Business Lasting Power of Attorney: Possibly the most important business document you can have!
Whether you are a business owner, director, partner or sole trader, protecting the future of your business with a Lasting Power of Attorney makes excellent business sense.
As a business owner it is important to consider what might happen to your business if you were suddenly unable to deal with it due to illness, injury or lack mental capacity.
Who would take over the running of the business and its financial affairs in your absence?
Whilst there may be ‘an understanding’ amongst your colleagues of what would happen should illness or injury take you away from the business, in the eyes of the law this isn’t sufficient and you cannot guarantee what would actually happen.
Unless you have legally appointed an Attorney, key business operations may not be possible, for example, access your business bank accounts may be denied, suppliers not getting paid, contracts could be compromised or lost, insurance premiums won’t be renewed, and salaries could go unpaid. This disruption to your business could be significant and the impact would quickly be felt.
A Business Lasting Power of Attorney (LPA) is an important document to prevent this.
You can use an LPA to appoint your Attorneys to deal with business matters and ensure the continuity of your business in the event you are unable to work. Powers of Attorney are already widely used by businesses to manage a range of commercial situations. Business Lasting Powers of Attorney should be seen as an extension of managing business interests, an integral part of the business crisis management practice and used to reduce the risk to your business.
Business LPAs are different to personal LPAs (the ones that deal with your personal finances and property) in that they are restricted to only deal with your business, therefore, providing a vital element of your business continuity planning.
Preparing Your Business Lasting Power of Attorney
The first step in preparing a business LPA is to review your company structure, the company’s articles of associations (if any), and any partnership or shareholder agreements.
Then you will need to identify a suitable Attorney. This should be someone you trust and who you know is capable of doing the job how you would want it done, someone who is familiar with the business and already has a good knowledge of your business market.
It is possible to appoint more than one Attorney and to specify how the Attorneys are to act, possibly acting jointly in some matters. For example, you could choose to appoint a trusted business associate who knows the business well to negotiate contracts, whilst also appointing a family member for the control and accessing of bank accounts. The structure is your choice as befits your needs and those of your business.
In addition to your Attorneys, you will also need a ‘certificate provider’ which is someone who:• Signs to confirm that they’ve discussed the document with you;• That you understand what you are doing; and• That nobody is forcing you to do it.
There are specific rules as to who this ‘certificate provider’ can be and we are pleased to say that Trusted Law can provide you with this service.
Once your Lasting Power of Attorney is in place
After your business LPA has been signed by all parties, it will be sent to the Office of Public Guardian for registration. This can take between 8-12weeks and once it is registered it can be used if needed.
The LPA will allow your Attorney to make business decisions on your behalf, including accessing business bank accounts, paying suppliers/employees, dealing with business property, organising insurance and repairs, dealing with business tax affairs and making those vital decisions in your absence to ensure your business survives.
And what happen if you don’t have your Lasting Power of Attorney in place?
If the worst happens and you are unable to deal with your own business affairs, and you don’t have your LPA in place, your family members (not your business partners) will have to apply to the Court of Protection for permission to deal with your affairs. This process can take anywhere between 6-12 months and fees are much higher.
Your business will benefit greatly with an LPA in place as it is there to use from day 1 of that unpredictable event. This just makes good business sense and is right for the majority of companies irrespective of size, it should be part of an effective business continuity plan.
To make your appointment or for an informal chat, please feel free to contact us.