The Importance of Lasting Powers of Attorney for Business Owners
If you own business assets we would advise you to give serious consideration to preparing a ‘commercial’ lasting power of attorney.
If you became incapable of managing your business interests for any reason, who would have access to the company business account? Who would make sure that employees are paid? Who would pay suppliers or make day to day decisions about the running of the business? Who would sign deeds, authorise share sales etc etc.
Putting into place a specific power of attorney limited to business purposes will allow you to authorise ‘attorneys’ to manage your business interests on your behalf.
There are a number of reasons why this could become relevant to you at some stage in your business life, including, but not limited to, deterioration in your own mental capacity. Physical incapacity or other reasons, such as spending a large proportion of your time outside the UK may also prevent you from managing your business affairs appropriately.
A lasting power of attorney can be used to make decisions where a director is unavailable or away on business; or where they become incapacitated for longer periods of time; or indeed, lack mental capacity completely.
Any authority you grant to your attorneys under the lasting power of attorney document can be made subject to restrictions and/or subject to any requirements prescribed by the wording of the company articles of association or partnership agreement.
Your choice of attorneys is also important. You need to appoint people that are capable of undertaking the role and they have to be people that you trust to look after your best interests.
How does this apply to me?
For sole traders, authority conferred under a Lasting Power of attorney will allow an attorney to act, subject to any restrictions in the document itself.
For partners, the partnership agreement must also be considered to see whether there are any restrictions on an attorney acting on behalf of a partner.
For directors of a private limited company, the general authority of an attorney may not extend to carrying out the duties of the donor in his capacity as a Director. A director’s appointment is personal and can only be discharged by the person holding that office, unless the articles of association make specific provision for this.
Directors cannot therefore delegate their powers and responsibilities as a director to an attorney unless the articles specifically provide otherwise. We can check this for you and advise as appropriate.
If you would like to discuss ‘commercial’ powers of attorney, please do not hesitate to contact Nicola Finbow for more information on 0161 764 5266.