Don’t Leave Your Business Vulnerable - Business Lasting Power Of Attorney

Business owners without a business Lasting Power of Attorney (LPA) in place are leaving their companies exposed to unnecessary risk

Deborah Perry from Aconveyancing says as we head into year three of the pandemic and reflect on the overwhelming effects the virus is having on us all both personally and professionally, it’s become increasingly clear that business owners without a business Lasting Power of Attorney (LPA) in place are leaving their companies exposed to unnecessary risk.

While most people understand the benefits of a personal Lasting Power of Attorney (LPA), many business owners are not aware that they need a specific business LPA to cover the management of their affairs if they are unable to do this themselves.

Should a business owner become incapacitated by injury or illness, who would take over the running of the business and its finances? If this isn’t legally documented then the situation can become unclear and fundamental business operations may not be possible. This can have deeply adverse consequences for a business owner’s finances if they are solely reliant on income from the business.

A business LPA is a legal document which allows the business owner to appoint somebody / people to make certain decisions on their behalf if they are unable to do so themselves. Shareholders, partners and sole traders are some of the most common business owners who can benefit from putting in place a business LPA. It is also entirely possible and indeed, sensible, to consider making two LPAs for financial decisions with one to cover your business and the other to cover personal finances.

• If the business owner has a medical condition which means that they do not have capacity to act
• If the business owner has an accident and becomes temporarily unable to act
• If the business owner is on holiday and not able to sign documents/cheques or agree or disagree with any urgent decisions to be made

A business LPA can be straightforward to organise. An LPF1 form must be completed and signed by a witness, the chosen attorney(s) and a “certificate provider”. The form is then registered with the Office of the Public Guardian. It’s always worth consulting your solicitor for professional advice on the choice of attorney(s) and any specific instructions that you wish to include in the document to ensure the business continues to run as you wish.

If you do not have a business LPA in place and you are unable to manage the running of your business, then somebody may need to apply to the Court of Protection to be appointed as Deputy on your behalf. This is a lengthy and costly process, leaving your businesses at risk while the paperwork is being processed. The applicant may then be refused deputyship and the Court of Protection will appoint an official deputy, which adds further costs and potentially leaves your business in unwanted hands.