Similar to individuals, there may come a time when the person who manages a company’s finances is unable to do so. When this occurs, appointing a Power of Attorney can mean the difference between your business staying afloat and falling apart. In this article, we’ll explain what a company power of attorney is, when to appoint one and why it matters.
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Company Power of Attorney
It’s common for a Power of Attorney to be appointed when people go overseas or are unable to manage their financial affairs. In the same way that people manage their personal finances, there are often a small group of key people who manage a business’s financial affairs. This especially true for sole traders and smaller companies. Requirements for executing documents and financial transactions can become big obstacles if one director isn’t present. A Company Power of Attorney is someone you nominate to make decisions and sign documents on your behalf and directors can appoint them under the Corporations Act 2001 (Cth). Here are some circumstances where you may need to appoint one:
- If you become sick or injured
- Travelling overseas (for work or leisure)
- Travelling somewhere where you won’t be able to make company decisions
What is a Power of Attorney?
A Power of Attorney is a legal document that allows an individual (principal) to grant another person(s) (attorney) authority over their decisions in the occasion that they are incapable or absent. A Power of Attorney can make key financial decisions, such as withdrawing funds or executing legal documents. Your Power of Attorney will cease to be active if you become incapacitated (unable to make decisions). You can also revoke a Power of Attorney at any time by putting it in writing.
How to create a Company Power of Attorney
1. Find the company attorney
Choose the person carefully. Keep in mind that the person you select will have the same powers you do while you are unable to fulfil your duties. You can customise the Power of Attorney document, to place limits on the control the person has. However, you should ensure you communicate these limitations to the attorney, so they know what to expect. Your Company Power of Attorney can be any person over the age of 18. You can also choose whether to appoint a group of people to either all agree to make decisions on your behalf, or act individually to make decisions for your business.
2. Seek a legal professional to customise the documentation for you
The Power of Attorney document is significant, and we recommend that you seek professional help when creating one. This will ensure that the document you create is tailored to meet your specific requirements. Company Power of Attorneys differ in the degree to which they make decisions. These include:
- Using their powers for a specific purpose
- The Power of Attorney only becoming active if a certain thing happens
- Only being able to act in routine transactions
3. Sign the form in front of a legal witness
Once you have completed the document, you must sign it in the presence of an eligible witness. This person is a legal practitioner (solicitor or barrister), Registrar of a NSW Local Court, or an accredited officer from NSW Trustee & Guardian.
Finally
Appointing a Company Power of Attorney is an ideal option where one or more company directors will be in a position where they can’t make decisions or sign documents. However, it’s important to appoint someone who you trust and know will make decisions in the best interests of the business. If you have further questions about appointing a Company Power of Attorney, we recommend that you get in touch with a business lawyer.
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