What is a Corporate Power of Attorney?
A Corporate Power of Attorney (CPOA) is a legal document executed by the director(s) of a company which allows the company to appoint a person(s) to act on behalf of the company in relation to legal and financial matters. The appointed party is referred to as the Attorney.
Why is a Corporate Power of Attorney important?
Australian companies are regulated by the Corporations Act 2001 (Cth). Section 127 of the Act limits who can sign on behalf of a company to the following:
- Two (2) directors of the company;
- A director and secretary of the company;
- A sole director/secretary if that company has a sole director and secretary; or
- A sole director if that company only has a sole director.
The benefit of a company having a CPOA in place is that it provides a mechanism for the continued operation of the company if one or more directors are unable to attend to their duties as director due to death, illness, travel, or any other situation that is specifically covered by the appointment. This is particularly relevant when a company has only two directors, or a sole director.
What is the scope of power granted under a Corporate Power of Attorney?
The scope of the CPOA can be as broad or as narrow as the company determines:
- A broad CPOA will generally allow the Attorney to carry on all activities and execute all legal documents (such as agreements, deeds, dealings, certificates, and undertakings) that they consider necessary to the ongoing ordinary activities of the company;
- A narrow CPOA can be limited to a specified transaction or purpose.
When does a Corporate Power of Attorney take effect?
The CPOA will specify the circumstances in which the appointment will operate. This may include:
- As a contingency – where the appointment only takes effect if the current director(s) are unable to perform their duties due to an unforeseen event such as illness; or
- During a specified time – where the appointment only takes effect for a defined period such as when a director(s) is known to be unavailable or for the duration of a specific activity or transaction.
A CPOA can be revoked by the company at any time by providing the Attorney with written notice.
Should your company have a CPOA?
A CPOA is an essential component to any corporate structure which includes a company where there are two or less appointed directors. It ensures the company’s interests are protected and that it can continue to operate if a director is unavailable.
Our team at Morgan + English can assist in preparing CPOAs that are best tailored to you company’s needs. Please get in touch with Jackie Caspers (firstname.lastname@example.org) of our Future Planning team to start the discussion today.