Company Power of Attorney

• Company Power of Attorney

• $380 includes GST

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• Checklist

What is a company power of attorney?

In a company power of attorney, the company appoints someone to act on its behalf. The person the company appoints is called an ‘attorney’.

The company empowers the attorney via a company power of attorney. 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

This is important if the company directors are missing.

Example of how a company power of attorney works in Australia

The company must urgently sign a document. Where is the director? The director is sick, dead, suffering from dementia or overseas. 

Thankfully, via Company POA the company had appointed an ‘attorney’. This is to sign legal documents on behalf of the company. This is called a Company Power of Attorney.

Company POA vs Human POA

A company POA is different from a human POA.

• Companys make Company POAs
• Humans make Enduring and Medical POAs

A company can not make an Enduring POA or a Lifestyle POA. Likewise, a human can not make a Company POA.

How is a Company POA different from an Enduring POA?

• Company Power of Attorney – a company appoints an attorney (the attorney is another company or human)
• Enduring and Medical/lifestyle POAs – a human appoints an attorney (the attorney is human only)

Benefits of a Company POA

Companys sign Company POAs. The company is appointing a human or another company to act as its attorney. The attorney now:

• acts on the company’s behalf
• authorises the attorney to act on the company’s behalf
• signs documents on the company’s behalf

Can the Company POA appoint both humans and another company?

The person the company appoints is called an ‘attorney’. Our Company POA is flexible. The company appoints:

1. a human
2. humans
3. another company
4. other companies
5. any combination of the above

In contrast, a human POA (enduring or medical) only appoints humans.

Director gone walkabout?
Company POA saves the day

The Corporate POA provides:

• con­ti­nu­ity of com­pa­ny affairs; and
• good stew­ard­ship.

This is especially if the director is missing.

Problem: A company acts through its directors. Directors sign documents and make decisions for the company. What if the director is missing, sick or unable to act? The company loses its ability to act. Without a functioning director, a company is a ship without a rudder.

Solution: The company, itself, appoints an attorney. This is via a company power of attorney. Under the corporate POA, the attorney has the power to do and sign things for the company. This includes signing documents and making company decisions.

SMSF Corporate Trustee POA

Corporate POA protects the company

What happens if the director suffers death? Illness? Travel? Mental incapacity? Bankruptcy? Who looks after the company when the director is missing?

A Company Power of Attorney ensures your company continues to operate.

Two directors? But one is missing?

Does your company have two or more directors? Under the Corporations Act, at least two people sign all deeds. This is either two directors, or a director and a secretary. 

Problem: Two directors: but one is missing. On the day of signing, you suffer a car accident. 

Solution: The company appoints a person – an attorney. This is via a Company POA. Under the Company POA, that person signs the Deed.

Company as Trustee of Family Trust – Why have a family trust corporate trustee company?

Fund Managers and SMSF require a corporate trustee POA

For asset protection, most companies only have one director. If you have one director, then you only need that one director to sign Deeds. However, if you have two or more directors then you need two directors to sign all deeds.

Self-Managed Superannuation funds require all members to be trustees. And when the SMSF has a company as a trustee then all members must be directors of that corporate trustee. Therefore, many SMSF’s have two directors. Such SMSFs must have both directors sign. What happens if your spouse dies? You can not get your money out of a fund manager.

Two directors? Then the Corporations Law requires:

• two directors; or
• a director and a secretary

to sign Deeds.

If one director loses capacity or is unavailable, the company is unable to sign documents and enter into agreements. Corporate POAs fix this.

Corporate Trustee of your SMSF must have a Company POA

Example: Your Self-Managed Superannuation Fund has two members: mum and dad. The trustee of the SMSF is a company. The directors of the company are mum and dad. Mum dies. Mum has given a human POA to her son, Johnny.

Some fund managers, especially for Self-Managed Super Funds, require both directors to sign to release monies.

• Fund Managers do not accept a human POA for the director unable to sign. Johnny cannot sign on behalf of mum, as mum is acting as a director.
• Anyway, as mum is dead her human POA to Johnny no longer operates. A human POA dies when the person giving the POA dies.

The Company POA outlives the directors. A Company POA only stops working when the company, itself, dies.

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 the company constitution is silent on delegated authority.

The attorney can human or even another company.

Just use a ‘human’ Enduring POA from one of the directors?

There are company POAs. And there are human POAs (enduring and medical). Each State and Territory has its own set of documents for human POAs.)

An indi­vid­ual pow­er of attor­ney gives your attor­ney legal author­i­ty to man­age your assets and finan­cial affairs when the indi­vid­ual is unable to do so. This is for ill­ness, acci­dent and absence. A com­pa­ny pow­er of attor­ney autho­ris­es a per­son or per­sons to act on behalf of a com­pa­ny and or sign cer­tain doc­u­ments on its behalf.

A ‘human’ POA does not work. No, a key rea­son why com­pa­ny pow­ers of attor­neys are so impor­tant is that an indi­vid­ual pow­er of attor­ney is not a sub­sti­tute for a com­pa­ny pow­er of attorney. Even if you have grant­ed a pow­er of attor­ney to some­one to man­age your finan­cial affairs, this does not extend to your com­pa­ny and the attor­ney can­not sign doc­u­ments on your behalf in your capac­i­ty as direc­tor of a company.

A com­pa­ny pow­er of attor­ney is grant­ed to a per­son or per­sons. The company pow­er of attor­ney is unique to the com­pa­ny.

