How to create a Company Power of Attorney

What is a company power of attorney?

In a company power of attorney, the company appoints a human to act on its behalf. The human is called an 'attorney'.

What can the attorney do on the company's behalf?

The company power of attorney allows the attorney to:

• sign on the company's behalf
• carry out the company's tasks
• have the legal authority to act on the company's behalf
• look after the company's affairs

Company Power of Attorney for your SMSF corporate trustee · Company Power of Attorney for your Family Trust company

When do you need a company power of attorney?

As soon as you incorporate the company, get a Company Power of Attorney. It is a vital "insurance policy". It sits in your bottom drawer. This is to ensure your business survives if the directors are:

• sick
• lose mental capacity
• go missing
• die

If your company does not currently have a legally prepared Corporate POA, build one on our law firm's website now.

Does a Company POA work if the company has no directors?

Legal Consolidated Company POAs are drafted so that they survive the loss of the last director. This is the Company Power of Attorney's most critical function.

If you are a sole director and you die, your company is immediately paralysed. Under the Corporations Act 2001, a company with no directors has no human "mind and will" to:

• Access bank accounts;

• Pay employees and creditors; or

• Sign contracts.

When the sole director dies, the Legal Consolidated Company POA bridges this gap. Because the Power of Attorney is granted by the Company (which lives on) rather than you personally, the authority survives your death.

After the director dies, the appointed attorney acts within the Company POA to keep the business moving. The company still needs a replacement director. Where the sole director and sole shareholder dies, s 201F of the Corporations Act 2001 (Cth) gives the personal representative a route to appoint one.

Can I get a Company POA while there are no directors?

The Company POA must have been built on our website and signed before the director's death. You cannot put in place a POA if there are no directors. You are too late.

That is why you need to put a Company POA in place now.

How to appoint a company power of attorney

Prepare a Deed of Company Appointment appointing a person to act on behalf of the company. The company signs the deed.

Your Kit includes the Deed of Company Power of Attorney, directors’ minutes and our law firm’s cover letter and instructions. Your company appoints the attorney through the Deed. Our instructions explain signing and the steps to complete the appointment.

What is the difference between a Company attorney and a Director?

A Company Attorney does a different job from the director:

• Director: A company acts through its directors. The company directors sign documents and make decisions for the company. A director is elected by the shareholders under the Corporations Act. A director has onerous responsibilities under the Corporations Act. If something goes wrong, the director often goes bankrupt together with the insolvent company.
• Attorney: An attorney under a Company Power of Attorney is appointed by a legal document called a Deed. This is where the company appoints a person to act and sign documents on the company's behalf. Shareholders do NOT appoint the attorney. It is the company itself that appoints the attorney.

Who appoints the company attorney - directors or the members?

Members (also called shareholders) own the company as they own the shares in the company. The workhorse, the person who manages the company is the director. The members hire and fire the directors.

However, it is the company itself that appoints the attorney under the Company POA.

Company Power of Attorney vs personal Enduring Power of Attorney

A company POA is different from a human POA.

• Companies make Company POAs. The Attorney does things only for the company. (The Attorney does not help any humans. It only performs services for the Company.)
• Humans make Enduring and Medical POAs. The Attorney only helps the human. (The Attorney has no power to help the company.)

Your personal attorney does not take your job as a company director. The company needs its own appointment.

A directorship is a personal role — Mancini v Mancini

In Mancini v Mancini [1999] NSWSC 799, the Court distinguished a director’s personal office from property rights such as share ownership. Your personal attorney does not become a director simply by holding your Enduring POA.

But, a 'human' enduring POA can look after the shares in my company?

Correct. But you asked the wrong question. In all Legal Consolidated Enduring POAs (most law firms also do this) the human attorney exercises the rights of the donor as a shareholder. But your attorney under your Enduring POA is acting on your behalf as a shareholder - NOT as a director.

For example, if you hold a Legal Consolidated Enduring POA for your Dad then you 'stand in his shoes'. Therefore, you can call a general meeting of the company. Provided your dad has the votes, then you can replace directors etc...

But we are not talking about that. We are talking about the company (not your Dad) appointing an attorney. The company gives the attorney authority to act for it.

An enduring POA does not give you the right to stand in your Dad's shoes as a director. Being a director is a personal obligation. A director cannot hand his responsibilities and job of being a director to someone else.

Further, a human POA does not allow you to make decisions for the company. Only a company can:

• appoint directors.
• make a Company POA.

This is the case even if your Dad is the sole director or shareholder.

Two directors, but one cannot sign?

You have two directors. One suffers a stroke. The bank needs a deed signed. Your personal Enduring POA does not authorise its holder to sign in your place as a director.

