As a business owner, implementing a Business Lasting Power of Attorney (LPA) should be of consideration to ensure your company can continue to operate if unforeseeable circumstances arise.
As power of attorney lawyers, NSS Legal can provide you with professional advice and guidance in this area of law. Our article explains what a Business LPA is and how it can help your business to continue operating.
What is a Lasting Power of Attorney?
An LPA is a legal document registered with the Office of the Public Guardian. It is created by the ‘donor’ who gives their representatives, known as the ‘attorneys’, the authority to make decisions regarding their affairs in the event the donor is no longer able to do so.
When the LPA is produced, it is only legally binding if it has been validly registered by the Office of the Public Guardian and:
• The donor is 18 or older; and
• The donor has ‘full mental capacity’ at the time of the creation.
If you're thinking "I have Power of Attorney, now what?", please take a look at our article on what is a Lasting Power of Attorney?
What is a Business Lasting Power of Attorney?
The same concept applies to a Business Lasting Power of Attorney, but it is specifically set up to deal with the donor’s business affairs.
The Responsibilities of the Business Lasting Power of Attorney
The Business LPA is made specifically to allow the attorney to make decisions on behalf of the company owner if the owner is unable to do so in unforeseen circumstances such as an accident which causes incapacity or a prolonged trip abroad. The powers of the attorney are limited to handling business affairs.
In these circumstances, the attorneys appointed in a Business LPA would take on the responsibilities required to keep the business running such as signing and authorising payment of wages and bills.
Why Might You Need a Business Power of Attorney?
For many clients, the people they would wish to appoint to handle their personal finances (should they become unwell) are not suitable to handle their business affairs.
Protecting Your Business
As well as ensuring there is suitable insurance cover such as key person insurance, having a Business LPA can be an essential to your business. Your family, employees or business associates may not legally be able to take on the responsibility in your absence.
If no one has the authority to take on this role, it can leave your business vulnerable without your involvement.
Consequently, it is in the best interests of the business to ensure a Business LPA is put in place to ensure as little disturbance to the running of a company as possible.
What Happens if You Do Not Have a Business Power of Attorney?
If you no longer have the capacity to make decisions in the interests of your business and a Business LPA has not been put in place and/or your company documents do not make provision for such a situation, an application for a deputy to be appointed to act on your behalf may need to be made instead.
The Disadvantages of a Deputy Application
This could involve the Court of the Protection and the process is much more cumbersome, costly and time-consuming. For example, in many cases, it can take at least six months for the legal process to complete, which can leave your business in an uncertain position during that time.
There is the added risk that the Court may not necessarily appoint the people you would choose.
What Are the Advantages of Having a Business LPA?
As well as ensuring a seamless continuity of the day-to-day running of the business, it will provide certainty for those working in the business and third parties who have an interest, such as banks and creditors being paid on time.
It also provides clarity and peace of mind that your Business attorneys will be people you have chosen personally.
Can One LPA Manage Both my Business and Personal Affairs?
Technically, this is a possibility. However, it may not be the best solution for your business.
You can have a separate LPA to look after your personal financial affairs. This is often recommended, as the people who would be capable of looking after your personal affairs may not necessarily have the required level of business acumen to look after your business, and you may not wish for someone who is suitable to look after your business to be involved in your personal affairs.
Organising Separate LPAs for Business and Personal Affairs
If you do choose to have separate LPAs, it is vital to have clear instructions for each one to ensure they know their responsibilities and where their powers start and end. By doing this, it should reduce the risk of conflict and set clear boundaries for each one.
NSS Legal can guide you through the bespoke clauses which would suit you in both your personal and Business LPAs.
How Can NSS Legal Help?
If you're not sure whether you need a Power of Attorney or Deputyship, we've taken a look at the difference in our article.
If you require NSS Legal to prepare and register Lasting Powers of Attorney for your business, please get in contact with our team of power of attorney solicitors in London on 020 8209 1222, and we can assist you through this. Alternatively, you can email us at info@nsslegal.co.uk.
