A Power of Attorney (POA) is a formal instrument by which one person (the Donor) gives another person (the Donee) the authority or power to act specifically or generally on behalf of the Donor. These powers may cover movable or immovable assets such as property, land, shares, cash or intellectual property.
The law on Power of Attorney in Malaysia is not only subject to common law principles but also to Contracts Act 1950 as well as the Power of Attorney Act 1949. Under Malaysian laws a valid Power of Attorney must be executed pursuant to Section 3 and also deposited in the High Court as per Section 4 of Power of Attorney Act 1949.
The more common circumstances where you can see a POA in play is, for example, when a land owner gives a developer powers for development of land or in circumstances where a parent authorises her child to attend to his or her personal welfare matters.
The scope of the powers granted pursuant to the POA depends on the purpose of it being granted. The POA may contain express or specific powers that the Donee is granted and may also expressly state what the Donee cannot do on behalf of the Donor.
A POA can be made ‘revocable’ or ‘irrevocable’.
With a revocable power of attorney, one can revoke the powers granted to the Donee at any time or at the point of a certain event. Once the Donee revokes the power, the Donor cannot act on the Donee’s behalf.
On the other hand, an irrevocable power of attorney would mean the Donor gives up his/her right to revoke those powers with regard to the specific subject matter that the powers were granted for. However, in the interest of justice and to avoid any misuse or abuse of such powers, an irrevocable power of attorney can be revoked in certain situations, for example, breach of trust or fraud.
If the Donee is found to be abusing his or her position by acting in a manner contrary to the best interests of the Donor, the Donor may initiate legal proceedings to revoke the power of attorney.
Once a valid POA is granted, it will subsist and remain valid until and unless revoked or renounced (by way of a notice in writing of the Donor’s revocation or the Donee’s renunciation).
A valid POA may also be deemed revoked under the following circumstances:
- If either the Donor or the Donee dies; or
- The Donee has become of unsound mind; or
- The Donor has been adjudged to be of unsound mind; or
- A receiving order has been made against the Donor in bankruptcy.
It is advisable to be cautious when granting a POA. Apart from the Donee being able to spend and misuse your money, having a POA allows the Donee to make financial decisions that could be life-changing and bring severe consequences.
The Donee could make poor investments or incur debts in your name or fail to pay your bills and expenses. If you do not trust a prospective Donee, it is best to find someone else to fill those shoes.