SMSF trustees travelling overseas may need company power of attorney
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John and Mary have an SMSF and they are both directors of the corporate trustee of their fund. As they have worked hard over many years, they now plan to go on more overseas holidays.
What happens if they, in their capacity as directors of the corporate trustee, need to sign off on decisions concerning them as members but they are overseas?
This is a very common scenario and therefore it is very important that if the trustee of your fund is a company that the company appoints a company power of attorney in anticipation of this type of situation.
A validly appointed company power of attorney will allow the corporate trustee to continue to act as trustee of the fund should the director/s be unable to physically sign for a particular period of time.
What is a company power of attorney?
A power of attorney is legal document signed by a principal (which can be an individual or a company) and which gives another individual (the attorney), the authority to act on behalf of that principal. This may include making financial decisions when the principal is unable to.
A validly appointed company power of attorney is an individual appointed by the company to act on the company's behalf.
A company is accorded the legal capacity and power of an individual under s124 of the Corporations Act 2001 and this gives it the company the power to grant a power of attorney.
How can you appoint a company power of attorney?
The first step is finding a suitable person to hold the company's power of attorney. Of course, it is vital that this person be completely trustworthy and someone in whom you have complete confidence.
They also need to be prepared to accept the role. It is also important to note that the appointment of the company power of attorney must be in accordance with the company's constitution.
The second step is ensuring you execute proper documentation to reflect the power of attorney's appointment.
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Natasha Ng is a solicitor with Townsends Business & Corporate Lawyers. This is a financial news article to be used for non-commercial purposes and is not intended to provide financial advice of any kind. Opinions expressed herein are subject to change without notice and may differ or be contrary to the opinions or recommendations of Morningstar as a result of using different assumptions and criteria.
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