It takes hard work, determination and passion to build a flourishing company from the ground up. Even so, there is nothing more rewarding than reaping the rewards for all this toil. You can imagine then, how horrifying it would be to see this work undone in the blink of an eye simply because you were to fall ill or pass away unexpectedly. While it is easy to get caught up in the process of building a business, it makes sense to safeguard all your hard work by building it upon a solid foundation. This grounding will ensure that your business continues to thrive, even in your absence.
Once you appreciate this, it is time to act immediately, and appoint a ‘Successor Director’.
Most companies require, at least, one director in order to keep the business running and operations flowing. Directors are the person who places company needs before their own with the best interests of the company at the forefront. They are also tasked to make major decisions within the business and undertake important activities that includes securing and managing finances and assets.
What happens when directors change?
When a current director steps down, it’s usually due to retirement or illness. In many cases it involves passing the reins of the company to a family member, most often adult children. In some cases, the director can unexpectedly pass away, suffer from a sudden illness, or experience an emergency that requires them to step down immediately.
In the former case, there is ample time for a smooth transition that allows a new director to be appointed to the company that will offer peace of mind to all stakeholders and staff. The latter situation is where things can get hairy, especially if there is an Alternate Director appointed rather than a Successor Director.
Alternate versus Successor Directors
An Alternate Director is frequently appointed once a sudden trigger event has occurred. They can undertake all the duties of a standard Director. Consideration must be given to the fact any such appointment is slow moving and the Alternate Director’s power is often discredited within the company. This may occur if the original director has died and was the only person offering credibility to the Alternate Director. As the Alternate Director is are listed with ASIC, they are also subject to finance checks and audits. This can have an adverse impact on company operations, as they are a back-up option and not a replacement. Essentially, the wrong Alternate Director can undo the years of hard work you put into the business in a short space of time.
It is often understood that a loss of mental capacity means the director’s attorney is automatically appointed under a Power of Attorney. This isn’t always the case and may, in fact, complicate the handover, adding delays and complications for paying wages and suppliers. This is an outcome that may place the whole organisation in immediate jeopardy. Appointing a Successor Director is the smart choice when it comes to deciding who will run your business if you pass or retire.
The appointment of Successor Director is automatic and allows for a safe, smooth transition from one director to the next. This dismisses the need for paperwork, waiting for Probate, or appearing on company searches or ASIC documents. In essence, the Successor Director is the lifeline that does not impede company dealings until called to action. They also work as a safety net, to protect the company if a surviving director (such as a business partner or spouse) should wish to take control in a manner that is in breach of the previous director’s wishes and direction for the company.
How can I get my Successor sorted?
Simply pick up the phone and call one of the experienced solicitors at Welden & Coluccio Lawyers. Our knowledge and understanding of these issues will ensure that the right questions are asked to guarantee you your desired outcome. In short, we do the hard-thinking so that for our clients the process is painless. Most importantly, we provide you with the ‘peace of mind’ assurance so that you know that whatever happens tomorrow is sorted.
Let us help you – we take the time to learn and understand your company, what your goals are and discuss your smart business decisions to ensure a bright and prosperous future for your company.