What would happen to your company if its sole director became incapacitated or died? How would bills and staff get paid? Who would make decisions on behalf of the business?
Companies may only act through its directors so in the case of a sole director company, the company will be unable to operate if something happened to its director.
A personal power of attorney granted by a director is not valid where it seeks to allow someone to act in the role of a director of a company as the position of a director is a personal duty that cannot be delegated. Only the shareholders of a sole director company can appoint a replacement, even if it is only temporary.
A personal held by a shareholder may be able to call a meeting of shareholders so as to seek to appoint a replacement director, but this all takes time.
Each company that has a single director should appoint its own attorney as part of its overall risk management strategy.
The Corporations Act grants to a company all the powers and authority of a ‘natural person’ and as such, a company can appoint an attorney under a company power of attorney to act on its behalf when the company itself is not able to act (such as through the incapacity or ill heath of its sole director) and this attorney can continue to act even if the sole director died.
Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to corporations, commercial law or business related matters, contact Craig Pryor on (02) 9521 2455 or email email@example.com.
This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal concerns or objectives.