Successor directors: keep the company running

If you’re the only director (or one of a small number), there’s a real continuity risk: if you die or lose capacity, the company may not be able to authorise banking, payroll, or key decisions.

Why this matters

Companies don’t “pause” neatly. Lack of director authority can cause immediate operational failure.

Payroll

No director authority can mean wages, super, and PAYG can’t be approved on time.

Banking

Banks may restrict access until valid directors are appointed and verified.

Contracts

Leases, suppliers, and customer agreements may stall if nobody can sign.

Tell it like it is: “There’s money in the account” doesn’t help if nobody has authority to press pay.

What a successor director plan actually is

Not a single magic document — a practical governance setup so someone can step in quickly and legitimately.

The goal

  • Ensure the company can keep operating if a director can’t act.
  • Keep controls in place (limits/approvals), not unlimited power.
  • Avoid delays caused by court/estate administration timing.

What it usually involves

  • Constitution review (who can appoint a director and how fast).
  • Shareholder control review (who has voting power to appoint directors).
  • Bank authority setup with sensible controls.
  • Documented “what to do if I’m not available” procedure.
Quick note on Powers of Attorney
A personal power of attorney doesn’t automatically solve company authority. Director powers and bank mandates often require company-specific appointments and resolutions.

Case studies (good and bad)

Same business size. Very different outcomes depending on planning.
Avoid thisBad case: “Frozen banking, missed payroll”

Sole director becomes incapacitated unexpectedly. No clear pathway exists to appoint a replacement director quickly. The bank requires proper director resolutions, but no director can sign them.

Payroll approvals stall, suppliers tighten terms, and compliance deadlines start getting missed.

Outcome: cashflow stress, reputational damage, and urgent legal/admin costs.

Best practiceGood case: “Continuity built in”

A successor pathway is built into the constitution/shareholder control, and bank authority settings are pre-agreed. Key operating procedures are documented so the business can keep moving.

When the director is temporarily unavailable, wages and critical bills are paid on time and client communication stays professional.

Outcome: stability during the disruption, and time to recover properly.

The aim is not “hand someone the keys forever”. It’s “avoid a standstill when life happens”.

Red flags

If any of these apply, you’re likely exposed to a standstill risk.

In a nutshell

This is business continuity. A small amount of governance work can prevent major disruption.
If a director can’t act, the company may be unable to bank, pay wages, or sign key documents. A successor director plan is a practical way to keep the company running and avoid a costly standstill.

General information only. Company control and succession depends on your constitution, shareholdings, bank mandate, and estate planning. Obtain legal advice before making changes.

If you’d like to discuss any of the above further, please don’t hesitate to contact our office.