Posted on February 09, 2024
Many people are familiar with Powers of Attorney documents when it comes to their personal estate planning, but not many people are familiar with the term ‘corporate powers of attorney’.
In Medical and Enduring Powers of Attorney, the individual elects another person to act on their behalf in circumstances where they cannot. Similarly, a company appoints a corporate power of attorney to manage and run a company in the event that a director is unable to. This attorney can be another company or an individual.
You cannot elect a corporate power of attorney by way of an enduring power of attorney as the power does not extend to a company. Therefore your business may not be looked after in the event that anything unfortunate happens to you.
It is important to understand the nature and role of an attorney appointed under a corporate power of attorney:
Does the attorney have full control over the business?
Shareholders purchase shares in a company resulting in control of the company.
Directors control the day-to-day business of a company and make decisions for the benefit of the shareholders.
The company empowers the attorney to carry out company tasks such as:
- execute documents on the company’s behalf;
- perform company tasks; and
- attend to the company’s affairs.
An attorney does not have the power to:
- act as a shareholder;
- buy and purchase shares;
- remove or appoint directors; and
- control family trusts.
This power becomes very important if a company has a sole director and that director becomes ill, loses capacity, goes missing, is overseas on holiday or passes away. In these circumstances, a company power of attorney ensures that the company continues to operate.
If you are a director of a company with two or more directors, the Corporations Act 2001 states that at least two directors are required to execute all company documents.
Further, if you are a member of a Self-Managed Superannuation Fund (SMSF) it is a requirement for all members to be trustees, or if a corporate trustee has been appointed, then all members must be directors of the corporate trustee. Accordingly, many SMSFs have two directors.
Corporate powers of attorney operate from the moment that they are executed by the company, and they last until revoked or otherwise stated.
If you would like to find out more about preparing corporate powers of attorney or have further discussions regarding how a corporate power of attorney will impact your business or your family trust, please contact one of our friendly team members at Scanlan Carroll Lawyers.
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