Should my Company have a Corporate Power of Attorney?
What is a Corporate Power of Attorney?
A Corporate Power of Attorney is a document whereby a company authorises and empowers a person (or company), namely, the Attorney, to sign documents and/or take action on behalf of the company.
A Corporate Power of Attorney is a relatively simple but powerful legal document as the nominated Attorney can sign documents for the company and generally manage the company’s affairs as if it were the board of directors for the company.
Why have a Corporate Power of Attorney?
Company documents and company instructions are generally signed by a company’s directors.
Directors of a company may sign documents on behalf of the company when authorised by a Company Resolution and as provided under the Corporations Act 2001.
Section 127 of the Corporations Act 2001 provides that a company will be taken to have executed a document if it has been signed by:
- two (2) Directors of the company,
- a Director and Company Secretary,
- if the company has a sole Director and secretary, by that sole Director/secretary, or
- if the company has a sole Director and no secretary, by that sole Director.
If your company has a Board of Directors consisting of only one (1) or two (2) Directors, and one of those Directors is uncontactable or incapacitated at a time when a company document needs to be signed, your company may not legally be able to execute the document at hand. From a practicable point of view, your company will be limited as to how it operates or worse, it might be brought to a standstill.
A Corporate Power of Attorney is the solution to this problem.
Scope of Power
A Corporate Power of Attorney can grant broad and unfettered powers, or it can have limitations placed on the Attorney as to what they can and cannot do.
If it is of a general nature then the Attorney can, without limits, do all things for and on behalf of the company.
If the powers are limited, then the attorney can only act within those limitations and those limits should be clearly specified in the document.
A Corporate Power of Attorney can also run for an indefinite period of time, or it can be for a limited time (for example a period of two (2) weeks if you are taking a two (2) week holiday to a destination that does not have phone and internet coverage).
Given how powerful a Corporate Power of Attorney can be, it is important to note that:
- The nominated attorney must be a trusted person.
- It can grant broad and unfettered powers, or it can have limitations placed on the attorney as to what they can and cannot do.
- It can run for an indefinite period of time or it can be for a limited time .
- It can be revoked by the company, at any time, by notice in writing.