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 of 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.
For further information in relation to corporations, commercial law or business related matters, contact Craig Pryor on (02) 9521 2455 or email firstname.lastname@example.org.
Content contained in this document is general information only and is not advice, financial planning, legal or otherwise.
This document was sourced from McKillop Legal’s blog
by Integrated Planning Systems Pty Limited ABN 21 051 429 184 trading as McKillop Financial Planning, an Authorised Representative of GWM Adviser Services Limited ABN 96 002 071 749 trading as MLC Financial Planning, Australian Financial Services Licensee, 105 – 153 Miller St, North Sydney NSW 2060, a member of the National Australia Bank Group of companies. The information is current as at 06 March 2019.
The article does not take into account your personal objectives, financial situation or needs. Accordingly, you should consider how appropriate the information is to you with regard to your personal circumstances. You may wish to obtain an adviser’s assistance, tax and/or legal advice to make this assessment. Before buying any financial product, you should read the Product Disclosure Statement (PDS) for that product and consider the contents of the PDS before making a decision about whether to acquire the product.
Opinions constitute our judgment at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia Group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility of errors or omissions for this document.
GWM Adviser Services Ltd is not responsible for the advice and services provided by McKillop Legal. Fionne McKillop is a director of McKillop Legal Pty Ltd and as a result, will receive distributions and/or other benefits from McKillop Legal Pty Ltd.