
What is a Power of Attorney?
Many people are already familiar with the concept of a Power of Attorney, which is a legal document that allows you to appoint someone to manage financial and legal decisions on your behalf. An Enduring Power of Attorney has the additional function of continuing to operate even if you have lost the ability to make decisions for yourself or to instruct the person you have appointed to act for you.
We recommend that all adults have an Enduring Power of Attorney in place, to ensure that their legal and financial affairs are looked after in the event of a sudden loss of capacity to make those decisions themselves.
What does this mean if you are the director of a company?
You might have already been diligent in ensuring that you have your personal documents in place, including an Enduring Power of Attorney (if you haven’t, please call us to get the process started). However, have you ever considered what would happen to your company if you can’t continue in your role as director because you lost your capacity to make decisions? Even if you have a personal Enduring Power of Attorney in place, it doesn’t give rights to your Attorney to take on your role as director or to make decisions on behalf of the company. If you are also a shareholder of the company, your personal Attorney may, under some circumstances, act on your behalf as shareholder to appoint a replacement director.
If you are the sole director and shareholder of a company and you pass away, there may be a delay until the executor of your estate can step in as your legal personal representative or until ownership of the company shares can pass to your beneficiaries, allowing them to appoint a new director. Without having someone immediately authorised to sign company related documents, operate the company bank accounts, sign cheques or to make decisions, the company may come to a complete standstill.
This may also be problematic for two director companies. Section 127 of the Corporations Act 2001 (Cth) requires two directors or a director and a secretary of a company to execute documents. If one director loses capacity or dies, the company may be powerless to sign documents or enter into agreements if the requirements under the Corporations Act have not been satisfied.
The good news is, we can help you prepare a company Power of Attorney to ensure that the company can continue to operate seamlessly in these circumstances.
What is a company Power of Attorney?
A company Power of Attorney (also referred to as a Commercial Power of Attorney) allows a company to appoint a person to act as the company’s attorney. The attorney will then have the power to do the things that the Power of Attorney authorises them to do on behalf of the company. The company Power of Attorney document may limit the scope of the power including when the power applies, and the types of decisions that may be made.
Key Takeaways
- Every adult should have a personal Enduring Power of Attorney in place.
- A director of a company should also consider a company Power of Attorney to ensure the seamless and continued operation of the company if the director suffers a loss of capacity or dies.
- A company Power of Attorney is a legal document where the company appoints a person to act on its behalf, who will have the power to make decisions or act on behalf of the company.
If you have any questions or you need help with your succession planning, please contact our Wills & Estate team on (02) 9964 0499.
Related Articles
Sexual Harassment In The Workplace? See How Recent Changes To Legislation Affects You
The Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill 2022 has been enacted to amend a suite…
Special Disability Trust
If you are thinking of establishing a Special Disability Trust, it is important that you obtain legal advice so that the…
What to do when someone passes away? The all-inclusive checklist to assist you and your family following the death of a loved one.
When someone passes away, you may be overwhelmed with googling ‘what to do next’. At Antunes Lawyers, we have dedicated…
The articles on this website comprise legal general information and not legal advice. The general information presented here must not be relied upon without legal advice being sought. In the event that you wish to obtain legal advice on the contents of this general information you may do so by contacting our office or your existing solicitor.