Ensuring succession in a company through the articles of association and power of attorney

Power of attorney

With a power of attorney, you give one or more individuals the authority to act on your behalf concerning your assets or personal matters. This power usually only comes into effect when you become incapacitated.

It is important to realize that you must still be legally capable of making decisions at the time you grant the power of attorney. Therefore, it is wise to do this proactively. If nothing has been arranged in advance, the court will appoint a temporary administrator. This could be a family member but also an external person.

A power of attorney can stipulate that the voting rights of your shares are exercised by the appointed agent(s). In concrete terms, this means that you can designate someone in your power of attorney to vote at the general meeting in the event of your incapacitation. The articles of association must, however, allow for this possibility.

A power of attorney, however, cannot arrange matters concerning directorship positions, for which it is better to make provisions in the articles of association.

Articles of association

It is possible to establish a succession plan in the company's articles of association, both for the board and the transfer of shares.

For a statutory director, for example, you can appoint a successor in the articles of association. This successor takes office as soon as the current director passes away or becomes incapacitated. In a collegial board, you can arrange that each director can represent the company alone, ensuring continuity if a director is declared incapacitated.

Successfully arranging succession in a company requires careful planning and the use of legal instruments that align with the needs of the involved parties. Both the company’s articles of association and a power of attorney can be effective means to streamline the transition of leadership and ownership. It is advisable to seek professional advice from legal experts to ensure that the chosen instruments fit the specific circumstances and objectives of the company and its shareholders.