The Prokura is a legally granted power of representation with legally defined scope. We clarify what this actually means, how you can grant procura and how it differs from other forms of representation.

In order for someone to be able to act legally for another, this requires representative power. In connection with companies, there are various possibilities to let another person appear for the company. The general deputy rules according to §§ 164 ff. BGB apply of course also in commercial law. However, these are regularly adapted to commercial law requirements and thus receive regular modifications. In commercial law, for example, there is a need for rapid processing and legal clarity. Accordingly, there are types of representation in commercial law. Procura is one of these possibilities. In addition, there is the power of action and the representative power of the shop employee. However, the Prokura has the widest scope according to §§ 49, 50 HGB.

The Prokura is a legally granted power of representation with a legally defined scope. The extent determined by law means that the contractual partner can rely on the representative power of his contractual partner. Thus, according to § 49 HGB, Prokura basically authorizes all legal transactions that the operation of a commercial trade entails. Only real estate transactions are excluded. A restriction of the scope in accordance with § 50 HGB against third parties is also ineffective. The procura is usually based on a special relationship of trust between the principal and the procurator. This results in the extensive scope and lack of transferability of the Prokura.

The authorized representative must sign in such a way that his position as authorized representative becomes clear. Consequently, he has to sign with the company, his name and an addition suggesting the procura. The latter is regularly indicated with the abbreviation ppa or p.p.a. for "per procura authorritate".

3.2.1. Personal and express

In principle, the granting of the procura is governed by §§ 164 ff. BGB – the general rules of representation. Nonetheless, there are some special features of commercial law. First of all, Prokura can only be granted by merchants and only personally and expressly. Therefore, as a merchant, you cannot authorize another person to give someone procura. In addition, there is no implied procura. Then at most a normal toleration power, prima facie power or implicitly declared power of action can be present.

3.2.2. Entry in the Commercial Register

The granting of the procura must also be entered in the commercial register in accordance with § 53 (1) HGB. However, the registration is only declaratory. The effectiveness of the granting of the procura therefore does not depend on the registration in the commercial register. However, we have explained the effects of the missing entry in our article on the publicity of the commercial register.

The one to whom the procura has been granted is called the procurator. He can only be a natural person. He must be different from the principal. Consequently, members of the Executive Board of a public limited company or the Managing Director of a GmbH cannot be authorized representatives.

The scope of the Prokura is determined by law in §§ 49, 50 HGB. Accordingly, the authorized representative has power of attorney for all transactions that the operation of a commercial trade entails. Therefore, it must be an industry standard business. The decisive factor here is that the business carried out by the authorized representative falls into the field of any commercial trade. Nevertheless, the authorized representative can also make extraordinary transactions and even change the industry of the respective trade. Restrictions on the power of representation apply in principle only in the internal relationship and therefore receive no significance in relation to the business partner. Something else applies only if the business partner and the authorized representative cooperate fraudulently to the detriment of the businessman or the authorized representative deliberately exceeds his power of representation and the business partner recognizes or could have recognized this.

Only the private affairs of the businessman, which do not relate to the commercial sector, as well as transactions which do not serve the business, such as the cessation or sale or pure proprietary business, which are called principal transactions, are excluded from the procurator. In addition, basic transactions on which the existence of the commercial sector is based are attributed to the legal representative bodies. The latter includes, for example, the change of company or legal form. Furthermore, Prokura does not include the sale and encumbrance of land. However, it is possible to extend them with respect to the latter.

The procura can have special forms. On the one hand, the Prokura can be designed as a fake overall representation. Then the articles of association stipulate that a shareholder should only be entitled to represent together with the authorized representative. Here, the power of representation depends on the strongest link, i.e. the shareholder. Therefore, the authorized representative can also make land purchases or provide other authorized representatives. Nevertheless, it must always be ensured that the shareholder can act without the authorized representative. On the other hand, there is also the form of genuine overall representation. The business owner grants the procura jointly to several persons. Then the general authorized officers must act jointly in each legal transaction.

The procura expires upon the death of the procurator or upon termination of the underlying legal relationship. In addition, the business owner can revoke the Prokura at any time. In the latter case, however, you must always remember to register the revocation to the commercial register. Furthermore, it comes to an end when the trade is discontinued.