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Corporate Powers of Attorney

What’s a Corporate Power of Attorney?

People are used to thinking of powers of attorney in the personal context, such as for estate planning purposes or in medical situations.  Companies also use powers of attorney, but for entirely different purposes.  Companies use powers of attorney to manage signing authority.

What is Signing Authority?

It is important to manage who signs on behalf of a company in every context.  Officers and manager will have general power to sign on behalf of a company pursuant to state law and/or the formation documents of a company.   So it’s clear that your president or (if you are an LLC) one of your managers can sign nearly any document and bind the company.  But what about the day-to-day stuff?  If the receptionist falls into a pattern of signing receipts, invoices and purchase orders without any formal authority, who is to say whether those documents are binding or not on the Company or, more importantly,  binding on the other side should a dispute emerge?  Worse, without any documentation defining an employee’s authority, what is to stop a salesman from from signing a sales contract he or she shouldn’t and committing the company legally?

Companies manage signing authority with a powers of attorney that outline specifically what an employee or contractor is authorized to sign and do on behalf of that company and the limits of that authority.  It is good practice and doesn’t take a lot of effort to set up a simple structure.

What Does a Corporate Power of Attorney Look Like?

Corporate PoAs can be simple.  They are signed by an officer who has general signing authority.   They can be, but don’t need to be notarized.  Most importantly, they should define the type of documents an employee is authorized to sign on behalf of the Company.  It needs to be clear that the PoA can be revoked by the Company at any time and is automatically revoked upon a separation of the employee from the Company for whatever reason.  As a safety net, corporate powers of attorney should automatically expire periodically.  Many company forms will include a clause that has them expire after twelve months, unless renewed.

For After Incorporation registered users, there are several good PoA forms located in the Forms and Resources tool.