Business and Commercial Lasting Power of Attorney (BLPA’s)
24 May 2021
‘These documents are a critical component of any business’s succession planning, crisis management strategy, and risk management policy.’
Making a Business Lasting Power of Attorney allows you, as the operator of a business, to appoint an attorney or attorneys to make decisions and act in relation to your business affairs when you are otherwise unavailable or, critically, if you suffer illness or accident that removes your mental capacity to act.
They should be considered separately to arrangements you should have in place to manage your personal finances in a similar situation. The skills and attributes required of a business attorney are likely to be entirely different to those required of an attorney looking after your personal financial affairs (generally speaking, a business attorney is more likely to be a senior staff member or colleague within your business, whereas a personal attorney is more likely to be a relative or loved one).
Why make a separate Business Lasting Power of Attorney (BLPA)?
There are a host of important, but often overlooked, reasons including:
- It is critical to have a plan in place if you suffer an unexpected accident or illness that removes your availability or your mental capacity to act. Without a BLPA an application would have to be made to the Court of Protection seeking the appointment of a Deputy to manage those affairs. These applications can take, on average, at least six months and in the intervening period there would be no person authorised to manage your business affairs.
- Financial institutions will often freeze sole and joint bank accounts to protect you whilst an appointment is made, a consequence that could be devastating to your business when you consider the day to day financial transactions that are required – payments to staff, suppliers and financial institutions may all be affected.
- Your commercial reputation may be at risk if your business cannot effectively operate.
- The ability of your business to survive a period of forced inactivity may be questionable.
- If you are a sole trader, could your business operate without you?
- If you are a partner in a partnership, the risks may extend beyond you and the business to the other partners, creating avenues of liability that need to be addressed.
- If you are a Company Director, can the company operate without you? What provisions are contained in the Articles of Association that deal with the incapacity of a Director? How will any co Directors be effected?
- Taking the opportunity to assess the risks and compile adequate business succession plans, crisis management strategies and risk management policies in a market place where so many challenges are unforeseen and unanticipated.
- The very ability to continue the day to day operation of your business despite a crisis having arisen.
- Allow you to think ahead and appoint a suitable person or persons of your choosing who have the necessary understanding, skills and ability and who understands your particular business.
- Having immediately nominated persons to step up and act as attorney with no lengthy delays thus offering business continuity when it may be needed the most.
- Anti discrimination legislation can conflict with articles or clauses designed to remove partners or directors who lack mental capacity. A BLPA can allow the attorney to continue in the role of the incapacitated partner or director and reduce the risk of a conflict with equalities legislation.
- The cost of creating a BLPA is a legitimate expense of the business
Call us today to discuss the nuances of your business so that we can provide accurate and tailored, expert advice. Our professional service is key to creating an effective Business Lasting Power of Attorney that looks to protect you and your business, a service that will provide peace of mind to you and any fellow business associates.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.