A common myth we hear is that a person appointed under an Enduring Power of Attorney, can fill in the shoes as director of a company, should that director become incapacitated.

This is not the case. The role as a company director is not something that can be ‘delegated’ or ‘gifted’ to someone else – not even your attorney.

In Queensland, under an Enduring Power of Attorney, you personally give power to someone (your attorney) to manage your financial and personal (including health) affairs whilst your alive.

However, this does not extend to your dealing with your company. Your Enduring Power of Attorney cannot ‘stand in your shoes’ and help manage the company like a director.

The solution to this issue comes in the form of a Company Power of Attorney.

What is a Company Power of Attorney?

A Company Power of Attorney (also known as a Corporate Power of Attorney) is a document whereby a company (e.g. ABC Pty Ltd) authorises an attorney to sign documents and/or take action on behalf of the company itself.

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.

These documents can be used in a variety of situations, such as signing contracts, managing bank accounts, attending to Queensland Titles Office transactions and making legal decisions.

Why have a Company Power of Attorney?

Company documents and company instructions are generally signed by a company’s directors.

Section 127 of the Corporations Act 2001 (Cth) (the Act) provides that a company will be taken to have executed a document if it has been signed by:

1. 2 directors;
2. 1 director and 1 secretary;
3. if the company has a sole director and secretary, by that sole director/secretary, or
4. if the company has a sole director and no secretary, by that sole director.

If your company has consists of only 1 or 2 directors, and one of those directors is uncontactable due to travel or incapacitated due to injury or illness – at a time when a company document needs to be signed, your company may not legally be able to execute the document.

From a practicable point of view, your company will be limited as to how it operates or might be brought to a complete standstill.

A Company Power of Attorney allows companies to conduct business and make important decisions, even when key persons are unavailable or unable to act.

This can be useful for companies that operate in multiple locations or for those that have several directors who are not always around to make decisions in person.

A Company Power of Attorney helps provide:

1. stability and oversight to ensure the business continues to run smoothly;
2. ensures business activities and operations proceed without interruption, maintaining productivity and meeting obligations; and
3. ensures that the company’s assets and resources are managed responsibly and effectively in the director’s absence.

Who can be a Company Power of Attorney?

A company may grant a Power of Attorney to a person over the age of 18 capable of understanding the nature and effect of the power being granted.

A company can also grant a Power of Attorney to another company or other body corporate, a partnership or a trustee of a trust.

Rather than a third-party attorney, the existing directors may also wish to consider appointing each other severally (i.e. one may act the absence of the other – if one is away). 

The power may be granted by in the company in its own capacity and/or in its capacity as a corporate trustee of a trust. However, it is important to read the relevant trust deeds, to ensure they allows for an appointed Company Power of Attorney to make decisions.

If a property transaction is due to take place, it is important for the original signed Company Power of Attorney (along with any relevant certified copies of trust deeds) to be registered with the Queensland Titles Office.

Scope of Power

A Company Power of Attorney can grant broad 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.

A Company Power of Attorney can run for an indefinite period of time or for a specific transaction, or it can be for a limited time (for example – only for a period of 3 weeks whilst the director is overseas).

Important to get it right

Appointing an attorney for your company is a serious undertaking.

Therefore, it is important you obtain legal advice prior to creating such a document. You should carefully consider who you wish to appoint as an attorney, the powers they are given and to consider what the attorney can and cannot do in your absence.

Please contact us to discuss the preparation of your Company Power of Attorney today.