Let’s set the scene.
You have been working hard to establish your business. More money is coming in and your client list is growing.
You love what you do… but you are *tired*. And well-overdue for a holiday. You start daydreaming about soaking up the sun in Queensland, sailing through the Greek Islands, or skiing in New Zealand.
You start trawling through travel booking sites. But just as your cursor hovers over the ‘Book Now’ button, it hits you.
You cannot possibly leave the business right now.
What if an urgent problem comes up when you are mid-way through an international flight?
What if that important deal you are working on falls over?
All of a sudden… a holiday seems impossible.
No need to panic
Does the above sound like a bit familiar to you?
We all know that burn-out is ‘enemy number one’ for business owners. But too many of us feel that we have no choice but to put off holidays and personal days because we worry that something will go wrong while we are away.
It’s a shame because there is a simple contract that can help any business owner take as many holidays as they want. This contract can be quickly and cheaply prepared by a commercial lawyer and can help ensure that your business runs smoothly while you are away (even if there is no mobile phone reception!).
This contract is called a ‘Company Power of Attorney’.
What is a Company Power of Attorney?
A Company Power of Attorney allows a business owner to appoint someone else to act on behalf of the business for a certain period. For example, while they are on holiday. This person is known as the ‘attorney’.
The attorney can be a person or a company (although there are some limits on who can be appointed).
You, as the person appointing the attorney, can authorise them to perform almost any action that you ordinarily perform when managing the business – this includes operating bank accounts, signing contracts and voting at meetings.
You can also choose what scope of powers that the attorney is authorised to exercise while you are away. For example, you can choose to give the attorney the power to take any action that you could take on behalf of the company. Or, you can limit the authority so that the attorney is only allowed to perform certain acts on behalf of the company such as sign a specific contract that may or may not have to be signed while you are on holiday.
However, it is important to ensure any limits on the attorney’s authority are clearly specified in the document and discuss this scope with the attorney before you leave. This reduces the risk of the attorney acting outside of their intended authority.
The right person for the job
The attorney has a legal obligation to exercise any powers they are granted under a Company Power of Attorney in the best interests of the business. That said, you should carefully consider who you want to appoint as an attorney before taking your holiday.
You should not appoint an attorney unless you absolutely trust them to manage your business. The attorney will have the legal authority to perform the acts you authorise them to take on behalf of the company without necessarily asking for your permission or input. So, you should satisfy yourself that they will exercise good judgment and have the skills and experience necessary to perform those acts.
What if I change my mind during my holiday?
You have the power to revoke the powers you have granted under the Company Power of Attorney at any time. If you decide to do this, you should immediately inform the attorney(s) and any other key stakeholders (eg senior staff, your bank) of your decision in writing so that the people are aware that the attorney no longer has authority to act on your behalf.
A Company Power of Attorney is a great way for business owners to maintain work-life balance without interfering with the everyday operations of their business. All you need to get started is a person that you trust to act on behalf of the business (and who is willing to accept this responsibility) and a trusted legal advisor to draft the contract.
After that, it is all ‘smooth sailing’…
About Your Guest Blogger: Jessica is the Principal of Kinny Legal, a boutique commercial law firm in Sydney, Australia. Kinny Legal offers small to medium businesses the legal services and information products they need to get established, reduce risk and grow. Jessica loves helping business owners reach that next level in their business journey. To find out more, why not visit our website or follow us on Facebook?