where the approval is kept, so it can be found later.
More detail
There are no names in it, and no limits for decisions nobody makes. A register for a business this size often fits on two or three pages.
What a delegations policy must say
Exhibit 5
Six rules keep the register true when people and budgets change
01
Positions, not people
Delegate to the role. When someone leaves, the authority stays with the role; only the list of who holds it changes.
02
Count the whole commitment
A three-year contract is approved at its total value, not its monthly invoice. Splitting a purchase to stay under a limit is a breach.
03
Write down the leave rule
When an approver is away, a named person acts for a set period, in writing. Otherwise approvals stall or go around the register.
04
Limit passing it down
Say which powers the CEO may delegate further and which stay with the CEO. Each further step is written down too.
05
One owner, one change process
Usually the CFO or the company secretary keeps the register. The board approves changes, and the minutes record them.
06
Make the systems match
Approval limits in the accounting, purchasing and payroll systems equal the register, and change the same week it does.
Real transactions: large bills, new contracts, discounts, new hires and any manual payments.
02Check each approval
Did the approver hold the authority on that date, for that amount?
03Report on one page
To the board or its audit or finance committee: the number tested, the exceptions and what was done about each.
04Read the pattern
One exception is a conversation. A pattern usually means the limits no longer fit how the business runs.
Report the result as part of the board’s regular management reporting. Review the whole register at least once a year, and whenever the structure, the budget or a key role changes.
What to do first
Exhibit 7
Your first draft is the gap between practice and paper
01List ten decisions
This week, list the ten decisions that commit the most money or carry the most risk.
02Write who decides today
Beside each one, write who decides today in practice, not on paper.
03Compare with the board’s
Then compare that list with what your board has formally delegated.
04Draft from the gaps
The gaps are your first draft.
Common questions
Can directors delegate their powers to employees?
Yes, in most Australian companies. Section 198D of the Corporations Act lets directors delegate any of their powers to a committee, a director, an employee or any other person, unless the constitution provides otherwise. The delegate must follow the directors’ directions.
Are directors still responsible for what a delegate does?
Generally, yes. Section 190 makes a director responsible for a delegate’s use of a delegated power as if the directors had used it. The exception is narrow. The director must have believed on reasonable grounds, at all times, that the delegate would act within the directors’ duties. The director must also have believed, reasonably, in good faith and after proper checks where needed, that the delegate was reliable and competent.
How often should a delegations register be reviewed?
Test a sample of real approvals against it every quarter. Have the board review the whole register at least once a year, and whenever the structure, the budget or a key role changes.
What is the difference between a delegations policy and a delegation of authority matrix?
The policy sets the rules: what the board keeps, positions rather than people, the whole commitment, the leave rule, who may delegate further and who owns the register. The matrix is the table of who decides what, up to which limit. Both can sit in one document of a few pages.
Is there a delegation of authority template I can use?
Yes. The sample matrix in this article is a starting template: the decisions down the side, the positions across the top and a limit in each cell. Beside each row, write the measure, the condition and where the approval is recorded. Set the limits for your own business, and get legal advice on your constitution.
Chartered Accountant (CA ANZ) and finance executive, based in Canberra. Practical AI and automation for SMEs, and adviser to owners, CEOs and boards on integration and finance.
Is your board sure who can commit the business, and to how much? I set up finance controls as a fractional CFO, or review them in a Diagnostic.
Renzo Demartini