In these uncertain times, it’s important for businesses to be able to react quickly, especially for key personnel during this lockdown period.
What and why
Should a situation arise where you are only able to communicate with your lawyers and other representatives remotely, having a corporate power of attorney in place means that you can instruct your lawyer to sign documents on behalf of the company, meaning those documents then have the same power as if they were signed by a director authorised to do so. This means that your business, and any transactions you are involved in during this period of uncertainty, can still progress as normal.
A power of attorney can be specific or general and can give your lawyer or advisors powers to act on your general instructions, or powers to act only in relation to specific matters, i.e. to sign a specific document if you are unable to do so.
A general power of attorney may give companies comfort during this time that, if arranged now, they can call their lawyers, who are equipped to work during lockdown, to progress their business needs, whatever their personal situation.
A company must first ensure that they have the authority to grant a corporate power of attorney. This authority may be contained in the company's articles of association, and these should always be review as a starting point. If the articles do not contain this authority, you may be able to rely on a statutory right, which can then be ratified by a resolution of the board (Regulation 71 of Table A and Regulation 5 of the Model Articles permit the directors as a board to appoint an attorney to act on behalf of the company. It is worth noting that there is no statutory authority for a company to grant a power of attorney on any individual director's behalf, so if any documents can only be signed by a particular director (for example, a bank mandate) a corporate power of attorney will not necessarily assist, please contact us if you are having this issue.
Once the authority to enter into a corporate power of attorney has been identified, a board meeting should be held as soon as possible. A board meeting can be held remotely, by telephone. The board meeting must keep minutes which must record that a certain person has been authorised to sign the power of attorney and must also record why the board consider the power of attorney is necessary and what the powers it is delegating are.
A corporate power of attorney is a document which must be signed as a deed by the person designated to do so at the board meeting. This person does not have to be a director, although it would be best if they were, and this person must also ensure they are in a position to get their signature witnessed by a third party, and also get to a post box to send the original deed to the person to whom they are granting the power of attorney (i.e. their lawyers or advisors).
If you have any questions about whether a corporate power of attorney is the right thing for you and your business, please contact our corporate lawyers.