Summary
- The Companies Act 2006 lets a company appoint an attorney by deed to sign documents in the company’s name.
- The document must define the attorney’s powers, state how long the authority lasts and allow the company to revoke it.
- Delegated authority under the articles of association suits routine decisions, whilst a power of attorney suits significant one-off transactions.
- This article explains company powers of attorney for business owners and directors in England and Wales.
- LegalVision’s corporate lawyers advise UK companies on defining an attorney’s authority, revoking an appointment, and choosing between a power of attorney and delegated authority.
Tips for Businesses
Execute the deed with two authorised signatories, or one director signing in front of a witness who attests the signature. Register the power at Companies House where it relates to land transactions. Give a bank a certified copy before the attorney acts. Name a successive attorney in case your first choice becomes unavailable. Speak to a corporate lawyer at LegalVision about executing a company power of attorney as a deed.
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A company power of attorney is a written document that lets a company appoint someone, the attorney, to act and sign in its name. Under the Companies Act 2006, a company may appoint an attorney by deed to execute documents on its behalf. The appointment must be in writing, because banks and other third parties will ask for a copy before accepting the attorney’s authority. The document sets the limits of that authority, which can be narrow, such as approving invoices, or general, covering wider financial decisions. Companies use them to cover planned absences and sudden illness. 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.
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What 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.
“A company power of attorney is only as useful as the third parties who accept it. Banks, landlords and suppliers will want to see the signed document, and some will take days to process it, not hours. Get copies to them while the arrangement is still theoretical, rather than on the morning you need someone to act.”
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.
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Frequently Asked Questions
How long does a company power of attorney last?
You set the duration in the document. The power can cover a fixed period, such as a planned absence, or run until the company revokes it. The company can revoke the power at any time by giving written notice to the attorney and to any third party holding a copy.
Can I have more than one attorney for my company?
Yes, provided the articles of association do not restrict it. State whether the attorneys act jointly, meaning they must agree together, or severally, meaning each can act alone. Joint authority gives the company more control. Several authority moves faster but demands careful selection.
Does my company have to execute the power of attorney as a deed?
Yes. A company appoints an attorney by deed. Two authorised signatories, such as two directors or a director and the company secretary, can execute the deed. Alternatively, one director signs in the presence of a witness who attests the signature.
What happens if my company does not have a power of attorney in place?
The company relies on delegated authority under its articles of association and board resolutions. That route suits routine matters, but a representative acting under it cannot execute a deed in the company’s name. A significant one-off transaction, such as a property sale, can stall.
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