Meaning of delegation of authority

it is important for corporate law student.

1. A delegation of authority involves the sharing of authority downwards to the subordinates and checking their efficiency
by making them accountable for their doings. In an organization, the manager has several responsibilities and work to do.
So, in order to reduce his burden, certain responsibility and authority are delegated to the lower level, i.e. to the
subordinates, to get the work done on the manager’s behalf.
If that person also is a director of the board, then commonly that person may also be accorded status as the Managing
Director (MD). As most CEO’s of listed public companies are also appointed as directors of the board of the company,
these terms are often used interchangeably. However there are differences in legal standing and authority between the
different descriptors.
For simplicitythe term ‘CEO’ will be used in this document to refer to the most senior executive irrespective of whether
or not they also be a director on the board.
Although often used interchangeably, and although the functional roles of CEO and MD are often held simultaneously by
the same person, there are important legal distinctions between the two.
Generally a CEO/MD is authorisedand responsible for the management of the organisationand its operations by way of
delegated authority from the board, or as expressed in the organisation’sconstitution. This delegation of authority
generally includes responsibility for:
Meaning of Delegation of Authority
Sonu Baniya

2. Elements of Delegation
Authority-in context of a business organization, authority can be defined as the power and right of a person to
use and allocate the resources efficiently, to take decisions and to give orders so as toachieve the organizational
objectives. Authority must be well-defined. All people who have the authority should know what is the scope of
their authority is and they shouldn’t misutilizeit. Authority is the right to give commands, orders and get the
things done. The top levelmanagement has greatest authority.
Authority always flows from top to bottom. It explains how a superior gets work done from his subordinate by
clearly explaining what is expected of him and how he should go about it. Authority should be accompanied with
an equal amount of responsibility. Delegating the authority to someone else doesn’t imply escaping from
accountability. Accountability still rest with the person having the utmost authority.
Responsibility-is the duty of the person to complete the task assigned to him. A person who is given the
responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held
responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate
authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The
middle level and lower level management holds more responsibility. The person held responsible for a job is
answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t
accomplish tasks assigned as expected, then also he is answerable for that.

3. Accountability-means giving explanations for any variance in the actual performance from the
expectations set. Accountability can not be delegated. For example, if ’A’ is given a task with
sufficientauthority, and ’A’ delegates this task to B and asks him to ensure that task is done well,
responsibility rest with ’B’, but countability still rest with ’A’. The top levelmanagement is most
accountable. Being accountable means being innovative as the person will think beyond his scope
of job. Accountability, in short, means being answerable for the end result. Accountability can’t be
escaped. It arises from responsibility.
For achieving delegation, a manager has towork in a system and has to perform following steps : -
Assignment of tasks and duties
Granting of authority
Creating responsibility and accountability

4. Delegation of authorityis the base of superior-subordinate relationship, it involves following steps:-
Assignment of Duties -The delegator first tries to define the task and duties to the subordinate. He also has to
define the result expected from the subordinates. Clarity of duty as well as result expected has tobe the first step
in delegation.
Granting of authority -Subdivision of authority takes place when a superior divides and shares his authority with
the subordinate. It is for this reason,every subordinate should be given enough independence to carry the task
given to him by his superiors. The managers at all levels delegate authority and power which is attached to their
job positions. The subdivision of powers is very important to get effective results.
Creating Responsibility and Accountability -The delegation process does not end once powers are granted to
the subordinates. They at the same time have tobe obligatory towards the duties assigned to them. Responsibility
is said to be the factor or obligation of an individual to carry out his duties in best of his ability as per the
directions of superior. Responsibility is very important. Therefore, it is that which gives effectiveness to authority.
At the same time, responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the
obligation of the individual to carry out his duties as per the standards of performance. Therefore, it is said that
authority is delegated, responsibility is createdand accountability is imposed. Accountability arises out of
responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority
position an equal and opposite responsibility should be attached.
Therefore every manager,i.e.,thedelegator has tofollow a system to finish up the delegation process. Equally
important is the delegatee’srole which means his responsibility and accountability is attached with the authority
over to here.

5. The powers and authorities delegated to the designated officers as per this delegation shall be exercised
subject to the following conditions:
1. The powers will be subject to provisions of the Companies Act 2063, as amended from time to time, the
Memorandum and Articles of Association of the Company, the directives of the Government and instructions of
other relevant constitutional authorities.
2. The delegated powers will be exercised by the officers in respect of the function(s) / department(s) under
their control & supervision.
3. Authorities delegated to any officer under this delegation can be exercised by his superior/controlling
officer(s).
4. Relevant concurrences must be obtained where evermentioned in this delegation. In case of disagreement
between the concurring authority and the approving authority, the approving authority may over rulethe
concurring authority with reasons to be recorded in writing. However, all such cases shall be brought to the
notice of the authority one level higher than the approving authority, not below the level of GM, as and when
these occur.

6. 6. The powers shall be exercised automatically by the officers/ incumbents to the post to whom delegation have
been made unless specifically restrained by MD in terms of clause 8below.
7. MD may sub delegate any powers delegated to any officer who is not covered under this delegation, to meet
the operational needs of the company.
8. Any or all ofthe powers delegated here-in to designated officials , other than whole time Directors, may be
restricted/ withdrawn/revoked/modified/amended by the MD in writing and such restriction/ withdrawal/
revocation/ modification/ amendment shall be reported to the Board for its post facto approval.
9. Financial limits prescribed under this delegation may be altered/enhanced by MD in writing depending on
operational needs and such amendments shall be reported to the Board.

7. Managing Director And CEO’s role and responsibilities
The CEO/MD is the head of the executive team and manages the day to day operations of the organisation, its
people and resources. The CEO implements the strategy approved by the board and ensures that the
organisation’s structure and processes meet the strategic and cultural needs oftheorganisation.
“ The CEO/MD is accountable to the board for the performance of his/her responsibilities with expectations of the
CEO/MD keeping the board informed of all events and circumstances which have, or may be likely to have, a
material impact on the organisation.”
Primary authority for the governance, direction, control and management of an organisation is usually
constitutionally and legally vested in the board. Therefore itis necessary for the board to resolve to delegate such
parts of that primary authority to the CEO, so as toempower the CEO to take responsibility for the day to day
operations and management of the organisation. The CEO can then sub-delegate certain of those delegated
powers toother executive officers and managers of the organisation. Thisis commonly effected by a delegated
authority matrixproposed by the CEO and approved by the board.
In addition to the general responsibilities of a CEO mentioned in the executive summary and key aspects, the
following further expectations commonly apply to CEO’s.
• With respect to Board accountability, the CEO should:
-Report to the board on the status of policies, strategies, directions and plans (business and otherwise) set or
approved by the board;
-Inform the board of all events within, or which reasonably should be within, his/her knowledge orawareness,
which may or do have a material impact on the organisation’s activities or well-being;
-Observe limitations of authority as set from time totime by the board; and
-Regularly meet and consult with the chair (as the lead representative of the board) on all such matters.

8. • With respect to leadership, the CEO should:
-Provide a strong, clear leadership to the organisation;
-ensure the organisation’s code of conduct/values is a living document, regularly updated, monitored and
communicated with ongoing training provided;
-Provide internal leadership direction, goals and energy to the organisation’s personnel;
-Create and sustain a culture of innovation and enablement, underpinned by and expressing the values and
philosophy of the organisation;
-Monitor and interpret the external environment in order to continually position the organisation in its markets to
best advantage;
-Maintain awareness of political, governmental, business and industry components of the external environment,
on a local, national and international level;
Etc.

9. ANY
QUESTIONS ???