Legal Tip 349: Powers of Attorney and Companies

Being appointed an attorney of an individual does not give you the right to act as a director in place of that person for a company. Either the company would need to appoint the individual as attorney, under Section 124 of the Corporations Act 2001, or you would need to get the shareholders to appoint you as a director – even if your principal is the sole shareholder.


Example

Homer is the sole director and shareholder of Hommy Pty Ltd. He makes an enduring power of attorney in favour of his son Bart. It is only to commence once his capacity is lost and this is confirmed by a medical doctor.

Homer has caused the company to buy a property and a contract is signed. To celebrate he goes to a specialist sushi restaurant and has Fugu fish. He ingests the poison and is rushed to hospital where he is in a coma for the time being.

Bart cannot start acting for the company using the power of attorney as he doesn’t have the power. Bart would need to exercise the power of attorney as Homer the shareholder to appoint himself, Bart, as a director. He could then begin to act as director for the company.



Section 201F Corporations Act 2001

CORPORATIONS ACT 2001 - SECT 201F Special rules for the appointment of directors for single director/single shareholder proprietary companies

Section 124 of the Corporations Act 2001

CORPORATIONS ACT 2001 - SECT 124 Legal capacity and powers of a company