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In the light of the growing need to delegate tasks and actions to be carried out before official or non-official bodies, and in view of the need for stable business and life transactions in human life, the authority to delegate others was created whereby others are mandated to perform or carry out tasks as their powers shall be determined by the authorizer. Thus, the power of attorney became one of the most common contracts at our present time.
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The Romans knew authorization in the second century BC and it evolved throughout history until our present day, as it became common in all transactions and among all people. It should be noted that authorization of powers emerged during the “Punic Wars” between Rome and Carthage, as warriors were forced to turn away from their homelands and to use agents to manage their money during their absence. Therefore, the power of attorney emerged late in Roman law since the idea of representation or acting on behalf of another person was not generally known to Romans.
Hence, the agency or the power of attorney is something required by the practical necessity for several considerations, the most important of which are:
- The inability of an individual or entity to carry out all the required tasks by himself or by one person, as they may not have the time and capacity to do everything required to be done. Hence, delegating powers to others was necessary through the agency or the power of attorney, for example, authorizing a person or company to take care of a building or property, to collect the rent and evacuate the residents when they refrain from paying or expel them in return for a commission to be paid to the agent of the attorney.
- The inability of an individual or entity to carry out all the required tasks by himself or by one person, as they may not have the time and capacity to do everything required to be done. Hence, delegating powers to others was necessary through the agency or the power of attorney, for example, authorizing a person or company to take care of a building or property, to collect the rent and evacuate the residents when they refrain from paying or expel them in return for a commission to be paid to the agent of the attorney.
- Both individuals and entities need to be experienced in matters that they cannot do on their own, in which the expertise of others is needed. For example, authorizing an accountant to go to the bank and sign papers or authorizing lawyer to appear before the court on behalf of the individual or the entity.
- In their lives, human beings may experience circumstances and events that make them obliged to hire others to act on their behalf. Such circumstances and events may include illness, travel, and personal status. While travelling, an individual may have to authorize another person to perform tasks or sign other papers in his/her absence based on a specific mechanism.
- In addition, the emergence of issues resulting from industrial and economic development and the attempt to achieve the maximum amount of work in the shortest period of time, there has been a need for the energy of others to carry out work by authorizing others to carry out the said work in exchange for fee or without a fee.
1 – Powers of Attorney Issued by Individuals
Individuals (clients/authorizers) issue general or special powers of attorney to other individuals (attorneys) authorizing them to act in general or specific matters. Such powers of attorney may be issued based on personal relations (power of attorney to a brother or friend) or based on a professional relation or business dealing (an employee in an entity or a power of attorney issued to a lawyer or tax accountant).
Often, such powers of attorney are based on personal relationships in which acting upon the client\’s request to the agent orally, by a casual message or as needed, without any regulation. Concerning actions based on a business relationship or business deal, powers of attorney shall be drafted based on a contract or agreement which outlines means of receiving and implementing instructions.
The power of attorney whether it was public or private does not make any difference except in the breadth of the interpretation of powers and defining powers within the framework already drafted in the powers included in the power of attorney.
Furthermore, individuals (clients) may issue to a corporation, company, bank, or a financial institution (agent) a special power of attorney which is concerned with specific matters based on business relations.
Such business relations are often included in detailed contracts specifying the powers and methods of receiving instructions and procedures to be carried out and the responsibility of the authorizer and the agent or the attorney. Such powers of attorney may include powers of attorney issued to securities companies to buy or sell a stock, powers of attorney which are issued to property management offices to manages buildings, real estate to lease it and invest on behalf of the authorizer. Many disputes arise as a result of such powers of attorneys and contracts due to the client\’s lack of understanding of contracts and power or due to the default or misunderstanding of any party of the nature of the business dealings.
2 – Powers of Attorney Issued by Companies
Companies are considered legal entities which are separate from the liability of its partners to represent it or to act on its behalf except in the case of individual establishments or partners in joint ventures. The Commercial Law No. 2 of 2015 for commercial companies specifies the powers of company representatives, especially the company manager (the Director General) which is regarded as the company\’s high representative as he/she shall enjoy the broadest powers. The law may add the powers of boards of directors and general assemblies.
