A registered company is a separate legal entity; it can enter into contracts, own property and incur liability all in its own name. It is for these reasons that, just like you, your company needs to appoint a Power of Attorney.
The Director or Directors of a company are the officers authorised to make decisions on behalf of a company. Section 127 of the Corporations Act specifies that Companies execute with the signatures of:
- Two Directors;
- A Director & Secretary; or
- Sole Director/Secretary.
If the above individuals cannot sign or do things on behalf of the company, then the activities of the company may grind to a sudden halt.
A Company Power of Attorney (CPOA) is a legal document that allows a company to appoint an individual to act on its behalf in certain matters in place of a director. This delegation of authority can be crucial for the efficient operation of a business, particularly when directors are uncontactable, unavailable, become incapacitated, or require extra assistance. Without a CPOA, transactions may be delayed, leading to lost business opportunities and/or financial penalties. A properly structured CPOA ensures that operations continue smoothly, even when key decision-makers are unavailable.
A CPOA is distinct from an Enduring Power of Attorney, which applies to an individual’s personal affairs. Instead, it is granted by the company to allow an appointed attorney to perform specific functions or make decisions on the company’s behalf. The powers conferred under a CPOA can be:
- Specific (limited to certain transactions and/or time frames); or
- General (grant authority for all powers that can be exercised by a director).
Here are some examples:
Specific – A company could choose to appoint a certain staff member to undertake banking transactions on its behalf, or a lawyer appointed to act on the company’s behalf in relation to legal proceedings. A multi-jurisdictional or multi-national company may appoint representatives to act on its behalf in each location of operation.
General – A company can appoint an attorney with broad blanket authority to act on it’s behalf for all matters in the event that a director is unable to act themselves. This is particularly relevant in the case of sole director and secretary companies. If that director is unwell, uncontactable or otherwise unable to act, this document allows another trusted individual to keep the company functioning until such time as a new director is appointed. Without a CPOA, companies may need to seek costly and time-consuming legal solutions, such as court-appointed administrators.
A CPOA can be considered an insurance policy that provides flexibility, mitigates risk, and safeguards against unforeseen disruptions and financial losses. It is for these reasons that directors should make appointing a CPOA a matter of priority for their company.
Our experienced Commercial team are here to help – contact us on 5221 8777 to discuss your needs and make an appointment today.
This article is general information only and is not legal advice.
Article prepared and written by:
Courtney Gow, Commercial Lawyer (available by appointment at our Geelong office)
Jesse Rankine, Director / Accredited Specialist Wills & Estates (available by appointment across all our offices)