Under s 127 of the Corporations Act 2001 (Cth), two directors, or a director and company secretary, sign for a company. A sole director of a proprietary company also signs alone where that director is the sole secretary or the company has no secretary.

Those are not the only ways a company signs. Under s 126, an authorised individual acts and signs for the company, including executing deeds. Legal Consolidated’s Company POA gives the appointed attorney the powers set out in the Deed. It does not give the attorney a director’s office or vote at board meetings.

Why does Legal Consolidated prepare the Company POA as a Deed?

We prepare the appointment as a formal Deed. It records the company’s decision, identifies the attorney and sets out the powers the company grants. The signing instructions accompany it in our cover letter.

Section 126 permits an authorised agent to execute a company’s deeds without a common seal. It also says the agent need not have been appointed by deed. Our product uses a Deed to document the appointment clearly.

Company Power of Attorney for your SMSF corporate trustee

Your SMSF trustee company holds your retirement assets. Fund managers and insurers ask it to sign documents before releasing money. What happens when a director dies, loses capacity or goes missing?

A personal Enduring POA does not authorise its holder to sign in a director’s place. The company needs its own Company Power of Attorney.

John dies. Jenny needs the company’s authority to claim the insurance

John and Jenny are directors of their SMSF trustee company. John dies. Jenny asks the insurer to pay his life insurance to the fund.

“I just need you and John to sign the Deed of Release,” says the insurer.

“But John is dead,” Jenny replies. “That is why you are paying the life insurance!”

Jenny holds John’s personal Enduring POA. It ended when John died. Even during his lifetime, it did not authorise her to sign in his place as a director.

Thankfully, their adviser prepared a Company POA on Legal Consolidated’s website before John died. The company appointed Jenny as its attorney. She signs the release for the company within that authority and the insurer’s requirements.

Does the Company POA continue when the sole director dies?

The company gives the power. The director does not give a personal power. The director’s death does not by itself end the company’s appointment. The company still needs a replacement director and must meet its governance obligations.

For an SMSF trustee company, the appointment does not replace the fund’s trustee and member rules or make the attorney a director. Keep the SMSF Deed and appointments current. Review central management and control before members move overseas. The Company POA and each member’s personal Enduring POA perform different jobs.

Company Power of Attorney for your Family Trust company

Your Family Trust’s corporate trustee needs someone to sign and attend to its affairs when a director cannot. The company appoints its attorney. The attorney acts for that company within the Deed, the trust’s rules and applicable law.

Does the company’s attorney replace the Family Trust Appointor?

No. Do not confuse the Trustee with the Appointor. They have different jobs. A Company POA does not transfer a separate Appointor’s powers to the company’s attorney.

Check the Appointor and backup Appointor arrangements as part of the Family Trust’s succession plan. Keep the company’s appointment and the trust’s control documents working together.

Follow our family asset protection pathway. Review the Family Trust, its corporate trustee and the people who control each.

Company constitution silent on company power of attorney?

An Australian company has legal capacity. A company is a person. (Sure, an unnatural person, but a person nonetheless.) As such, under the Corporations Act, a company is allowed to appoint an attorney. It is not necessary to have a specific power in the Company Constitution.

Our Corporate POA is drafted so that it does not matter if the company constitution is silent on delegated authority.

Check any restrictions in the Constitution and, for a trustee company, the trust deed. A Company POA does not override those restrictions or the superannuation law.

Each company needs its own Company POA

Company A, Company B and Company C share the same directors and shareholders. They still need three separate appointments. Each company gives its own authority and appoints its own attorney.

A parent company’s POA does not automatically grant authority to act for its subsidiary. Prepare the appointment for the company that needs someone to act.

One company appoints one human under our Company POA

Our building process appoints one human for one company. Choose someone you trust to use the powers in the Deed.

To appoint another attorney, prepare a separate Company POA. Check how the appointments work together, including revocation provisions. Clear appointments tell the attorneys and the organisations dealing with them who has authority.

Does the attorney become a director?

No. The attorney acts for the company within the appointment. The attorney does not take the director’s office or vote at board meetings simply by holding the Company POA.

Can my company build more than one Company POA?

Yes. Check how each appointment works with the others, including any revocation provisions. Separate appointments need clear powers so your attorneys know who acts and when.

Can the Directors sign a Legal Consolidated Company POA anywhere in the world?

Yes. We have prepared the Legal Consolidated Company POA so that your directors can sign our document anywhere in the world.

Your company is an Australian entity. But directors are human. Humans travel. Humans live overseas. A director can sign our Company Power of Attorney from a desk in London or a hotel in Geneva. You do not need to be on Australian soil.

