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.