|Description||Pricing* (incl GST)|
|Successor Director Appointment (first director)||POA|
|Successor Director Appointment (each additional director of the same company)||POA|
|*Add $75 for hard copy documents|
The appointment of a successor director to a company is vital to the smooth succession to a director’s role in many family and private companies. Broadly, this allows a director to nominate someone who takes their role in the event they are unable to.
Under most constitutions, the shareholders appoint the directors. However, in many family and private companies there are only two directors. Typically mum and dad are the two directors who hold one share each. Thus, if either mum or dad loses legal capacity or die, the remaining director of the company will be the surviving spouse who will effectively control the ongoing affairs of the company and make decisions such as who will be paid the deceased’s death benefit if the company acts as trustee to an SMSF.
This is not always the best outcome and prior documentation has to be implemented to ensure there is a trusted person who can ‘stand in the shoes’ of a director in the event of a director’s loss of capacity or death. Otherwise, in the above scenario, when each spouse has a 50% vote and a director who has lost capacity or died, will generally not have any legal right to have someone represent their interests.
The appointment of a successor director is relevant if there are separate beneficiaries who will ultimately benefit upon the death of the relevant member/director, eg, if dad has a second spouse and each have children to their prior relationships, then having someone represent their interests if they lose their capacity or die is recommended to ensure their benefits will be dealt with in the most appropriate manner.
The documents required to implement a successor director usually includes
- A nomination form;
- Relevant consents to act and cease acting, as appropriate;
- Relevant resolutions or minutes of directors and shareholders;
- Covering letter explaining the steps and documents to implement a successor director and checklist; and
- Related documents.
Generally, a constitution upgrade to the DBA constitution is required to facilitate the appointment of a successor director. The above documents then need to be implemented for each director who wishes to have a successor.
For further reading on the advantages of having a successor director, click on the articles listed below: