What is a Company Power of Attorney?
A company power of attorney is a legal document made by a company that authorises a person (the “attorney”) to act on its behalf and/or sign certain documents on its behalf. This company power of attorney authorises the attorney to execute those documents referred to in the power of attorney, and related documents, on behalf of the company.
The appointment will need to be completed alongside a set of company minutes confirming the appointment.
You will need to provide the following information for us to generate your document:
- Name of attorney
- Address of attorney
- List of documents that the attorney will be able to sign on behalf of the company
Company Power of Attorney – When is it useful?
A company can only act through its directors. If the directors are not able to act (deceased, incapacitated or any other reason) then the company is effectively frozen. This can be a death knell for the business operated by the company – transactions cease and everything stops. Typically, a new director can only be appointed by the shareholders of the company. If the incapacitated directors and shareholders are one and the same (or the incapacitated shareholder has majority voting rights) then things become very difficult.
If you are incapacitated: Your enduring power of attorney can appoint someone to exercise your power as a shareholder to appoint a new attorney. However, the attorney cannot act as director of the company unless they are appointed by the company to do so. This process can be cumbersome (involving transfers at ASIC and banks etc), particularly if you are only incapacitated for a short time. An easier, much more fluid process, is to nominate an attorney under a “company power of attorney”. The document can start and stop straight away on provision to the relevant organisation.
If you die: Your enduring power of attorney is useless – it ceases on your death. Your Will takes over. However, sometimes it might be a few days or weeks before your executor of your Will takes up the mantle of executor and starts making decisions. ASIC transfer of shares will need to occur before they can nominate a new director. One strategy is to set up a “company power of attorney”. It is set up by the company, not by you – which means that it doesn’t cease on your death. This is a document where the company appoints a person to be attorney for the company. It should only be on an interim basis while your estate is dealt with and the executor of your estate sorts out what they need to do to take control of the assets (including the shares of the company and therefore, eventually, the directorship of the company).