Because we draft our documents to fully utilise Section 127 of the Corporations Act 2001 (Cth), the directors' signatures do not even need to be witnessed. The Act dictates who must sign, but it is completely silent on where they must be. If the Act imposes no geographical boundaries, none exist.

Further, we have structured the Legal Consolidated Company POA to take full advantage of the permanent 'technology-neutral' reforms in Section 110D of the Corporations Act. This means directors do not even need to be in the same room, let alone the same country. One director can be in a chalet in Switzerland signing a PDF, and the other can be in Sydney signing a physical piece of paper. Our POA drafting protects this split execution flexibility.

Can the Attorney be anywhere in the world?

Yes. We have prepared the Company POA so that your attorney can live anywhere.

The attorney’s location is irrelevant. We build the document using Section 126 of the Corporations Act, which authorises an individual to execute documents and contracts on the company's behalf. Our Company POA is drafted to take advantage of Section 126. Section 126 imposes zero restrictions on the nationality, residency, or physical location of the agent.

The attorney's master is the company and no one else. You can appoint a daughter living in New South Wales, a son in South Africa, or a business partner in Switzerland. The document remains entirely valid. As long as the attorney is an adult with mental capacity, distance is not a barrier for a Legal Consolidated POA. The power is anchored to the Company, not a human's physical location.

Does ASIC require that a Company POA be registered?

Q: For a company POA, are there any other documents or registrations with ASIC required to validate the Attorney’s authority?

A: The Australian Securities and Investments Commission (ASIC) is the regulator of Australian companies. ASIC does not have a registration service or system for Company POAs. The Legal Consolidated Company Power of Attorney itself is a sufficient legal instrument that grants the designated human the authority to act on behalf of the company. However, ensure that the Corp POA is properly signed according to the legal requirements that we set out in our cover letter. Further, keep the original Company POA as part of the company’s records.

Different groups and government regulators may not accept a company POA. Check with the relevant organisation before you let the Director go on a safari tour or die.

Do I have to register the company power of attorney at the title's office?

This Company POA you are building has NOT been prepared to be lodged at a Titles Office. If you need to deal with land then speak with your conveyancer, lawyer or settlement agent.

Does the company POA work overseas?

Legal Consolidated is an Australian law firm. We do not give advice on jurisdictions outside of Australia.

While we do not limit the scope of the company POA we are not able to tell you how it operates outside of Australia. You need to brief a lawyer in that other country.

Company Power of Attorney’s obligations?

A Company Power of Attorney must:

• Avoid conflicts of interest. This is between the attorney and the company.
• Act honestly.
• Act in the company's best interest.
• Retain proper accounts and records.
• Keep the attorney's finances and assets separate from the company's finances and assets.
• Not pay themselves or others with the company’s money. This is unless directed to do so. This is different from claiming out-of-pocket expenses in carrying out the attorney's duties under the company POA.

Do directors remain responsible?

The Company POA does not remove directors’ duties. Directors must consider the appointment, the powers they give and their responsibility for delegated acts. Choose the attorney carefully and keep appropriate oversight while you act as director.

How to revoke a Company POA

Each law firm has its own rules for revoking a Corporate POA. However, Legal Consolidated Corporate POAs are revoked by a Directors' resolution. You do not need the person the company appointed to consent. But let the attorney know that the Company has terminated the company POA.

Is a company POA revoked when the company is dissolved?

Yes. A company's Power of Attorney is automatically revoked when the company is dissolved or ceases to exist. It makes no difference if the company is dissolved by a liquidator (e.g. insolvency) or by the members by consent.

Does the Company POA replace your Will?

No. The company gives the Company POA. You make your Will. Your Will deals with your personal estate, including shares you own. The Company POA authorises acts for the company. Keep those two jobs separate.

Review succession planning in your company alongside your personal Enduring POA and Will.

Build your Company Power of Attorney before your director goes missing

Start building for free. Read the hints as you answer the questions. Save your answers and return later. For legal help answering the building questions, telephone 1800 141 612.

Our law firm prepares the Deed, minutes and cover letter from your answers. Put the appointment in place while your company has directors with authority to approve and sign it.

START BUILDING FOR FREE

Keep your SMSF documents working together

Review your SMSF Deed, trustees and members, your SMSF company’s Constitution and your personal Enduring POA alongside the company’s appointment.

Keep your company and trust documents working together

• Update your Company Constitution — review the company’s rules.
• Update your Family Trust — review the Trustee, Appointor and backup appointments.
• Incorporate an Australian company — prepare its Company POA as part of the setup.
• Prepare a Shareholders Agreement — document arrangements between the company’s owners.