In the real world, things go wrong. Directors get sick, go overseas, get caught in litigation, or just need someone else to sign something while they’re off-site. Without the right delegation in place, the business can grind to a halt. That’s where a Company Power of Attorney (CPOA) steps in.

It’s a simple document with serious benefits provided it’s done properly.

Don’t Confuse It with an Enduring Power of Attorney

A common mistake: assuming that a personal Enduring Power of Attorney (EPOA) will suffice.

Case example: The Director of a sole director, single shareholder company suffered a medical event and became incapacitated. His wife, armed with his personal EPOA, marched down to the bank to access the company’s trading accounts. The bank said no. Why? Because the EPOA only covered the individual, not the company because, at law a company is a separate legal personality to those who operate and control it¹ . With no Company Power of Attorney in place, the business was paralysed.

What a Company Power of Attorney Does

A CPOA authorises a trusted person (usually a senior employee, adviser, or non-director spouse or family member) to act on behalf of the company in defined circumstances². It can cover things like:

• Signing contracts or leases
• Making or receiving payments
• Dealing with the ATO, ASIC, banks, and suppliers
• Engaging lawyers, accountants, or insurers

In short: it keeps the wheels turning when the director can’t.

Why Guardrails Matter

A power of attorney without limits is an invitation for trouble. When preparing a CPOA, you should build in clear guardrails to limit both authority and exposure.

These may include:

• Scope limits: restrict to specific transactions or categories of decisions
• Time limits: make it valid only during a trip, illness, or defined project
• Dual signatures: require two attorneys to act together for major transactions
• Notification requirements: require the attorney to notify the board or the director after taking certain actions
• Revocation clauses: allow immediate cancellation if trust is lost or circumstances change

What About the Attorney’s Risk?

Appointing someone as attorney under a Company Power of Attorney doesn’t make them a director, and that detail matters.

The attorney:

• does not become a director, so they don’t attract director-level duties under the Corporations Act 2001 (Cth).
• acts only within the scope of the authority granted in the power. They are an agent, not an officer.
• is not liable for company decisions unless they step outside their authority or act dishonestly or negligently.

That said, attorneys should always:

• keep clear records of decisions made on the company’s behalf.
• follow any limits or reporting requirements imposed in the CPOA.
• seek clarification if in doubt about whether a particular act is permitted.

For the company, this clarity protects against the risk of the attorney overstepping their role. For the attorney, it ensures they’re not held personally liable for decisions made within the scope of their appointment.

The Big Payoff: Continuity and Control

Without a CPOA, you’re working without a net. Banks won’t let someone act for the company just because they “always have“, and informal delegation carries legal and financial risk.

With a properly drafted CPOA, you gain:

• Continuity: no disruption if you’re unavailable
• Efficiency: delegated authority for routine actions
• Protection: formal delegation protects against unauthorised decisions

Next Steps

Setting up a Company Power of Attorney is straightforward – done correctly, it will outlive most crises.

To implement a CPOA the company will need:

1. a well-drafted document, with appropriate guardrails
2. a board resolution
3. execution in accordance with section 127 of the Corporations Act 2001 (Cth)

Act Now

If your business has a director, it needs a Company Power of Attorney. It’s simple risk management. Done right, with the right controls, it can mean the difference between continuity and collapse when the unexpected strikes.

Footnotes

1. Salomon v A. Salomon & Co Ltd [1897] AC 22

2 Powers of Attorney Act 1998 (Qld) – Chapter 2