Stannard was hospitalised after a 'one-punch' attack in Sydney early last Friday.
The 35-year-old had replaced regular captain Lewis Holland, who had been ruled out due to a hamstring injury.
"It's been a strange feeling to take the role of captaincy in such difficult circumstances for 'Chucky' (Stannard) but I am honoured to be given the chance to captain my country," the 28-year-old Parahi said in a statement on Wednesday.
"For us as a team there's a real sense that we want to do it for James who would have been playing in his third Commonwealth Games.
"This adversity has bonded us closer together and we'll rise to the challenge when we run out on the Gold Coast in front of a home crowd."
Stannard was released from hospital on Sunday.
"I've got a fractured skull with a little bit of bleeding, they said, and I don't really know the full extent of it to be honest, I'm not a doctor (but) that just sounds bad for me," he told reporters earlier this week.
"I'm very lucky to be here."
The Games open later on Wednesday and run until April 15.
Australia's men have been drawn for the sevens tournament in Pool B with Samoa, Jamaica and England.
(Reporting by Greg Stutchbury; Editing by Peter Rutherford)
