In Short
- A company power of attorney lets you authorise someone to act on your company’s behalf when you are unavailable.
- It must be in writing and clearly set out what the attorney can do and for how long.
- It is commonly used for significant transactions and business continuity.
Tips for Businesses
Choose your attorney carefully and only grant the level of authority your business genuinely needs. Keep the document clear, up to date and separate from routine delegated authorities. Always include a right to revoke, and notify banks and key counterparties if you change or cancel the arrangement.
Table of Contents
As a business owner, you will be used to making the key decisions for your company and signing off on relevant paperwork. There may be times when it would be helpful for someone else to jump in for you. In these cases, it can be useful to have a company power of attorney as a support mechanism to keep your company going during any extended absence. This article will outline what a company’s power of attorney is and how you can make use of it for your business.
How Does a Company’s Power of Attorney Work?
A company’s power of attorney is a legal document, alternatively known as a corporate power of attorney. Whichever name you use, you can put it in place to allow another person, called the ‘attorney’, to act on the company’s behalf when you are unavailable.
A company attorney must be appointed in writing because when interacting with other parties, such as other businesses or a bank, the attorney must prove they have the power of attorney.
Requirements for Valid Power of Attorney
Creating a valid company power of attorney requires specific legal formalities to ensure enforceability. The document, in the form of a deed, must clearly identify both the principal (company) and the appointed attorney, including full names and addresses.
You must clearly define the scope of the authority. Whether it is limited to specific transactions or gives broader decision-making powers, you should set out how long the authority will last. It is important that there is also a provision in the document allowing the company to revoke the power at any time.
Moreover, the document should be signed by the principal in the presence of witnesses. Some financial institutions may require documents to be certified.
Continue reading this article below the formWhat is the difference between a delegated authority?
A delegated authority refers to authority granted through the company’s articles of association and board resolutions made pursuant to the articles. Key features include:
- the articles set out the constitutional framework for who can bind the company;
- directors typically have the authority to delegate their powers (if the articles permit);
- usually involves board resolutions authorising specific individuals or setting approval limits
- less formal than a power of attorney since it does not require execution as a deed;
- often used for day-to-day operational matters (e.g., signing certain contracts below certain values); and
- the person acts as an authorised representative rather than as an attorney.
Choosing the Right Attorney for Your Business
Selecting an appropriate attorney is crucial for protecting your business interests. Consider appointing someone with relevant business experience who understands your industry and company operations. The attorney should be:
- trustworthy;
- reliable; and
- capable of making sound commercial decisions under pressure.
Alternatively, successive attorneys can be named in case your primary choice becomes unavailable. Professional advisors, such as solicitors or accountants, can serve as attorneys, though this typically involves additional costs for their services.
What Else Could a Company’s Power of Attorney Document Include?
A well-drafted document could also include:
- the ability to pay the attorney for their period assisting your company during your absence;
- that the attorney has the power to appoint a substitute in the event that they are not available, provided they are liable for the acts of the substitute; and
- confirmation that the company will ‘indemnify’ the attorney for certain loss and harm, provided that they are acting within the bounds of their authority – acts of negligence or fraud would not be covered.
When you incorporate a company in England and Wales, you must maintain a number of company registers at its registered office or at the Companies House. This template includes these company registers.
Key Takeaways
At times, it can be difficult to plan for unusual and unforeseen circumstances. One way to assist is by understanding the company’s power of attorney. This allows your nominated person to make business decisions in your absence based on how much authority you provide them with. It is essential that when assigning power of attorney, you do this in a written document.
LegalVision provides ongoing legal support for UK companies through our fixed-fee legal membership. Our experienced lawyers help businesses manage contracts, employment law, disputes, intellectual property and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.
Frequently Asked Questions
A company’s power of attorney specifically relates to business decisions and transactions on behalf of the company. However, note personal power of attorney covers individual personal and financial matters.
Yes, you can revoke a company’s power of attorney at any time while you have the mental capacity to do so. The revocation should be made in writing and copies provided to the attorney and any third parties who may have relied on the original document, such as banks or suppliers. Consider including revocation procedures in your original power of attorney document for clarity.
We appreciate your feedback – your submission has been successfully received.
