- January 7, 2021
- Posted by: Josiah Hincks Solicitors
- Category: Legal News
Protecting your Business – Business LPA’s (Lasting Powers of Attorney)
Emma Longstaff | Associate Solicitor
Did you know that if an individual owns and runs a business as a sole trader or sole Director of a company, and they lose capacity, no one else may make decisions on behalf of the business. Likewise, if an individual owns and runs a business with others, and that individual is unavailable or lacks capacity their business may be at risk.
If a company adopts the Model Articles without altering them, the Mental Health (Discrimination) Act 2013 amends the articles to protect the directors position, by not allowing a director to be removed by a Court if he has mental health concerns, to include incapacity. This can make it very difficult for the business to continue running smoothly.
How can we safeguard against this?
A Business LPA/Lasting Power of Attorney (“BLPA”) allows the donor to appoint an Attorney to make decisions concerning their business interests either when they are unavailable or lack capacity.
You can create separate Lasting Powers of Attorney for business and personal use, and separate BLPAs for different business interests, specifying in each which they are to refer to.
They are important to consider to avoid discrimination claims, if a partner or director lacked mental capacity or had mental health concerns, the attorney can step in and make decisions on their behalf without having to seek Court approval to be removed.
What if I don’t have a BLPA?
If you do not have a BLPA and you lose capacity there could be potential issues that impact your business. What crisis management strategy do you have in place if that happens?
- If you lose capacity the bank is likely to freeze the business account;
- Voided or voidable contracts;
- Regulatory breaches;
- Statutory breaches;
- Insurance matters;
As a BLPA is regarded as a business document, the expense incurred for the preparation may be counted as a business expense and is tax deductible.
If you would like to know more about Business Lasting Powers of Attorney, Emma Longstaff and Natalie Biggin of our Wills and Probate Department will be providing a talk about these documents on Wednesday 17th February 2021.
Book on via Eventbrite by by clicking here.
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