Smart Business Risk Management:

Authorising a Company Power Of Attorney

If there’s one thing the past two years have taught us, is that businesses need to act quickly during crisis periods to ensure business continuity and having a Company Power of Attorney (CPOA) for your company is a smart risk management decision.

No one likes to think of the “what if something happens to me…?” scenario of running a business, but including this in proper estate planning is a vital component so your business continues to run effectively in the event you suddenly become incapacitated or pass away.  

An individual power of attorney (POA) has the legal authority to manage your personal assets and financial affairs when you are unable to do so due to illness, accident or absence.  

A company power of attorney (CPOA) authorises a person/s to act on behalf of a company and/or sign certain documents on its behalf, should the company head become incapacitated or pass away. 

Often an oversight in business estate planning, the importance of a Company POA can’t be underestimated. 

We realise it’s not easy to determine the best person to handle your company affairs, so we asked Malcolm Campbell, Commercial Law Principal @ Coleman Greig Lawyers, a few questions to help you make the right decision.

Q. Why do I need a Company POA? 

A company power of attorney ensures continuity of company affairs, should something happen to those running the show – particularly for a sole director sole share shareholder company.

For these business structures, everything could come to a grinding halt if no one has the authority to sign off on things such as cheques or important documents, potentially crippling the business.

If a sole director who is also the only shareholder is incapacitated there is no other director that can sign documents nor is there another shareholder who can appoint another director. If there is no Company Power of Attorney in place prior to the sole director/shareholder becoming incapacitated there is no one who can lawfully conduct the affairs of the Company.

And no, being an individual power of attorney for your wife, husband, or father etc, (who may be that sole director/shareholder) doesn’t give you the authority to handle company affairs.

Q. What ways can a CPOA be granted? 

It’s always important to consider the scope of power you’re granting a CPOA – here are three options to consider; 

1. Limited power for routine transactions  
   You can grant a limited POA for recurrent or routine transactions – this could include being signatory of certain bank documents, payroll, and supplier payments. 

2. For specified situations  
   Another option is to authorise a CPOA for a specific transaction or for a set situation ie when a director is overseas and documents need to be urgently signed. 

3. General Powers  
   The most common authorisation for CPOA use is in the case of unexpected contingencies, as in a director dies or becomes incapacitated due to injury or illness.  
   
   This way the business will continue to run effectively until a succession plan, another important part of risk management and estate planning, can be put in place. 

Q. Am I liable for the acts of my CPOA? 

Yes, as director you remain liable for your CPOAs actions as an attorney acts as a company’s agent. 

Appointing two people to act jointly can help to reduce the misuse of the attorneys powers.

Next Steps

Smart risk management means having a Company Power of Attorney in place – it’s easy to do once you have the right person/s in-mind and the Company Power of Attorney Request Form below will help with the process.

Once submitted, Malcolm and his team will contact you to discuss the next-steps toward helping you finalise your CPOA.

Contact your CIB Manager at anytime during the process for additional assistance and support.