What is a Company Power of Attorney and does my company need one?

A Company Power of Attorney (also called a “Corporate Power of Attorney”) is a document created by a company granting an individual or a group of individuals, the legal authority to exercise certain powers on behalf of the company. It is important for companies to have Company Powers of Attorney (“POA”) documents in place whether you are a sole director of a small company or a large international company with multiple directors. These documents can be used in a variety of situations, such as signing contracts, managing bank accounts, and making legal decisions. POA documents are particularly important as they allow companies to conduct business and make important decisions even when key personnel 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 able to make decisions in person.

Who can be my Company Power of Attorney?

In Australia, the Corporations Act 2001 (Cth) (“the Act”) regulates the use of POA documents for companies. Under the Act, a company may grant a POA to a person over the age of eighteen (18) capable of understanding the nature and effect of the power being granted. A company can also grant a POA to another company or other body corporate, a partnership or a trustee of a trust.

Why do I need a Company Power of Attorney?

An example of where a POA document can be useful is in the case of a company that is involved in a legal dispute. The POA document can authorise a lawyer to act on the company’s behalf and make decisions related to the dispute, such as settling out of court or filing a lawsuit. Appointing someone to act on the company’s behalf in Court could prevent any delay to the legal process and reduce significant amounts of valuable time and resources which can be allocated elsewhere for the company. This also allows the company to effectively manage the legal process without the need for all shareholders or directors to be involved.

In Victoria, under the Powers of Attorney Act 2014, a company can grant a POA document to a person or group of people to make financial and legal decisions on their behalf. This can include, but is not limited to, managing and investing assets, buying or selling property, and taking legal action.

Do I need a Company Power of Attorney if I have a small company?

If you are a sole director, it is important to consider a POA in the scenario that you become incapacitated due to injury or illness or are planning a period of absence (ie. overseas travel with limited communication connectivity). Having a POA in place would allow your company to continue business during the period you are incapacitated or absent without needing to change the corporate structure of your company.

Additionally, company POA documents are an important tool in allowing companies to conduct business smoothly and efficiently on a day-to-day basis. For example, a POA may authorise an individual to sign contracts, open bank accounts, and make other legal decisions on behalf of the company. This can be especially important for small businesses or companies that operate in multiple locations.

Is a Company Power of Attorney document valid if I am interstate or overseas?

One example of the importance of company POA documents can be seen in the case of a company director who is traveling overseas and needs to sign important legal documents on behalf of the company. Without a POA in place, the company would be unable to proceed with the necessary business transactions, potentially causing significant delays and financial losses.

The same goes for the opposite situation where a company is involved in interstate or international business. A POA document can authorise an individual or group to sign contracts and manage bank accounts on behalf of the company, which can be particularly useful when the company is not physically present in the state or country where the business is conducted.

A properly drafted company POA document will generally be valid regardless of whether you are in the same state or country as your company. However, Power of Attorney laws in Australia are governed individually by each state and territory. It is very important to ensure that any POA document is compliant with the laws of the state or territory in which the company is incorporated. That is why it is crucial to consult a law firm which specialises in both Succession Planning Law and Corporate Law.

Company Powers of Attorney documents are an essential tool for companies to have in place, as they provide legal authority for individuals or groups to act on behalf of the company. This can be particularly useful in situations where the company is not physically present, such as in legal disputes or international business. Companies operating in Australia and Victoria can use these documents as per the regulations of the Corporations Act 2001 (Cth) and Powers of Attorney Act 2014 (Vic) respectively.

How we can help

As with personal decision-making, it is important that you elect and appoint the right people to handle decisions impacting your company in your absence before the need arrives.

At Coulter Legal, we provide tailored and personalised estate planning advice that will ensure your Power of Attorney documents are legally binding and effective in protecting your wishes and the best interests of your company.

Further information

To get in touch with us, please contact the Wills, Estates and Succession Planning Team at Coulter Legal on (03) 5273 5273 or email info@coulterlegal.com.au.