COVID-19 | Temporary powers of attorney for business continuity
COVID-19 | Temporary powers of attorney for business continuity
As the impact of coronavirus continues to disrupt our economy, it is important to look at alternative ways to keep it “business as usual” as much as possible.
Organisations who regularly execute a large number of deeds and documents, for example in property transactions, mergers and corporate transactions, amendments to commercial contracts etc – it is often the case that only board members, ‘company’ secretaries and perhaps executive/senior managers have the authority in place to provide handwritten signatures required to complete transactions.
Whilst people are self-isolating and therefore not available for signing or witnessing documentation, appointing temporary powers of attorney can be a measure for businesses to remain functional. In this webinar, we will discuss the benefits and options available.
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And welcome to today's webinar on temporary Powers of Attorney. I'm Rachel Gwynn a legal director and head of the social housing team here at Shakespeare Martineau. You will see on your screen that you are able to ask questions. So, please do ask them along the way and I'll answer as many as I can.
We will also share a summary of the questions with everybody after the webinar with the government putting the UK in lockdown in an effort to reduce the impact of covid-19 many organizations are finding Finding it increasingly difficult to manage the processing and signing of legal documents particularly.
Those were electronic signatures cannot be used these kind of documents include many property-related deeds and agreements with many offices closed or running on a skeleton staff receiving documents for signing has become increasingly difficult in addition access to authorized signatories who can actually sign the documents is also proving challenging with some having Self isolate and the rest having to largely stay in their homes homes, of course, which can be scattered across a wide geographical area.
So what can organizations do to assist in ensuring they can still process and execute the documents. They require when accessing authorized signatories is becoming increasingly challenging.
One option is to utilize Powers of Attorney.
ordinary powers of attorneys can be granted by both individuals and corporate bodies that have a separate legal personality provided that their constitutional document does not explicitly prohibit this So that would include entities such as companies charitable Incorporated organizations Community interest companies and registered societies Powers of Attorney are a means of delegating Authority for a wide range of purposes for the purpose of this webinar. We are only considering how an organization could use Powers of Attorney to delegate to a much wider pool of individuals the ability to sign.
Indeed and documents on behalf of the organization. Please note that we are talking about the organization delegating authority to execute documents here and not individual directors board members or trustees appointed attorneys to sign in their place.
Just to confirm in putting in place such a power of attorney. We are not looking to delegate power to the attorney to enter into transactions on behalf of the organization or agree amendments to documents and deeds. The organization has approved rather. We are simply enabling an organization to broaden the pool of people who are authorized to sign approved documents during this time when accessing an existing signatory could prove difficult.
Putting in place a power of attorney or indeed having additional Powers of Attorney can help organizations Better manage the process of getting legal documents executed. This is particularly the case as I said earlier, we're electronic signatures cannot be used for example as the land registry does not yet accept electronic signatures all property documents requiring registration must be executed using a wet signature.
Picture having a wider range of signatories means organizations ensure that they have sufficient cover during times where a number of authorized signatories are self isolating or indeed having to Shield themselves all at the same time.
In addition by appointing appropriate attorneys that are also located near each other and organization can also help to reduce traveling time between the signatories. So who can be an attorney. There are very few statutory or common law restrictions on who can be an attorney and an ordinary power of attorney. In fact, the Restriction only extends as far as ensuring that the attorney is mentally capable of acting.
Therefore organizations can concentrate on considering who would be a most suitable person for appointment as an attorney. It is essential that organizations ensure that they trust their attorney. So often senior employees are appointed or trusted professional advisors such as your organization's legal advisor or accountants where of course they agree to act a single power of attorney can be used to appoint just one attorney.
Ernie or indeed a number of attorneys. It is also possible for an organization to appoint another corporate body to be its attorney in these cases. It's important to ensure that the attorneys constitution does not prohibit it from acting as an attorney. We're such a corporate attorney is appointed.
It is necessary to ensure that the power of attorney contains Provisions to enable the delegation of the power to By way of example, it would be possible for an organization to a point Shakespeare Martineau as its corporate attorney and providing the correct delegation Provisions are contained within the power of attorney Shakespeare Martineau would then be able to delegate the power of execution to individual Partners or other suitable employees. So, how can an organization put in place a power of attorney once a suitable attorney has been identified it.
Be necessary for the organization's board to resolve to delegate authority to execute documents to the attorney under that power of attorney such a board resolution can be passed as a written resolution or by calling and holding a valid board meeting.
