Corporate Power of Attorney

Ian Aldridge WebsiteAuthor: Ian Aldridge, Progressive Legal

corporate power of attorney

If you’re a business owner that wants to fortify your decision-making processes, the Corporate Power of Attorney is an effective and beneficial legal tool to consider.

In this article we’ll explain exactly what a corporate power of attorney (CPOA) is, everything you need to know when appointing a CPOA and your attorney’s powers, rights and obligations. 

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What is a Corporate Power of Attorney?

Corporate Power of Attorney (CPOA) is a legal document that gives someone the legal authority to act on your behalf and look after your affairs in the event that you are unable to do so. Section 124 of the Corporations Act authorises companies to appoint attorneys, whether individuals or other bodies corporate, both in and outside of Australia.

We recommend obtaining legal advice when appointing a CPOA.

Why should my company appoint a Corporate Power of Attorney?

It is important that your business doesn’t shut down just because one of its key people is away. For example, if the direc­tor of a sole trader company is out of office and difficult to contact, or los­es capacity to sign doc­u­ments because of an ill­ness or acci­dent, the busi­ness may come to a standstill.

Also, regarding a two director company, section 127 of the Cor­po­ra­tions Act requires two direc­tors or a direc­tor and a sec­re­tary of a com­pa­ny to exe­cute doc­u­ments, meaning that if one person is unavailable the company will be able to meet the two signature minimum required by the law when conducting certain business activities.

Who should I appoint as a Corporate Power of Attorney?

Any person over the age of 18 can be appointed as a CPOA. You may choose to appoint a close family member or a friend/college that you trust. Other options are to appoint the NSW Trustee, a trustee company or a professional advisor such as a lawyer or accountant, who will charge a fee in return for acting as your CPOA.

If you appoint more than one attorney, you need to consider whether you want your attorneys to act jointly (where they must all sign/agree together on your behalf) or jointly and severally (where they are able to act independently on your behalf). You should also consider what will happen if one of your attorneys dies.

Will I lose any of my rights if I appoint a Corporate Power of Attorney?

You won’t lose any of your rights if you decide to appoint a Corporate Power of Attorney and you will still have authority to act for your business, as long as you are available and capable. Your document should specify that you only want your attorney’s power to begin if and when you become unavailable/incapable of acting for your business.

What power can be granted to a Corporate Power of Attorney?

Some examples of power that can be appointed to a CPOA include the following:

1. Power for a spe­cif­ic pur­pos­e

An attorney may be granted power for a specific purpose, such as if a company needs to urgently sign off on a document but a director is ill or overseas.

2. Lim­it­ed pow­er for rou­tine trans­ac­tions

Limited power may be granted to an attorney, such as to remove the has­sle of needing two direc­tors to sign off on routine and frequent operations.

3. Contingencies

General power may be granted to an attorney in case a direc­tor is unavailable to act for the business.

What things are Corporate Power of Attorneys not permitted to do?

Attorneys who are appointed are not allowed to:

  1. swear an affidavit in their appointor’s name;
  2. perform any non-delegable duties;
  3. exercise any trusts, powers or discretions bestowed on the appointor;
  4. assign their powers or duties to another person;
  5. create a Will for the appointor.

What happens if an attorney dies or becomes mentally incapacitated?

Usually, CPOA will be revoked if an attorney dies or becomes mentally incapacitated in this circumstance. The document will then be read to appoint a new attorney to take over the role. Without this being specified in a document, the role will be vacated and there will be no acting CPOA.

What are your attorney’s obligations?

Your attorney must:

  1. avoid conflicts of interest between the attorney and appointer;
  2. act honestly and in the appointer’s best interest;
  3. retain proper accounts and records;
  4. keep their finances/assets separate to the appointer’s finances/assets;
  5. not pay themselves or others with your finances, unless directed to do so – this is separate from claiming out-of-pocket expenses related to carrying out their duties.

What if I change my mind?

A CPOA can be terminated at any time providing you have the mental capacity to do so. We recommend informing your attorney in writing so that your intention is clear to everyone. If you fail to inform your attorney, they may continue to deal with your finances and/or finances and you will still be liable for any actions made by them.

Key takeaways

Understanding and strategically leveraging the Corporate Power of Attorney is crucial for ensuring business continuity and safeguarding against unforeseen disruptions. At Progressive Legal, we recognise the significance of this legal tool in empowering businesses and offer expert advice on its application.

Whether you are navigating the complexities of appointing a CPOA or seeking insights into its powers and limitations, our experienced corporate lawyers stand ready to provide tailored corporate advice. Contact us below to explore how we can assist you with Corporate Power of Attorney or anything corporate law related.

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