Company

Can I use a “human” Enduring Power of Attorney for company matters?

No. A human power of attorney is not a substitute for a Company Power of Attorney. A Company POA is completely different.

1. A human POA in Australia is called an “Enduring Power of Attorney”.
2. Human medical/lifestyle POAs in Australia are called:

• • Enduring Power of Guardianship – Western Australia, Tasmania and New South Wales
  • Enduring Power of Attorney – Australian Capital Territory and Queensland
  • Advance Personal Plan – Northern Territory
  • Appointing Medical Treatment Decision Maker – Victoria
  • Advanced Care Directive – South Australia

Neither an Enduring nor a Medical POA can be used to act for a company. Instead, you need a Company Power of Attorney.

Even if you, as a human being, have granted a power of attorney to someone to manage your financial affairs, this does not extend to your company. An attorney under an Enduring POA cannot sign documents on your behalf, in your capacity as director of a company.

Who can your company appoint?

The person you appoint (attorney) is:

• over 18 years of age
• of sound mind
• an Australian resident (telephone if the person is not an Australian resident for tax purposes)

Choose trusted family members and friends. Consider your accountant, financial adviser or lawyer.

Is the director liable for the acts of the Company’s Power of Attorney?

A director remains liable for an attorney’s actions. To reduce liability and promote accountability, the company may want to consider appointing two persons to act jointly, acting as a check and balance to each other. Again, it is important to think about who is suitable for the role of Attorney to avoid issues.

Must the people holding the Company POA act together?

Yes, they must act together.

If you want them to act separately then do two Company POAs. One to each person.

How does the Company Power of Attorney interact with my Will?

A Will is not a substitute for a Company Power of Attorney. This is because a Will only operates after a person dies. What happens while the executor administers the estate? A Company Power of Attorney ensures the continued operation of the company. This is after the director’s death.

Lose rights if I appoint a Company Power of Attorney?

No. If you are available and capable, you still have the authority to act for your company while a director.

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 to 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 I have to register the company power of attorney at the titles office?

Only register your company power of attorney if your attorney is going to sell, mortgage, lease or otherwise deal with company real estate. Otherwise, it is not necessary to register the company POA at the local titles office.

For most States, the process is the same as registering a ‘human being’ Enduring POA. For example, you pay the registration fee. The staff stamp a number on the original company power of attorney and return it to you. This number is evidence that the company power of attorney is registered with the titles office. The company POA is digitally scanned and on public record, for anyone to see.

Q: Make the corporate POA conditional on some event? Eg. death or incapacity?

A: The corporate POA is operational all the time. This is from the moment the company approves it. However, you can keep the company POA in a safe. And only instruct it to be released on a certain event happening. Eg “if China invades Australia immediately provide this POA to Derryn.”

Q: Does the POA give the attorney the same powers as a director (ie appoint and remove directors if required) or would the steps of probate still need to be followed if a sole director dies and the corporate attorney steps in?

You are confusing the operation of the company with the ownership of the shares of the company. These are two separate matters.

People holding a company POAs and directors both protect and look after the company. But neither have any interest or control over who owns the shares in the company.

• Shareholder own the company. They hire and fire the directors and people holding company POAs
• Directors and Company POAs look after the company. They must act in the company and shareholder’s best interests.

For example, I hate the directors and I hate the people holding the POA over the company. But there is nothing I can do. This is because my dad owns all the shares in the company.

But Dad dies.

In his Will Dad leaves me the shares in the company. I immediately call a general meeting of the company. As the shareholder I replace all the directors with my own people. And I revoke the company POA.

• The shareholders ‘own’ the company.
• Directors and company POAs merely ‘look after’ the company. And they only carry out that job at the ‘pleasure’ of the shareholders.

Obviously if I liked the directors and people holding the company POA then, after Dad dies, I would do nothing. I let the directors and people holding the company POA continue on doing the work of looking after the company. But they better be polite to me, or I will sack them! As the shareholder I can sack them anytime. This is via calling a company general meeting.

Without my involvement as the ‘owner’ (via my shareholding) the directors continue to be in control of the company POA. The directors can hire and fire the company POAs. Sure, I can override that if I wish. The ‘owner’ (shareholder) always holds the final control. But the whole reason you appoint a director is to allow the director to run the company.

Probate: Now let’s look at probate. Probate is ‘proving the Will’. But you do not require probate if everyone transfers the assets to you without probate. Usually Probate is not required for the shares of a Pty Ltd company.

Sure, if you own $2m shares in BHP then the share registry requires probate.

But with a Pty Ltd you usually just go to the accountant’s office or your dad’s home. You pull out the company secretary file. And, with a blue pen, complete the share transfer form and fill out the new share certificate. Well that is the case if you have a Legal Consolidated company. If you got your company from a non-law firm, then good luck!

To labour the point neither the director nor a person holding a company POA have any knowledge, power or interest in:

• who owns the shares in the company
• your Dad
• you
• Probate
• transfer of the shares

There job is only to look after the operation of the company.

Any stamp duty on a Company POA

We draft your Company POA so that it is not necessary to pay stamp duty on the Company POA. A Legal Consolidated Barristers & Solicitors’ Company POA is not dutiable.

For help building your Company POA telephone us.

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Adj Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National Australian law firm

National:   1800 141 612
Mobile:      0477 796 959
Email:       [email protected]

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