Lisa Upham, Guernsey Advocate and a Notary Public, will look at specific issues relating to various types of power of attorney executed on the island of Guernsey.
A power of attorney is a legal document which enables an individual or a company (the donor) to delegate their authority to another person or company (the donee) to make binding decisions on their behalf.
Many clients come to us as they need a power of attorney for use in another country to appoint a third person to assist in the sale of a foreign asset (for example a house, a boat or a company) or to attend to something else like litigation in another jurisdiction.
Whilst we are concentrating on power of attorney in this article, it is important to note that the basic requirements for executing any document before a notary are the same.
The role of the notary is to provide authentication and a secure record for almost any sort of transaction, document or even event. This is not simply witnessing someone sign a document, there is more to it.
Where a document is executed or sworn before a notary, the notary must verify the following for each client, their:
- Identity;
- legal capacity;
- understanding of the document; and
- authority if signing on behalf of another party such as a limited company or under a power of attorney.
There are significant and often onerous background verification checks that need to be undertaken.
WHERE A DIRECTOR EXECUTES A POWER OF ATTORNEY
Where a company is entering into a power of attorney and the signature of the director binding the company needs to be notarised. The notary will need the following before they can do this:
VERIFY IDENTITY (FOR BOTH THE ENTITY ITSELF AND FOR THE NATURAL PERSON WHO IS SIGNING THE DOCUMENT)
- sight of the passport of the director/officer who will be executing the document for and on behalf of the company;
- certified copies of the M&A of the company; and
- certified copy of the certificate of incorporation.
The notary will also need to undertake a company and litigation search to check that the company exists and is not subject to a winding up or liquidation order.
VERIFY THE LEGAL CAPACITY OF THE ENTITY AND/OR INDIVIDUAL SIGNING:
- certified copies of the minutes of the board authorising the company to enter into the document and also authoring the person or people executing the document to do so on the company’s behalf (the best case – personal attendance at the meeting as an observer but this is rarely practicable)
- access to the directors’ register
- list of the authorised signatures
UNDERSTANDING OF THE POWER OF ATTORNEY:
In all cases, it is useful to have a copy the power of attorney for review and ideally a quick discussion with the individual(s) who will be granting any powers under it before the actual execution. The power of attorney may need to be amended (usually for Guernsey law purposes or because it is drafted extremely wide or appears to grant too many powers to too many people), so it is useful to have this in advance. The instructing foreign lawyer may also need to be involved if significant changes need to be made and this could take time.
OTHER THINGS TO CONSIDER
It is also useful to inform the notary of the country in which the power of attorney is to be used as there may be other issues relating to its legalisation or apostille that may need to be dealt with. It may also be the case that the power of attorney needs to be translated.
POWER OF ATTORNEY FOR INDIVIDUALS
Powers of attorney executed by individuals in Guernsey must be executed in accordance with the Power of Attorney and Affidavits (Bailiwick of Guernsey) Law 1995, usually before a notary public, a jurat or an advocate of over 5 years standing. Where this document is to be used abroad, it may also need to be notarised so it is probably best to instruct the notary at the outset. As noted above, care needs to be taken when granting any power of attorney as the donor needs to fully understand to whom they are giving the power or powers to, for how long and exactly what they are doing it for. Some foreign powers of attorney purport to grant powers to multiple donees and for an infinite amount of instructions. Where possible these people and instructions need to be restricted. A power of attorney should not grant the right on the donee to instruct new attorneys on their behalf.
POWERS OF ATTORNEY FOR COMPANIES
Where a power of attorney is executed by a Guernsey Company in Guernsey or elsewhere, it does not need to be executed before a notary, the Companies (Guernsey) Law, 2008 (as amended) provides that the power of attorney, is not valid unless it is signed by a director or in such other manner as may be provided for in the company articles and (b) is unless stated otherwise, capable of use in any place in Guernsey or elsewhere.
However, where the document is being used abroad, it may need to be apostilled and if this is the case, it is best to get the document executed before the notary at first instance.
POWERS OF ATTORNEY FOR TRUSTEES
There are additional restrictions for trustees under the Trusts (Guernsey) Law, 2007 (as amended) who are considering granting a power of attorney in respect of some of their functions in their capacity as a trustee for a specific trust.
Such powers of attorney (subject to the terms of the respective trust instrument) may be time limited to a maximum of 3 years. Furthermore, the trustee may also have specific notice requirements to any other co- trustees and/or anyone with a specific power of appointment or removal of trustees for that particular trust. Any power of attorney must be carefully drafted and there may be certain trustee duties that simply cannot be given to another person. We recommend that any trustee takes specific legal advice before entering into a power of attorney.
LASTING POWERS OF ATTORNEY
In 2022 Guernsey introduced the concept of Lasting Powers of Attorney (LPA) for local residents. Having an LPA in place removes the need for court applications for guardianships at an already stressful time which was the position before the LPA law was in force. LPAs governed by foreign law must be registered with the Court before they may be relied upon by a third party. You do not need to execute an LPA before a notary.
For more information please see our update Lasting Powers Of Attorney.
POWERS OF ATTORNEY AND ELECTRIC SIGNATURES AND EXCEPTION
The Electronic Transactions (Guernsey) Law, 2000 (ETL) allows for documents to be in electric form and for signatures to be attached in electric form. Specifically, the ETL states:
“signature, seal, attestation or notarisation in electronic form will not be denied legal effect, validity, enforceability or admissibility solely because it is in electronic form and a signature in electronic form satisfies a law requiring a signature written by hand.”
However, the Electronic Transactions (Exemptions) Order, 2001 (Exemptions Order) sets out certain documents which are generally excluded from the application of the ETL. Such documents they must continue to be executed in wet ink. Powers of attorney created by natural persons are one such exception and cannot be executed electronically.
The list of exemptions includes documents that would normally be executed by a natural person. Care must therefore be taken when dealing with certain service agreements or employment contracts as they may include a power of attorney from the employee or director.
As noted above, companies have different legal requirements for executing powers of attorney. Following the normal requirements that apply to a security interest agreement or for example any document which will invariably contain a power of attorney from a company, such document will be signed in accordance with the Companies Law by a director or in accordance with the company’s articles.
Whilst such corporate activities have not expressly been removed from the scope of the Exemption Ordinance, we feel that whilst the Exemption Order may result in a challenge to such a document being executed electronically, we believe that such a challenge is remote and that any document executed in this way has been done to usual market practice in the island and is enforceable. We have sought clarification from the legislature in this regard as we do not believe that the order was drafted to deal with such documents in mind.
E-APOSTILLES
Guernsey does not yet have a system for E- apostilles and very few local notaries have or use electronic signatures. These are all allowed in the UK and so we wait with interest as to when we will also be able to use these.
Other circumstances where an electronic document or signature should not be used include matters relating to enforcement actions which may need to be taken in another jurisdiction and that may be made difficult as a matter of local law because the use of an electronic signature.
For further information, please contact:
Lisa Upham, Appleby
lupham@applebyglobal.com