This can be done using electronic means unless your constitutional document prohibits this the usual rules will apply so it is necessary to ensure that there is a sufficient Quorum for the resolution to be validly passed in order to create a valid power of attorney. There are a number of legal formalities that need to be followed. The power of attorney must be made by way of a deed and be validly executed as a deed. This will require an organization to execute the power of attorney in the usual way in addition to these legal formalities. The content of a power of attorney must also include various provisions.
Firstly we must clearly identify the donor IE the organization that's grunting the power. Secondly, we need to clearly identify the attorney thirdly. We need to detail the scope of the attorneys power care should be taken here to ensure that the power is wide enough to cover all of the documentation. The organization needs the attorney to execute on its behalf fourthly. There should be a provision to ensure.
Sure that the donor organization ratifies the attorneys acts that have been validly undertaken within the power contained in the power of attorney fifthly an Indemnity should be included to indemnify the attorney against all costs and liabilities.
They incur when they properly carry out their functions in accordance with the power granted under the power of attorney and lastly the power of attorney should also detail when the attorneys Will commence and how or when the power of attorney will terminate. So let's recap on the actions that you would need to take if your organization wants to put in place a power of attorney firstly you should check whether you already have sufficient authorized signatories to continue to execute the documents and deeds your organization requires taking into account. The impact of the government's lockdown and that signatories maybe having to self isolate or Shield themselves.
herbs Secondly, remember to check whether your constitutional document explicitly prohibits your organization from appointing attorneys thirdly think carefully and select your attorney with caution ensuring that they are trusted fourthly. Take care to ensure that your power of attorney is appropriately drafted and that the power being delegated is sufficiently wide enough to cover all of the types of documents your organization executes.
Fifthly remember to pass a valid board resolution to approve the delegation of authority to execute documents to the attorney 6ly validly execute the power of attorney as the organization usually executes documents. Remember the power of attorney is a deed.
And finally, remember to check your execution Clauses in all your documents. These will need to be amended to provide for execution by an attorney. Thank you for listening to this webinar. I hope you have found it useful and relevant in the current circumstances. I will answer a couple of the questions now and we'll also send out a note of the questions received along with answers and a recording of This webinar.
So let's have a look at question 1 Can the power of attorney be terminated? Well, yes termination of a power of attorney can be dealt with in a number of ways depending upon the type of Delegation being made and who is acting as the attorney the can be an automatic termination date included in the power of attorney so that the delegation automatically terminates on a specified date for example in 6 months time.
Or where a power of attorney has been drafted. So it appoints a specific employee. It can provide that the power ceases if the employee leaves the organization if you've drafted a power of attorney so that it appoints a person that holds a specific job role for example, a finance director. The power of attorney can include a provision so that the power automatically ceases when that individual ceases to be appointed to that.
On parole and finally power of attorney can be terminated at any time by the attorney surrendering the power or indeed by the donor revoking the power. However care should be taken when a donor is revoking a power and this should preferably be done by way of a deed. Another question that I have here asks, whether the power of attorney can be amended a power of attorney can only be a minute.
Ended by way of a deed and therefore it's often simpler to Simply revoke the existing power of attorney and then put in place a new one that includes the Amendments that you want to make.
I've got a question here that asks what paperwork will the land registry require if you're using a power of attorney, so the land registry are likely to ask for a certified copy of any power of attorney when documents are sent for Stration just to confirm that a power of attorney can be certified in the usual Way by a solicitor notary commissioner for Oaths Etc. And it's just worth remembering when you are disposing of property that you provide a copy of the certified copy of the power of attorney to the purchasers solicitor to avoid any holdups when they try to register their title with the land registry. I've got a fine.
No question here that asks, whether these types of Powers of Attorney can be used by charity trustees to provide the necessary trustee certificates when they're disposing of land know. These can't that has to be done by way of a different type of power of attorney under a different act and there is specific wording that needs to go into such a power of attorney to ensure it complies.
Is with the relevant statute and trustees of Charities individually need to give those Powers of Attorney rather than the organization as a corporate entity. So thank you very much for your time today.
And for all the great questions, as I said, I'll follow up on all of the questions received after the session and share their responses with you all for further advice and guidance on the coronavirus and how it might be Impacting your business organization. Please do take a look at our dedicated resource Hub at shma.co.uk and if you would like any further information or if you have a specific query you'd like to discuss in more detail then please do of course get in touch.
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