Laws related to Power of Attorney

Published by The Daily Observer May 25, 2019 . (Link Here)

Law Column is authored by the associates of Legal Counsel which is one of the leading full-service corporate law chambers of Bangladesh having core expertise in corporate and commercial law, employment and labor law, family law, property law, corporate taxation and so forth. (www.legalcounselbd.com or email at info@legalcounselbd.com)

The term Power of Attorney is a very common legal term and perhaps is a frequently used legal tool among people of all possible sectors, disciplines and jurisdictions for various purposes. However, many of us are still unaware of the proper legal implications, construction and usage of power of attorney and therefore in many instances, this legal instrument does not become either enforceable or efficient as it is expected while creation.

In this article, I would like to highlight some of the very key aspects of the power of attorney under the Power of Attorney Act 2012 and simultaneously will put forward some relevant significant issues attached to that.
Firstly, it is to be understood that, what the power of attorney is. Power of attorney is an instrument authorizing a person to act as the agent or attorney of the person granting it. In a simpler term, power of attorney is a legal document that authorizes another person to act on behalf of the person, who created the power of attorney. In Bangladesh, Power of Attorney Act 2012 and Power of Attorney Rules 2015 are the governing laws related to powers of attorney.

In the broader brush, Power of Attorney can be divided into two types, namely, General Power of Attorney and Special Power of Attorney. A general power of attorney gives broad authorizations to the agent.

A general power of attorney grants an agent virtually unfettered powers of decision making, from tax payment to entering contracts, from medical decisions to legal choices from settling claims to buying a new property, everything. Whereas, Special Power of Attorney narrows what choices the agent can make. For example, creating a special power of attorney might only allow your spouse to make medical decisions on your behalf or grant a business partner the ability to use certain assets to care for your business in the event you become incapacitated.
The Power of Attorney Act 2012 has a structured outlook which has addressed practical dilemma relating to creation power of attorney regarding the immovable property. For example, this Act has introduced a provision of Irrevocable Power of Attorney.

Irrevocable Power of Attorney denotes those power of attorneys, which relate to selling, buying, mortgaging or transferring of immovable properties. A power of attorney given to a Land Developer against monetary consideration/benefit will also be treated as an Irrevocable Power of Attorney.
An irrevocable Power of Attorney must be registered under section 52A of Registration Act 1908 to be legally enforceable. In every Irrevocable Power of Attorney, there must be mention about the time validity of this power of attorney.

However, expiry of time does not automatically invalidate an irrevocable power of attorney. Unlike General Power of Attorney, the principal of the Irrevocable Power of Attorney cannot automatically terminate a power of attorney by simply giving notice to the agent. In general power of attorney, either of the parties can terminate the power of attorney in accordance with the termination provision contained in the power of attorney. Therefore, the creation of Irrevocable Power of Attorney should be given extra attention thinking of its foreseeable consequences.
Power of Attorney Act 2012 has also created a scope for individuals residing outside Bangladesh to execute power of attorney. This Power of Attorney has to be executed and signed in the presence of appropriate officer; which in the context of individuals residing outside of Bangladesh is the concerned officer of the Bangladesh Consulate/mission in that country.

The executed power of attorney will thereafter be sent to Bangladesh. Within two months of reaching Bangladesh, it must be submitted to the Ministry of Foreign Affairs for its attestation and then duly stamped within three months. In cases where the power of attorney is required to be registered, it shall be submitted to the concerned sub-registry office within four months from the date on which the power of attorney was received in Bangladesh.
In addition to that, the Power of Attorney Act 2012 expressly lists out all the scenarios where the power of attorney cannot be provided to individuals. Such limitations include the execution of the will, execution of power pertaining to adoption, execution of gifts and trust instruments.

While creating a Power of Attorney Deed, one needs to be particularly mindful about certain requirements. Firstly, to attach recent passport size photographs of both donor and donee with the power of attorney and it has to be attested by putting signature and/or thumb impression on it, to attach National ID Card of both the parties, to be very specific about the power granted and the time duration of it and shall be executed in non-judicial stamp papers of appropriate value.

In conclusion, it is very important to look into the construction of Power of Attorney because unless it has been created complying with the proper formalities, it loses its objectives and fails to fulfil party’s intention. Therefore, while deciding to create a Power of Attorney, everyone needs to be assured about its consequences and legal implications thoroughly.