On September 1, 2009, amendments to Section 5-1501 of the New York General Obligations Law went into effect regarding the statutory requirements of powers of attorney executed by individuals within the State of New York. The new law could require changes to documents relating to commercial transactions, Securities and Exchange Commission filings (including powers of attorney executed in connection with filings under Section 16 of the Securities Exchange Act), blue sky filings and tax forms, as well as other types of documents.
The new law requires that all short-form powers of attorney and non-statutory powers of attorney executed by individuals within the State of New York, including those executed by non-residents of the State of New York:
• be legibly printed or typed in a size no less than twelve-point;
• be signed and notarized by both the agent and principal; and
• contain the exact wording set forth in Section 5-1513 of the New York General Obligations Law relating to "Caution to the Principal"1 and "Important Information for the Agent."2
Powers of attorney executed prior to September 1, 2009 will remain valid; however, if an individual executes a subsequent power of attorney on or after September 1, 2009, it will revoke all prior powers of attorney granted by that individual (including unrelated powers of attorney), unless the newly executed power of attorney provides otherwise.
It is important to note that a power of attorney executed outside of the State of New York is valid in the State of New York if it complies with the laws of the state in which it was executed or the laws of the State of New York, even if the principal is a New York State resident. In addition, powers of attorney executed by non-individuals are not subject to the new law.
We are still in the process of analyzing the practical effects of the new law. For now, parties to commercial transactions, such as mergers and acquisitions and bank loans, may want to consider removing power of attorney provisions from the principal transaction documents and creating separate, stand-alone powers of attorney that comply with the new law. For Securities Act and Securities Exchange Act filings, such as registration statements and periodic reports, companies should consider removing the powers of attorney from the signature pages to their filings and including a separate power of attorney as an exhibit to the filing.
1CAUTION TO THE PRINCIPAL: Your Power of Attorney is an important document. As the "principal," you give the person whom you choose (your "agent") authority to spend your money and sell or dispose of your property during your lifetime without telling you. You do not lose your authority to act even though you have given your agent similar authority.
When your agent exercises this authority, he or she must act according to any instructions you have provided or, where there are no specific instructions, in your best interest. "Important Information for the Agent" at the end of this document describes your agent's responsibilities.
Your agent can act on your behalf only after signing the Power of Attorney before a notary public.
You can request information from your agent at any time. If you are revoking a prior Power of Attorney by executing this Power of Attorney, you should provide written notice of the revocation to your prior agent(s) and to the financial institutions where your accounts are located.
You can revoke or terminate your Power of Attorney at any time for any reason as long as you are of sound mind. If you are no longer of sound mind, a court can remove an agent for acting improperly.
Your agent cannot make health care decisions for you. You may execute a "Health Care Proxy" to do this.
The law governing Powers of Attorney is contained in the New York General Obligations Law, Article 5, Title 15. This law is available at a law library, or online through the New York State Senate or Assembly websites, www.senate.state.ny.us or www.assembly.state.ny.us.
If there is anything about this document that you do not understand, you should ask a lawyer of your own choosing to explain it to you.
2IMPORTANT INFORMATION FOR THE AGENT: When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must:
(1) act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest;
(2) avoid conflicts that would impair your ability to act in the principal's best interest;
(3) keep the principal's property separate and distinct from any assets you own or control, unless otherwise permitted by law;
(4) keep a record or all receipts, payments, and transactions conducted for the principal; and
(5) disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in either of the following manner: (Principal's Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal's Name).
You may not use the principal's assets to benefit yourself or give major gifts to yourself or anyone else unless the principal has specifically granted you that authority in this Power of Attorney or in a Statutory Major Gifts Rider attached to this Power of Attorney. If you have that authority, you must act according to any instructions of the principal or, where there are no such instructions, in the principal's best interest. You may resign by giving written notice to the principal and to any co-agent, successor agent, monitor if one has been named in this document, or the principal's guardian if one has been appointed. If there is anything about this document or your responsibilities that you do not understand, you should seek legal advice.
Liability of agent:
The meaning of the authority given to you is defined in New York's General Obligations Law, Article 5, Title 15. If it is found that you have violated the law or acted outside the authority granted to you in the Power of Attorney, you may be liable under the law for your violation.
For more recent information, please read the August 2010 article, New York Enacts Revisions to Power of Attorney Law