3 October 2017
Business as usual?
By Miranda Marshall, Director, Hayes + Storr
Many people assume that if they became incapable of running their business, it would still be ‘business as usual’ and that others would simply step into their shoes and carry on. This is not so. For many small businesses or sole traders, it could be the end of the business.
Whether you are a business owner, director, partner or sole trader, safeguarding the future of your business with a Lasting Power of Attorney (LPA) makes good business-sense. As a business owner, it is important to consider what might happen to your business if you were incapacitated by illness or injury. Who would take over the running of the business? What would it mean for your employees’ financial future?
Unless you have appointed an attorney, essential business operations may not be possible. Access to your bank accounts may be denied, suppliers won’t get paid, contracts could be lost, insurance premiums won’t be renewed and salaries could go unpaid. Without an attorney appointed to take care of the business, the disruption could be catastrophic. It might not take long for the impact to be felt.
A business or commercial LPA tackles this; however, they are more complicated than an ordinary LPA. For example, it might be necessary to alter the company’s Articles of Association or amend the partnership agreement. They are different to ordinary LPAs that deal with your personal and financial affairs and represent a vital element in your business continuity planning.
Many partnerships and companies, under the Mental Health Discrimination Act 2012, cannot remove a director/partner if they lose mental capacity.
You will need to identify one or more suitable attorneys. They should be known to you, trustworthy and capable of doing the job, ideally familiar with the business. You will need to talk it through with them so they know the role that they are taking on. They may need to take out their own Personal Liability insurance to make sure that they are protected when acting as an attorney. The attorney will effectively become a director with all the responsibility that follows.
Imagine if you had to leave your business unexpectedly with no one to take over your role. Many small business owners rarely take holidays because they cannot be spared. But, have you thought what would happen if you had no choice in the matter and were absent long-term without warning?
This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek our specific advice.
If you would like further advice on this matter please contact Miranda on 01328 710210. If you require advice on any other legal matter please call our Fakenham office on 01328 863231 or email firstname.lastname@example.org.