power of attorney with respect to a health proxy. The Amendments, however, provide that a third party that receives and retains a complete copy of a statutory power of attorney will not incur liability for relying on it unless the third party has received actual notice of revocation or termination of that power of attorney.7
proxies is far afield from the purposes of the Amendments, but without limiting language in the statute, the scope of the Amendments will remain uncertain.
A technical corrections bill that repeals the auto- matic revocation provision passed the New York State Assembly, but it has yet to pass the New York State Senate.
Required Notarization of Principal and Agent Signatures
As a practical matter, the Amendments make powers of attorney more burdensome to enter into because a new power of attorney is not effective until it has been signed and notarized by both the
principal intended financial
and the agent.8 This to protect individuals and estate planning.
added hurdle is in the context of In a commercial
context, it increases transaction costs create uncertainty as to when a power of is effective.
and can attorney
Aside from the technical corrections bill that removes the automatic revocation provision, sug- gestions have been made to address many of the issues discussed above. Bar Associations in New York are actively working to revise the new law to exclude most commercial powers of attorney and powers of attorney already governed by other areas of law, such as health care law. These proposed revisions would be retroactively effective as of September 1, 2009, but will not be taken up by the New York State legislature until 2010.
If you have questions regarding the use of powers of attorney in light of the Amendments, please contact the Stroock attorney with whom you regularly work or any of the Stroock attorneys named below.
This Stroock Special Bulletin is part of a series of articles by Stroock’s Private Funds Group to keep clients and friends informed of significant legal developments.
Although there has been some debate over whether the Amendments reach powers of attorney used in connection with filings with the United States Securities and Exchange Commission,9 some public companies are beginning to add the required statutory legends to powers of attorney found at the end of registration statements and other filings.10
Voting proxies are technically an agency relationship. However, if all voting proxies were required to be signed and notarized by the shareholder and the proxy as principal and agent, shareholder voting would become much more cumbersome. The agency relationship of voting
By Hillel M. Bennett (212.806.6014), a Partner in the Private Funds Group of Stroock & Stroock & Lavan LLP, Sarah R. Davidoff (212.806.5578), a Partner in Stroock’s Private Funds Practice Group, Melvin Epstein (212.806.5864), a Partner in Stroock’s Capital Markets and Securities Practice Groups, Robert W. Guazzo (212.806.5581), a Partner in Stroock’s Mergers, Acquisitions and Joint Ventures Practice Group, and Alessandro J. Sacerdoti, an associate in Stroock’s Private Equity/Venture Capital Practice Group.