Business owners may want to consider what could happen with the running of their company if they lose mental capacity, and to consider the benefits of a properly drafted Lasting Power of Attorney (LPA).
Private client Solicitor Ian Campbell explains that many people only think of LPAs in a personal and family context. But a business Lasting Power of Attorney (BLPA) is a legal document that allows a business owner to designate an attorney to make decisions on their behalf if they are unable to do so themselves. This could be due to physical or mental disability, travel, or other reasons.
The nominated attorney can manage the company’s finances, sign documents, and make decisions about the bank accounts, invoices, contracts, and staff.
The BLPA ensures that the business is managed according to the wishes of the business owner or owners.
Ian says: “it may be necessary to see any shareholders agreement or Articles of Association to ensure no ambiguity or conflict between the various documents.”
He added: “There can be potentially serious consequences if a business owner loses capacity for whatever reason and there is no BLPA in place. The business bank account could be frozen, contracts might be nullified and invoices could be left unpaid.”
In the absence of a BLPA, an application may be needed to the Court of Protection to appoint a Deputy, but this is likely to take many months and the business may not be able to survive that time and uncertainty.
“It’s important for a business to give proper consideration to a BLPA because the consequences of a loss of capacity can be extremely serious”.
For more information, you can contact Ian on 01202 558844 or email us at enquiries@rawlinsdavyreeves.com
