Legal significance of irrevocable power of attorney for corporate rights

BASE (basic) 7.74

advertisement

Ланткевич Кирило

Lawyer

Ukraine / Dnipropetrovsk Oblast

i

Reading time: 14 minutes Total views: 371

Rate:

0

Publication date: 19.07.2024

I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.

An irrevocable power of attorney is an important legal instrument that is issued to ensure the fulfillment of the obligations of the company members. Here are the key aspects of its use and meaning:

• Issue purpose: The main purpose of the irrevocable power of attorney is to ensure the fulfillment of the obligations of the company members. This may include the exercise of their rights and obligations in relation to the share in the authorized capital or the powers of the participants.
• Legal status: An irrevocable power of attorney is a legal document that provides the authority to perform actions on behalf of a member of the company without the possibility of revoking this authority.
• Restrictions on revocation: A distinctive feature of an irrevocable power of attorney is that it cannot be revoked by the participant who issued it. This gives confidence to other parties that the person to whom such a power of attorney is issued will carry out the specified powers without the possibility of their termination.
• Application in corporate law: In corporate law, irrevocable powers of attorney are often used to ensure the smooth running of a business and to protect the interests of participants, especially in complex situations or in cases where it is important to ensure continuity of management.

Subject of irrevocable power of attorney:

The subject of an irrevocable power of attorney may be the delegation of the right to vote at the general meeting of the company's members. This mechanism can be used in corporate agreements where one party acquires the right to vote on behalf of the other party.

The main aspects of this mechanism include:

• Corporate Agreement: In a corporate agreement, the parties may include a condition whereby one party grants the other party the right to vote at a general meeting of members.
• Irrevocable Power of Attorney: To enforce this condition, a participant (a person entitled to vote) may obtain an irrevocable power of attorney from another party. This power of attorney allows the participant to exercise his right to vote at the general meeting, representing interests and voting on behalf of another party.
• Protection of participants: This mechanism allows for the protection of the interests of participants, ensuring their influence on decision-making at the general meeting through the provision of voting rights.
• Legal status: An irrevocable power of attorney is a legal instrument that protects the parties from the possibility of revoking or changing the terms of representation, ensuring stability and reliability in management.

Termination of an irrevocable power of attorney:

The peculiarity of an irrevocable power of attorney is that it terminates automatically in the event of termination of the obligation or right on the basis of which it was issued. This is an important provision reflected in legal practice and legislation, and has the following key aspects:

1. Terms of issuance: An irrevocable power of attorney is issued on the basis of a specific obligation or right that must be performed or ensured by the person who receives this power of attorney.
2. Automatic termination: As soon as the obligation or right on the basis of which the irrevocable power of attorney was issued is terminated, the power of attorney itself also ceases to exist. This means that it loses its legal force and can no longer be used to represent or perform actions.
3. Nature of the relationship: Termination of the obligation or right, on the basis of which the irrevocable power of attorney was issued, may occur for various reasons, such as the expiration of the term, the fulfillment of the obligation, or the cancellation of the right. In all these cases, the irrevocable power of attorney automatically loses its validity.
4. Protection of interests: This feature protects the interests of the parties, as it ensures that the power of attorney will not be used after the termination of the main obligation or right, thereby avoiding misunderstandings or wrongdoing.

Therefore, the nature of an irrevocable power of attorney is its connection with the main obligation or right, and when this relationship is terminated, it automatically ceases to exist.

Form and requirements for a notarial certificate of power of attorney:

Ukrainian legislation regulates the execution and form of an irrevocable power of attorney, requiring it to be set out in writing in order to take effect. A notarized certificate for an irrevocable power of attorney is mandatory.

Here are the main aspects regarding the form of an irrevocable power of attorney and the possibility of its notarization in Ukraine:

• Written form: According to Ukrainian law, an irrevocable power of attorney must be in writing for its legal recognition. This means that the document containing the power of attorney must be duly executed, signed by the parties and may contain additional requirements determined by the parties or in accordance with the law.
• Notary certificate: In Ukraine, a notarial certificate of an irrevocable power of attorney is mandatory.
• Other requirements: In addition to the requirements for the form and possibility of notarization, the parties may establish other conditions and requirements for the execution of an irrevocable power of attorney in accordance with their needs and legislation.

Delegation of powers specified by the power of attorney:

1. A person to whom an irrevocable power of attorney is issued usually cannot delegate to another person the performance of actions for which he was authorized. This is the main principle of irrevocable power of attorney, which ensures the stability and reliability of its use.
2. However, in the power of attorney itself, at the will of the parties, something else may be established. This means that the parties can include a condition on the possibility of delegating the right to perform actions to another person. Such a condition must be clearly formulated and accordingly framed in the text of the document.

Therefore, under the usual conditions, an irrevocable power of attorney includes the prohibition of transferring its powers to third parties. However, if the parties agree otherwise, it can be set out in the power of attorney itself.

Services of a lawyer when issuing a power of attorney:

The lawyer services when issuing a power of attorney for corporate rights can be important to ensure legal fidelity and clarity of the terms of the document. Here are some aspects that a legal services online can look out for during this process:

• Legal advice and legal analysis of the situation: A types of legal services can help members or directors of a corporation understand the legal implications of issuing and using a power of attorney. He can explain the legal duties and responsibilities of the parties under the terms of the power of attorney.
• Preparation of the document: A lawyer services online can prepare the text of an irrevocable power of attorney, taking into account the specific needs of the corporation and the requirements of the law. This includes a clear formulation of the rights and responsibilities of the authorized person.
• Taking into account the specifics of corporate law: The online assistance of a lawyer knows the specifics of corporate law and can help take into account all the necessary aspects, such as restrictions on the transfer of rights and other mandatory conditions.
• Legal services to ensure compliance with internal regulations: It is important that the power of attorney complies with the internal regulations of the corporation and other documents that regulate its activities.
• Legal analysis and risks: A lawyers online can analyze the potential legal risks associated with the use of a power of attorney and suggest measures to reduce or avoid them.
• Services of a lawyer in conflict resolution: A lawyers will help to find ways to resolve a corporate dispute through a court proceedings or through pre-trial settlement methods.