Back to News

What is a Business Lasting Power of Attorney, and do I need one.

Our November 2021 article covered the benefits of a Lasting Power of Attorney (LPA) which is a legal document that allows you to give a trusted individual (s) the power to make decisions for you. You can make a financial LPA authorising the attorney (s) to make decisions relating to your finances, or a health and wellbeing LPA relating to your personal welfare.

However, the importance of a Business Lasting Power of Attorney (BLPA) is often overlooked. A Business LPA allows the donor (the business owner) to appoint a trusted attorney (s) to make decisions concerning their business interests when they lack mental capacity, or when they are unavailable (i.e. abroad on holiday or for business and cannot be contacted, or they have been in an accident and are not capable of acting).

Why make a business LPA?

Business owners should be aware of the risks if there is no BLPA in place and they are unable to make business decisions in the future. With nobody in charge there are many reasons the running of a business may become jeopardised, and it is necessary to consider the following:

  • Contracts entered into may no longer stand, payments of bills may need authorisation, insurances could be invalidated and bank accounts may be frozen.
  • Paying employees, creditors or tax becomes difficult, and investors may require their investments to be returned.
  • The value of the company may be affected, and other companies may no longer wish to trade with a business that appears rudderless.
  • For regulated organisations, such as solicitors, there could be professional implications with the potential for licenses to trade being withdrawn, or regulatory bodies intervening.
  • If you have not made a business LPA, then it may be necessary to apply to the Court of Protection to have a deputy appointed to act on your behalf. The process can be long, expensive, and there is no guarantee the Court of Protection will choose someone you would have chosen to run the business.

Delays during a time when the business is already facing uncertainty can exacerbate difficulties, and may result in potential litigation for failing to complete contracts or pay staff. A business LPA is an essential part of any crisis planning for a company, and enables business owners to protect their own interests and their businesses.

Who needs a business LPA?

A BLPA will be appropriate in most circumstances, but it is still important to consider the type of business you own. BLPAs are particularly important for family businesses where the business is the main source of income and may provide capital for retirement.

  • Director– you should check the Articles of Association or Memorandum of Association. In the event the director loses capacity there is often a provision within the Articles of Association that will provide for the termination of a director. If there is no such provision than you should seek advice.
  • Sole Trader/sole director– you are not a separate legal entity to your business and you are at high risk without an LPA because the bank accounts may be frozen, you may be unable to appoint other directors, or unable to enter into contracts. For a sole director of a small private company, the Articles of Association will probably not terminate the director’s appointment and a BLPA is recommended.
  • Partners-you should check the terms of the Partnership Agreement. A BLPA may not be necessary if a partnership agreement already includes a provision concerning what should occur in the event a partner becomes incapacitated. But if you feel an LPA may be needed, or if you are unsure about the provision in the Partnership Agreement, then you should seek advice on the wording of the BLPA to ensure it does not conflict with any existing provisions.
  • Shareholder– you should consider your voting rights, without a BLPA you may be unable to exercise your voting rights.

Making a BLPA

A BLPA can be set up at any time, and if you have more than one business it is possible that you may need more than one BLPA.

While there is no practical difference between a Property and Financial LPA and a Business LPA, it is important that a BLPA is distinguished and specific consideration is given to the structure of the business, whether the business can continue, who to appoint as attorney (s), any additional skills or qualifications the attorney (s) may need, and the scope of attorneys’ powers in relation to the business.

You should consider appointing a different attorney for your business LPA and your personal LPAs, often people prefer to keep their personal affairs separate from their business affairs. The person you choose as attorney should not only be someone you trust, but they should also be able to cope with the business role if they are called upon.

While many businesses prepare for crisis management, such as computer hacks or floods, there are fewer businesses that consider preparing in the event that key decision-makers become incapacitated. There are clear advantages to having a BLPA in order to avoid disruption, therefore, we recommend getting expert advice from our Private Client team to help tailor a BLPA to your specific business. Please contact a member of our team to discuss how we can assist you.  

Written by Anouschka Fenley-Paralegal.  


What People Are Saying

Hear what some of our clients have to say about Mercers Solicitors...

I just want to thank you again for all your help… we couldn’t have placed ourselves in more trusting, caring hands than your good kind self. It was great we had the opportunity to meet you when we did Alex!

Mrs A from Maidenhead

Peter has gone above and beyond with his informative, sympathetic and extremely wise advice.

Mrs H of Oxfordshire

We should like to place on record our appreciation of the highly professional and yet patient and stress-free manner in which Mercers have handled these matters for us.

Anon

I really do want to thank you for your patience, kindness and the meticulous way in which you tackled both me and my problem.

Mrs D from Maidenhead

Very professional and helpful. Don't know what I would have done without Shella!

Mrs G of Australia

You are so meticulous, efficient, and very responsive. Your professionalism and quality of work is outstanding. The fact that this matter was carried out during the very challenging times we have all experienced due to the Pandemic, makes the level of your service even more outstanding. Throughout the complete process I have always had the feeling that I was working with a friend I had known for years.

Mr D of Oxfordshire

Having sometimes experienced slow and reactive lawyers, it was refreshing to deal with Ruth and her team. The transaction was done promptly and smoothly. We will definitely use Ruth again and would have absolutely no hesitation in recommending her to family and friends.

Mrs B of Berkshire.

We have never experienced such fast and efficient return of communication from any past or present Paralegal/ Solicitor. Thank you Jess and Sam.

Mr & Mrs Masri of Berkshire

I have always received first class service from Sarah Crowther. Her advice and suggestions have always proven excellent. What she says she will do she does.

Mrs W of Berkshire

Thank you for all your care and understanding in helping me … through the complexity of a will.

Mr P from Berkshire

Quality, professional firm with integrity, nice people – I had a first class experience.

Mr A S of Oxfordshire

We have very much appreciated Paula's patience and expert guidance through, for us, a tricky landscape.

Mr A and Mrs S

Contact Us

Talk to a Mercers expert today

Contact Us