July 25, 2019
Whether you’re the owner of a new start-up or an established enterprise, a business venture can be an exciting journey. Decisions of all shapes and sizes need to be made including succession planning in the event you are no longer able to run the business.
Consider for a moment… what would happen in the unfortunate event that you suddenly lost capacity through illness or injury, or if you died? Who would manage the day-to-day operation of your business? Who would make the key administrative, commercial and financial decisions? Who would pay your employees’ wages or authorise other important payments? How could you ensure that business continuity is not disrupted?
You may have already made informal arrangements to deal with this scenario, but this may not be sufficient to unfreeze your bank account or to satisfy official bodies such as HMRC.
Whilst it may not be number one on the agenda, it may be a good investment to think now about how to protect the future of your business to ensure its vitality and survival.
Protecting your business
A Business Lasting Power of Attorney (‘LPA’) is a key legal document which allows you to appoint an individual of your choice (the attorney) who has the authority to make decisions on your behalf if you are unable. You should choose an attorney who will be capable of running your business in the way that you would want. Think of it like an insurance policy that will ensure your business can continue in accordance with your wishes even if you are unable to physically be there to run it. Once the LPA is in place it can continue indefinitely, unless you revoke it.
If you were to die, you need to be sure that the executors you name in your Will have authority to operate the business and, importantly, that your business documentation allows this. In the recent case of Kings Court Trust Ltd v Lancashire Cleaning Services Ltd, the executors of the estate of the late Mr Pilling (the sole shareholder and director) were forced to make an application to court to be allowed to continue running the business because his company documentation (Articles of Association) did not allow the executors to appoint an alternative director to run the business following his death. This led to a great deal of expense and worry which could have been avoided.
How we can help
We can advise on putting in place a Business LPA to assist should you become unable to run the business through ill health. We will then consider with you who would be an appropriate choice for your attorneys and/or executor, bearing in mind the nature of your business, and any safeguards or restrictions you wish to put in place on the attorney/s.
Also, we can assist with your business documentation, including, eg. articles of association, partnership agreements and/or shareholders’ agreements, to be sure that provisions exist in the event of the death or incapacity of a director.
Finally, we can advise you on any provisions which should be made in your Will to cover your business.
If you think your business could benefit from looking at succession planning, get in touch with us.
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