LEGAL
Hear it from the experts …
As a business owner, are you prepared for the unexpected?
Private client solicitors Heledd Wyn and Owen Mason from Mowbray Woodwards solicitors, discuss the importance of Lasting Powers of Attorney for business owners. You may be familiar with Lasting Powers of Attorney( LPAs) as something that a relative may have with regard to their personal affairs.
However, have you given much thought to what would happen to your business if you were incapacitated? Physical or mental incapacity can affect any of us and often without warning. A skiing accident or being run down by the proverbial bus can render us in a position where we are unable to manage our affairs in the way that we would normally expect. In these circumstances, who is running the business?
If you are a sole trader, it is particularly important for you to draw up a Lasting Power of Attorney to appoint someone to manage the business, its bank accounts, purchase stock and pay any invoices. Would you choose a family member or a professional to undertake this role? Ideally, it should be someone with the expertise to run a business.
If as a business owner you are in a partnership, then it is important to check the partnership agreement to see what provision is made in the event of incapacity. If there is no written partnership agreement, then the worst case scenario is that an application can be made to court to dissolve the partnership. Again, appointing an attorney who understands the business and who would be able to make good commercial decisions on your behalf is a sensible idea.
Companies are slightly different, as the removal of incapacitated directors is often dealt with in the Articles of Association. With regard to the shares owned by that director, care will need to be taken to ensure that anyone who is appointed attorney does not exercise any voting rights in a manner that would contradict the company’ s aims and aspirations( although again, reference will need to be made to the Articles and any shareholders’ agreement).
When you are considering who to appoint as your business attorney, it is crucial to choose someone who will understand the specific needs of the business. This may be someone entirely separate from the person that is nominated to manage your personal affairs. You may want a family member to manage your personal affairs and a professional( such as a solicitor) to manage your business affairs.
Owen Mason and Heledd Wyn from Mowbray Woodwards
Without a Power of Attorney, it would be necessary to apply to the Court of Protection in order for someone to be appointed as your deputy. This can be a time consuming process and could cost your business a great deal in lost revenue. By putting in place a Power of Attorney, if the unexpected happens, your business can continue without interruption.
For more info: www. mowbraywoodwards. co. uk
hello @ mowbraywoodwards. co. uk 01225 485700
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