How to Issue a Power of Attorney When Your Company is Managed by Another Organization

Imagine a situation: you have a company, but the functions of its executive body have been transferred to another organization — a management company. The question arises: who has the right to issue powers of attorney on behalf of the company in this case?

This nuance can cause difficulties, since the law does not directly explain such a situation. Let’s figure out how to properly execute a power of attorney and avoid possible problems.

Who can issue a power of attorney?

As a general rule, a power of attorney from a legal entity is signed by its director. However, if your company has delegated the powers of the executive body to the management company, the director of this management company has the right to sign the power of attorney.

In other words:

• The power of attorney is signed by the head of the management company (director, general director);
• The document must clearly state that the power of attorney is issued on behalf of the managed company, and not the management organization.

Example of wording in a power of attorney:

“Limited Liability Company “Romashka”, represented by the director of LLC “Sunflower”, which is the management organization of LLC “Romashka”, full name, acting on the basis of the decision of the sole participant from DD.MM.YYYY and the contract for the provision of services for the management of the business company from DD.MM.YYYY, hereby authorizes …”

What is important to consider when drawing up a power of attorney?

• Use the letterhead of the managed company, not the management company.
• The seal (if used) must be a managed company seal.
• Be sure to indicate the date of signing the power of attorney. Without it, the document is considered invalid.
• Specify the details of the parties:

1. For a managed company: name, full name and position of the signatory, a document giving him the right to issue a power of attorney (decision of the meeting of participants, agreement with the management company).
2. For a representative: full name, position, passport data that are not redundant in relation to the purposes of personal data processing.

Why is it important to do everything right?

Errors in the execution of a power of attorney can lead to a refusal to accept it, which means that the employee or counterparty simply will not be able to act on behalf of the company. This can slow down processes, lead to losses or legal risks.

If you manage the company through a management organization, then it is important to properly execute powers of attorney so that your business does not face unexpected obstacles.

If you have any questions, contact the experts – we will help you understand the nuances!

Authors: Evgeny Nekrasov, Mikhail Karpuk

Dear journalists, use of material from the REVERA website in publications is only possible with our written permission. 

To approve material, please contact i.antonova@revera.legal or Telegram: https://t.me/PR_revera