April 14, 2019
Wills & Estates
who will operate your company if YOU aRE NOT AVAILABLE?
General Powers of Attorneys for companies
If you are a director or shareholder of a company it is important to plan for a time when you are unavailable to act in those roles, whether that is due to death, illness, incapacity or absence from home.
A general power of attorney can be made for the company. The general power of attorney can appoint a person as the attorney for the company to sign documents and make decisions on behalf of the company.
General powers of attorney are typically created for particular transactions or certain events. For example, the sole director of a company might be planning to travel overseas, and wants a trusted staff member to be in a position to make decisions, deal with suppliers and financiers, sign cheques and other documents on behalf of the company while the director is away or outside the jurisdiction.
Where a company has one person as both sole director and sole shareholder it is important for the company to have a general power of attorney in the event that person dies or loses capacity. The attorney can carry on the day to day functions of the company until steps can be taken to replace the director and deal with the shareholding.
Issues to consider when making a general power of attorney for a company:
- The constitution of the company must provide that the company can appoint an attorney.
- Who to appoint as the company’s attorney. It is possible to have multiple attorneys, to act together or separately.
- The State that the power of attorney is intended to be used in; there are different forms for each State.
- When should the power of attorney commence. The director of the company should consider the purpose of the power of attorney. The power of attorney may be for a limited time (for example, when the director loses capacity to make financial decisions, or whilst the director is outside the jurisdiction) or all decisions in the future.
- The powers being given to the attorney, any restrictions and conditions of use. The power of attorney can be limited to certain decisions or actions, for example signing cheques up to a specified dollar amount.
- If the company is a trustee of a trust it cannot delegate its trustee powers to an attorney, unless there is a specific power in the trust deed.
Can the director of a company appoint an attorney to act as director?
A director’s appointment is personal and cannot be delegated to an attorney, unless there is a specific power in the company constitution to either appoint an attorney or an alternate director. The company constitution will need to be looked at carefully.
How can McInnes Wilson Lawyers help?
McInnes Wilson Lawyers are able to assist you with:
- Advising on appointing substitute decision makers for you and your company;
- Preparing a general power of attorney appropriate for your company after reviewing the constitution and any trust deeds.
If you require further information on general powers of attorney, please contact: