23 August 2023

Business Lasting Powers of Attorney

A business Lasting Power of Attorney (LPA) is a document whereby a business owner can appoint an attorney to make decisions in respect of the running of their business.

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A business Lasting Power of Attorney (LPA) is a document whereby a business owner can appoint an attorney to make decisions in respect of the running of their business, should they be unable to make decisions, for example, if they lack capacity or are temporarily unavailable.

The decisions that might need to be made range from, for example, the payment of suppliers / employees, to signing documentation on behalf of the business, or making decisions as to the day to day running of the business.

Business LPAs are not necessarily applicable or appropriate for all types of business, for example, if the business is a partnership, the partnership agreement may already provide for this, so an LPA would not be required. Similarly, a company’s articles of association may, for example, provide for the termination of a director who loses capacity, or preclude the use of a business LPA.

Business LPAs may be more appropriate for sole traders, whose businesses do not have a separate legal personality.

Making a business LPA

When making a business LPA, it is possible to make just one property and financial decisions LPA covering both your personal and business decisions, or you may choose to make two separate LPAs, one for your personal affairs and one for business decisions, especially if you would wish for different attorneys to deal with the different aspects of your affairs.

You can specify in this LPA what decisions your chosen attorneys can make, and how these decisions should be made and recorded. You cannot, however, mandate which decisions are made.  It may also be appropriate to provide detailed instructions as to your wishes in a separate supporting document.

Appointing attorneys

When appointing your chosen attorneys, you should consider who you would trust to act in your best interests and run your business in your absence, and also who would understand how your business works and be best placed to make the decisions that might be required.

If you do not make a business LPA and it later becomes necessary for decisions to be made on your behalf in respect of your business, it may be necessary for a third party to apply to the Court of Protection for authority to make decisions on your behalf, which can be a costly and lengthy process.  You also do not then retain control over who applies / is authorised to act on your behalf.

Business LPAs are, therefore, a useful contingency planning mechanism in respect of your business.

Consider other options

If you are unsure as to whether a business LPA is appropriate for your circumstances, there are other options which can be explored, for example, general Powers of Attorney, under which you can authorise an attorney to make certain decisions on your behalf, and which can be limited either in time, or to specific decisions, and which do not need to be registered at the Office of the Public Guardian in order to be used.

Attorneys appointed under a general Power of Attorney are not, therefore, supervised by the Office of the Public Guardian in the same way as attorneys appointed under an LPA, which is often an important control.

We would, therefore, recommend taking legal advice as to how best to proceed, to ensure that both you and your business are protected, and so that decisions can be made on your behalf without delay, if the need arises in the future.

Seeking expert legal advice?

Here at Kew Law we can provide all the advice you need to make a decision over how to proceed with your business affairs, whether through a Business Power of Attorney or a general Power of Attorney.

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0800 987 8156