A Business Lasting Power of Attorney (LPA) is a legal document that allows business owners to appoint someone they trust to make decisions on their behalf if they are unable to do so themselves, due to illness, incapacity, or other reasons. Under the laws of England and Wales, an LPA can be made specifically for business affairs, enabling the appointed person (known as the attorney) to manage day-to-day business decisions, sign contracts, and take financial actions.
For smaller organisations, particularly those with a sole director or shareholder, or where one party holds the majority of shares, Business LPA’s are crucial. In such businesses, decisions are often concentrated in the hands of one individual, meaning that if they become incapacitated, the business may struggle to function effectively. Without an LPA in place, there could be delays, financial difficulties, or even legal challenges regarding who has the authority to manage the business.
Why are Business LPAs Important for Smaller Organisations?
1. Continuity of Operations: A Business LPA ensures that if the sole director or major shareholder becomes unable to manage the business, someone else can step in quickly to keep things running smoothly.
2. Protection of Interests: In small businesses, the success of the company may heavily rely on the decisions of one person. An LPA allows the business to continue operating and for important decisions to be made without legal hurdles or power struggles.
3. Avoiding Disruption: If no Business LPA is in place and the key person is unable to act, the company could face delays in decision-making or even paralysis, as a court may need to appoint a deputy, which can be time-consuming and costly.
4. Security for Shareholders: For businesses with a majority shareholder, an LPA can help avoid uncertainty. The appointed attorney can make decisions regarding shareholder matters, ensuring the company’s interests are protected and maintaining stability for other shareholders.
In conclusion, Business LPAs are an essential tool for safeguarding the future of smaller organisations, particularly those where key decisions rest with one person. By planning ahead with an LPA, business owners can ensure that their organisation remains operational and protected, no matter what happens to them personally.
This is a highly complex area of law, to find out how best to navigate this you should see a specialist solicitor who specialises in Lasting Powers of Attorney.
For further information, please contact either one of our specialists in the experienced Private Client team using the contact details below:
David Roper on 01489 864 754 or david.roper@lawcomm.co.uk
Shaun Visser on 01489 864 173 or shaun.visser@lawcomm.co.uk
Jay Woodward on 01489 864 189 or jay.woodward@lawcomm.co.uk
