You may have previously executed a power of attorney in your personal capacity when planning your estate. An enduring power of attorney will ensure that the person or people that you nominate have legal authority to manage your personal affairs on your behalf when you are unavailable or incapacitated.
However, if you are a director of company, your personal attorney is generally unable to assume the role and responsibility of a director meaning the affairs of the company may come to a crashing halt during any period of absence. It is important for all company directors to consider the value of appointing a Corporate Power of Attorney.
A Corporate Power of Attorney authorises someone else to exercise control over a company when the individuals who usually exercises that control (its directors) are unavailable or incapacitated. A well drafted and properly executed Company Power of Attorney will ensure that the company runs smoothly during any period of unavailability of its directors.
A Corporate Power of Attorney can be tailored to suit the company’s specific needs. Restrictions can be placed on the functions, including limiting the powers to decide or act on matters involving a specific sum.
Some of the features of a Corporate Power of Attorney include the power to:
- Transact the company’s business;
- To purchase and lease property;
- To sell and mortgage property;
- To sign cheques and endorse cheques;
- To give receipts;
- To settle accounts;
- To commence and defend legal proceedings;
- To concur in doing acts;
- To execute deeds; and
- To employ professional assistance.
Any number of powers can be included, amended or removed depending on the individual needs and circumstances of the company and its directors.
The only people who can appoint a new director of a company are the company’s shareholders. If you are a sole director and you die, the affairs of the company can remain frozen for an extended period of time. If a sole director and shareholder of a company dies, section 201F(2) of the Corporations Act 2001 allows a personal representative or trustee to appoint a person as director of the company. This process can take months.
A Corporate Power of Attorney can be utilised to ensure the company can keep running from the death of a director up until the executor under the will can administer the estate and distribute shares in the company accordingly.