Definition and Scope of Commercial Power of Attorney
A commercial power of attorney is a legal authorization by which a legal entity (entrepreneur) grants its employee or another person the right to perform, in the name and on behalf of the principal, all legal actions related to the business activities of the legal entity (entrepreneur).
In the Republic of Lithuania, this authorization also includes the right to act on behalf of the principal before courts and other non-judicial institutions. The person who receives this authorization is called a commercial representative or authorized person.
The commercial power of attorney is issued by the competent governing body of the legal entity or by the owner of the legal entity, or a person authorized by the owner, in accordance with the procedure established in the founding documents of the legal entity. This authorization may be granted to several individuals (joint authorization). In such cases, all authorized persons must act together.
The authorization must be in written form and signed by the person entitled to issue it. It must also be registered according to the procedure prescribed by law in Lithuania.
This type of commercial authorization is a specific form of power of attorney, which:
- Can only be granted on behalf of a business entity – either a legal person or a sole proprietor (natural person),
- Can only be granted to a natural person, usually an employee of the legal entity (the authorized commercial representative),
- Is applicable only to business relations and to legal actions before courts and other institutions outside the judiciary.
The commercial representative does not have the right, and cannot be authorized, to perform the following actions:
- Transfer the principal’s immovable property (e.g., company real estate) or encumber the rights to it,
- Sign the principal’s financial statements or tax declarations,
- File for the principal’s bankruptcy,
- Delegate this commercial power of attorney to another person,
- Admit new shareholders or partners into the company,
- Transfer their authority to another individual.
The commercial power of attorney terminates when:
- the principal revokes it,
- the authorized person resigns from the authorization,
- bankruptcy proceedings are initiated against the principal,
- the legal entity that issued the authorization is liquidated or reorganized,
- the authorized person dies.
In Lithuania, a principal may assign employees to carry out ordinary and routine tasks in a specific area of business without issuing a formal commercial power of attorney. It is presumed that employees working in a shop or warehouse, without any special authorization, have the right to sell, deliver or receive goods, as well as to accept complaints regarding the quantity and quality of those goods.