Despite that the law grants the manager all the general powers, many entities with high risk activities does not only require that the manager is merely appointed in the position, as they require a detailed statement of the authorities and powers delegated to the manager by the memorandum of association or by a special power of attorney issued by the owners of the company as partners. This is usually the case especially with banks and securities companies whose activities include lending, signing guarantees and mortgaging the property of the company or the company itself. In addition, the delegation of an employee to manage to company’s bank account usually includes broad powers requiring a power of attorney from the manager.
Powers of attorney of companies are issued in several forms to the
Director
General, an employee, another company or body if
the concerned person is authorized to delegate others. Powers of attorney need to be notarized by a notary public to be in
order to be official and valid.
3 – Authorization as per the Memorandum of Association
The memorandum of association is the official document notarized
by the notary public and it sets out the basic structure of the company. It
may be briefed depending on the provisions of the Commercial Companies Law or it
may be detailed to regulate all details, relations and
obligations of managers, partners, and board members and their
appointment and dismissing methods. Therefore,
the memorandum of association may also include express authorization
to the Director
General concerning the actions which he may dispose of and the limits of such actions or it may make them absolute and unconditional. The Memorandum of Association may also include the authorization of other persons to act as attorneys on behalf of the company, or
the delegation of legal accounting offices, an account manager, a public relations manager, or other persons with powers and authorities to
act as a legal agents for the company. Finally,
the memorandum of association that
includes the information on the powers each person if they are allowed to delegate authorities to others or not.
4 – The Authorization of the Director General
Under the law, the Director General is the highest authority in the company and has the full right to dispose of
it. However, many entities and
bodies whose work involve high risks (such as lending and mortgage) borne by the company require a special power of attorney if the memorandum of
association does not include such powers. In general, the Director
General is responsible for the company and has the right to sign contracts and transactions
and delegate others, but there is always a hindrance to delegating others with
high-risk powers if the Director General does not have such powers under the memorandum of association. However, generally speaking, the manager is authorized by the company to act on its behalf, except as may be required by some entities,
as the existence of special powers
of attorney may be a necessity even if a general power of attorney was
included under the memorandum of association.
5 – Board decisions
In
some companies whose memorandum of association stipulates
that the Board of Directors may be delegated
specific powers or to act on specific matters, the Board of Directors shall be the decision-maker to
act on such decisions. In such cases, the Board of Directors may have the right to issue a power of attorney to an employee, a
board member or a natural person to act in a specific manner. The need arises for a Board of Directors in companies where partners do not have a role in the actual management of
the company or due to the
inability to gather these parties to issue a resolution to the General Assembly, especially in public joint stock companies and private joint stock
companies, which makes the Board of Directors an alternative which is authorized by partners to issue authorizations which are required
by some bodies.
6 – General Assembly Resolutions
The General Assembly is considered as a meeting of
the partners in a company and it is clearly reflected in limited liability companies and
public and private joint stock companies. The resolutions
issued by the General Assembly are the decisions of the partners themselves
and they have the power to delegate and increase the powers of
the Director General and to take all necessary
actions in accordance with the memorandum of
association. This type is common in the powers
of attorney issued by a company.
7 – Authorizing Partners in Their Capacity
Each partner in a company may issue a power of attorney in his own
capacity as a partner to the Director
General or others by acting in a manner that does not violate the memorandum of association or by
the powers delegated to him. Moreover, partners may jointly issue a power of attorney as
partners in the company in order to achieve the best interests of
the company.
We hope that this article has enriched your understanding of delegation, authorization and
powers of attorney for both individuals and companies,
in order to facilitate the issuance of authorizations,
either on a personal or a commercial level.
Contact us for Corporate lawyers in Dubai. In case if you have any suggestion to improve the article content or if you would like to contact us for additional information, you can contact the article writer via our e-mail.
Nour
Attorneys & Legal Consultants
Lawyer & Legal
Consultants
Mohamed
Noureldin
For any legal services or inquiry reach us on: info@nourattorneys.com
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