Why Every Sole Company Owner Needs a Power of Attorney: Planning for the Unexpected
If you are the sole director and sole shareholder of your company, you've undoubtedly invested significant effort into building your business. But have you ever stopped to consider what would happen to your company if you were suddenly unable to make decisions due to illness, accident, or even death? While it’s never pleasant to think about these scenarios, planning for the unexpected is one of the most responsible steps you can take to protect your business and your legacy.
What Is a Company Power of Attorney?
A company Power of Attorney (POA) is a legal document that allows you, as the business owner, to appoint someone you trust to make decisions and act on behalf of your company if you’re unable to do so. This person—the attorney—can handle everything from signing contracts and managing finances to making critical operational decisions. The document is executed by the company itself, not by an individual, and can be revoked or amended as needed.
Why Is a POA Essential for Sole Owners?
Unlike larger companies with multiple directors, sole company owners are the single point of decision-making. If you become incapacitated or pass away without a POA in place, your business could grind to a halt and may be unable to operate. Here’s why a POA is vital:
Business Continuity: Your attorney can keep your business running smoothly, ensuring employees, clients, and suppliers aren’t left in the lurch.
Delays in appointing a new director: When a sole director dies or loses capacity, the company cannot function until a new director is appointed. If you are also the sole shareholder, the process is even more complicated. Your legal personal representative must first obtain a grant of probate or letters of administration—a process that can take months. During this time, your business may be unable to meet its obligations, pay staff, or continue trading.
Reduce Stress for Loved Ones: With a clear plan in place, your family and team won’t be left scrambling to figure out what to do next.
Avoid Legal Complications: Without a POA, your business could face lengthy legal delays or even risk closure while waiting for court-appointed management.
Real-World Scenarios
Imagine you’re overseas on holiday and have a medical emergency, or you’re suddenly incapacitated. Without a POA, no one can legally access your business accounts, sign contracts, or pay staff. The result? Missed opportunities, financial loss, and a damaged reputation.
Or, in the event of your passing, your business could be tied up in probate, leaving employees and clients in limbo. A POA ensures there’s a trusted person ready to step in immediately (while new director/s are being appointed).
How to Set Up a Company Power of Attorney
Choose the Right Person: Select someone you trust implicitly—this could be a family member, business partner, or professional advisor.
Define Their Powers: Be specific about what your attorney can and cannot do. This could range from managing day-to-day operations to handling only financial matters.
Consult a Legal Professional: Drafting a POA is a legal process. Work with a lawyer to ensure your document is valid, tailored to your needs, and compliant with Australian law.
Communicate Your Plan: Let your family, staff, and key stakeholders know about your POA and who your appointed attorney is.
Take Action Today
Don’t wait for a crisis to highlight the gaps in your business planning. Setting up a company Power of Attorney is a smart, proactive step that can save your business from unnecessary hardship and protect everything you’ve worked so hard to build.
If you’re ready to safeguard your company’s future, contact us today for expert guidance on creating a tailored Power of Attorney that gives you—and your business—peace of mind.
Contact us at info@southernconnections.law to discuss how you can best protect your business, no matter what the future holds.
