Friday 29th April 2022 from 9am

Wills & Estates Senior Associate Debbie Sage will join Robyn Hyland to talk about the importance of planning for end-of-life care and what options are available.

Company Powers of Attorney – what happens to your business if you lose mental capacity to handle your own affairs?


In the same way that everyone should have an Enduring Power of Attorney in the event they lose mental capacity and cannot make decisions for themselves, business owners should also protect their business entities (i.e., a company or a trust) by putting in place a Company Power of Attorney. This critical document will ensure someone can step in to take control of a business entity if something unexpected happens to a company director who can no longer perform their duties, explains Attwood Marshall Lawyers Wills and Estates Lawyer Zoe Penman.

What is a Company Power of Attorney?

A Company Power of Attorney is a document put in place by a director of a company that appoints a person, or persons, or even another company, to act on its behalf which comes into operation if the director loses mental capacity (e.g., through illness or an injury, such as a stroke or a head injury).

An Attorney appointed by the company can sign documents on behalf of the company. If the company acts as a trustee for a trust, the attorney can also sign on behalf of the trustee company on behalf of the trust, although this needs to be noted in the power of attorney document.

The main reason someone may implement a Company Power of Attorney

For anyone that operates a business, they no doubt have plans for the business for the years to come.

People put their blood, sweat, and tears into their businesses, but they may not necessarily put in place an insurance policy if something happens to them as the director or owner of the business.

In most cases, we refer to a Company Power of Attorney so that there is someone to act if the director or owner loses capacity due to an illness or accident.

But these documents can also be used in situations where the director is away, perhaps on an overseas holiday, or even if they were to require surgery and know they will be out of action for a specific amount of time. In this case, you could look at appointing a Company Power of Attorney for a specific time period and for specific acts (like signing a contract) to ensure your business can keep operating without delay and someone you trust can make those important decisions.

The document can also be relied on if a director or owner of a company dies and the probate or administration of the estate has not yet been finalised.

Creating a company power of attorney is a straightforward process and should be considered by anyone who operates a business or ‘owns’ a company, to ensure that if something unexpected happens to them, their business will be looked after and controlled by someone that they trust.

Although we never plan for disaster to strike, unfortunately, we do not know what tomorrow brings. People work extremely hard to build up their businesses and it makes sense that you would want to protect it if something happens where you can no longer make decisions and operate the business in the same capacity.

What happens if someone doesn’t have a Company Power of Attorney and they fall ill or lose capacity?

A business can grind to a halt if you unexpectedly lose mental capacity, especially if you are a sole director and shareholder.

If there is no Company Power of Attorney in place and the director loses capacity, then the affairs of the company will remain frozen until an application can be made to the state’s Civil and Administrative Tribunal to have a person appointed to administer the company’s affairs.

This can take months and there is no guarantee your preferred family member or business associate will be appointed! Your affairs, and those of your company could end up being controlled by the Public Trustee. This would be a potential disaster! The key takeaway here is that you should ensure that you have made a Company Power of Attorney to avoid the delay that can come from the director suddenly being unable to make decisions and operate the business.

Who would benefit most from putting a Company Power of Attorney in place?

This is particularly important for sole directors of a company. By having a Company Power of Attorney, then you can have peace of mind knowing that your business can continue to operate if you are unable to act as a director. It is also helpful for a company that is a trustee of a trust. The same principles apply but it is a slightly different wording to include the company in its role as the trustee of the trust.

A Company Power of Attorney is similar to an Enduring Power of Attorney in that it allows the principal making the document to specify when the document will come into effect, which may be only in the event that the director loses the capacity to make decisions for themselves.

What happens if a company has more than one director, would this document still be relevant for them?

Yes! A Company Power of Attorney can be just as important in this scenario.

Under The Corporation Act 2001 (Cth), a company with two or more directors must sign documents by having either two directors or a director and the secretary sign documents for the business. If one director was to lose capacity or be unavailable, then their Corporate Attorney would have the ability to step in and sign on their behalf.

Obviously, the ability for a company to be able to sign documents is critical to the operation and running of a business, so there could be a significant disruption to a business by not having the ability to do this.

There are countless documents that may regularly require directors to sign, including employment contracts, business purchase or sale contracts, supplier contracts, and even tax returns.

Is there certain criteria a person should meet if they are to be selected for this role when a company is appointing a Company Power of Attorney?

Just like an Enduring Power of Attorney, anyone who is appointed to a role such as this must be over the age of 18 years and must be someone that is believed to be trustworthy and competent to perform the role.

It is about choosing someone that will always act in the best interests of the company and someone that will be able to keep thorough accounting and financial records.

They must also never enter into a conflict transaction, which means they must not act to benefit themselves without explicit permission from the company.

Sole business owners may choose to appoint a close family member or friend whom they trust that is familiar with their business.

There is also the option of appointing a professional advisor, such as a lawyer or accountant, who will charge a fee in return for acting as the Company Power of Attorney. However, this can sometimes be a preferential choice as you know that the professional will have the required skillset and experience to ensure financial and operational decisions that are made are in the best interest of the company.

Not everyone will have the skills and ability to take over someone’s business, and it really does come down to the type of business and how it operates, and the preferences of the director or directors.

Attwood Marshall Lawyers – helping you plan for the future and protect your business

As a leading estate planning law firm, we believe in putting in place the tools to ensure your hard-earned assets are protected and your best interests looked after if the unexpected happens.

Most people do not hesitate to take out insurance for their homes or businesses, but they tend to overlook the need to have a Company Power of Attorney to protect themselves, their loved ones and their assets.

Our lawyers work with business owners to ensure that their businesses are covered in all circumstances, and they can have peace of mind that their business can continue to operate if they lose capacity or are unable to manage their usual affairs.

With one of the largest and most experienced Wills and Estates Departments in Australia, we want to make it as easy and cost-effective as possible for everyone to have their most basic legal documents in place.

For advice on asset protection, succession planning, or estate planning, contact our Wills and Estates Department Manager Donna Tolley on direct line 07 5506 8241, email or free call 1800 621 071.

Our team of lawyers are available for appointments at any of our conveniently located offices in Sydney, Melbourne, Gold Coast and Brisbane. Book online today!

Read more:

Mental capacity issues in day to day living and what can happen if you don’t have an Enduring Power of Attorney

Taking care of business – protect your business with a business succession plan

Young or old; everyone should have a Will and an Enduring Power of Attorney!



Share this article

Zoe Booth - Associate - Wills & Estates

Zoe Penman

Wills & Estates

Contact the author

The contents of this article are considered accurate as at the date of publication. The information contained in this article does not constitute legal advice and is of a general nature only. Readers should seek legal advice about their specific circumstances. 

Brisbane Employment Law

Employment Law Sydney

Gold Coast Employment Law

Defamation Law

Employment Law

Download a Brochure

Please enter your details below and
a link will be emailed to you
Download Form

Compensation Law

Select your state